PAYING FOR LONG TERM CARE
As we age, the likelihood of needing long-term care for either a finite amount of time or indefinitely increases. It is important to understand who is responsible for paying for long-term care.
Many people think that if they are in a skilled nursing facility long-term, then Medicare will pay. The reality is that Medicare has a very limited benefit which covers individuals in that setting. A common scenario is as follows: an individual falls, breaks a hip, goes to the hospital, is admitted to the hospital, has surgery, spends at least 3 days having been admitted to the hospital and is then discharged to a skilled nursing facility for short-term rehabilitation. Medicare Pt. A provides full coverage for days 1-20. There is a current (2016) daily patient co-payment of $161.00/day for days 21-80, which is usually covered if the patient has a “medigap” policy or a Medicare Advantage plan. This means that the maximum amount of days Medicare Pt. A will pay towards care in a facility is up to 100 days “per spell of illness”.
If the patient cannot leave the skilled nursing facility by the time Medicare Pt. A has finished paying, the patient will have to pay from his or her private funds unless the patient has a long-term care insurance policy. Depending on the type of policy, the daily benefit amount and the length of time the policy will pay, the patient may or may not have complete coverage to pay the nursing home’s bill. The patient would need to supplement any shortfall with private funds.
The payor of last resort is Medicaid, also referred to as Title XIX. This is a welfare program with complicated rules which covers the medical bills of impoverished individuals. The rules are different if the patient is married as there is currently some financial protection for the healthy spouse.
Similar rules apply to paying for long-term care outside of a nursing home. The Medicare benefit for home care services is limited. Eligible veterans or their widowed spouses may be eligible for a monthly stipend to keep them out of a nursing home. Many long-term care policies cover home care services. Additionally, there is the Connecticut Home Care Program for Elders which covers home care services for those financially eligible. One part of this program is funded by State dollars and the other part of this program is funded with Medicaid dollars. The home care program funded with Medicaid dollars has similar rules for protecting some assets for the healthy spouse.
Many individuals will fund their home care costs by tapping into the equity in their home with a reverse mortgage. For those that qualify, the benefit with this type of mortgage is that the money borrowed is not paid back until the house sells. Under current law, it is possible to use the proceeds from a reverse mortgage to supplement the care available under the Medicaid waiver under the Connecticut Home Care Program for Elders.
It is important for individuals to recognize as early as possible that their need for care may increase as they age and to be aware of the options available.