Legal Q&A: Long Term Care Payment Options
Question: What are the financial options that are available to us for paying for long-term care for our elderly parents? For example, will Medicare and Medicaid pay for these elder care expenses?
Answer: There are three (3) main options for paying for long-term care – out of pocket (private pay), long-term care insurance, and government programs such as Medicare (very limited), Medicaid (income and asset dependent) and Veterans Administration (income and asset dependent). Which options are available to help your parents will depend on their situation.
Long-term care refers to medical and non-medical care for a person who has a chronic illness or disability. The need for long-term care, also known as custodial care, occurs when you need care but you are unlikely to get any better. For example, as we age our bodies simply start to wear out and fall apart. This may result in limited mobility, loss of independence and the need for assistance with everyday activities such as dressing, bathing and eating. Or we may need help with everyday activities due to diminished cognitive abilities, neurological conditions, confusion or dementia. Things that used to come naturally, such as turning off the stove when you are done, or remembering that you turned the stove on to make lunch are suddenly gone. The need for long-term care may also arise due to a sudden medical incident such as a heart attack or stroke, which even after the patient reaches “full recovery,” they may still be left with a reduced ability to care for themselves.
Most often long-term care is non-medical in nature and assists with support services such as activities of daily living like dressing, bathing, and using the bathroom. Long-term care can be provided at home, in the community, in assisted living or in nursing homes.
Difference Between Medicare and Medicaid – There is a very large difference between Medicare and Medicaid and people confuse the two all the time.
Medicare is a federally funded entitlement program to provide health insurance primarily to Americans over the age of 65 and many individuals with disabilities. There are several parts to Medicare: Part A covers hospital bills, post-hospital nursing home stays and home health care, Part B covers medical insurance and pays most basic doctor and lab costs, and some out-patient medical services, including medical equipment and supplies, home health care, and physical therapy, Part C is called Medicare Advantage and is the Medicare HMO program, and Part D covers some of the costs of prescription medication.
Medicaid on the other hand is a federal program, administered by Maryland, that pays for certain health services and nursing home care for older people with low incomes and limited assets. It also pays for some long-term care services at home and in the community. Medicaid covers a broader range of services and people than Medicare, including children, pregnant women, parents of eligible children, seniors and individuals with disabilities. Its greatest difference from Medicare is that Medicaid is based on need and financial resources. In order to qualify a person must fall into a covered group and meet the financial needs test.
Medicare generally doesn’t pay for long-term care. Medicare also doesn’t pay for help with activities of daily living or other care that most people can do themselves or that can be provided by family or non-medical personnel. Medicare only covers a small amount of the nursing home care provided in the United States, and only under very limited circumstances, making the hope of Medicare paying the bill quite difficult.
Medicare pays for 20 days of full coverage if you discharged to a skilled nursing facility after being admitted for at least three days in the hospital, so long as you are receiving skilled care as opposed to custodial care. If you still need skilled care after the first 20 days, you can get up to 80 additional days of partial coverage from Medicare. When the Medicare coverage ceases, you will have to pay out-of-pocket unless you have private long-term care insurance or qualify for Medicaid benefits.
If you need “custodial care,” rather than care associated with an injury or illness Medicare won’t pay a dime. Custodial care is defined by Medicare as help with activities of daily living, like dressing, bathing, going to the bathroom and eating. This is the kind of care that can be safely and reasonably provided by people without professional skills or training – like your family. Custodial care is also called “long-term care” and is the type of care that most people will need as they approach the end of their lives.
If you need custodial care there are a couple of alternatives to pay for it. First, you could purchase long-term care insurance – provided you are healthy enough and can afford the premiums. Many policies can also be used to pay for assisted living and in-home care, as well as skilled nursing care. Second, you can pay for everything directly out of your pocket. Third, if you qualify, Medicaid will pay for your care under certain circumstances. Finally, Veteran’s and widow(er)s of veterans may receive a Special Monthly Pension called “Aid & Attendance.” This benefit is based on a person’s assets and income. If approved for Aid & Attendance, the person will receive additional monthly income to help pay for the cost of health care.
Consulting with an experienced elder law attorney at Michael Hodes, LLC can help you determine the options available to help your parents get and pay for the care they need. It is important that you look at and evaluate all of the options. Assessing the options to pay for long-term care before the need for care arises or before a crisis occurs will ensure the greatest flexibility. Even with good advance planning, making long-term care decisions can be difficult.
If you have additional questions, you may want to talk with an attorney at Michael Hodes, LLC (410) 769-8002 about this matter.
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