Paying for Care
If you are looking for care for yourself or a loved one, you must understand how you are going to pay for it.
Many people believe – wrongly – that Medicare, Social Security or Medicaid will pay for their long term care needs. Medicaid does cover nursing facility care for the impoverished, and Medicare may cover some of the cost of nursing center care for those who require short term rehabilitation, but both require individuals to meet certain physical and medical standards. Generally speaking, neither covers the cost of personal care/assisted living.
Personal Resources – Most personal care home residents, and roughly 20 percent of nursing center residents, pay for costs out of their own savings and assets. Frequently, when people enter a nursing center for extended long term care, they first pay for their care out of their own assets and then expend their resources and apply for Medicaid.
Private Insurance – For the most part, private medical insurance does not cover the cost of personal care or nursing center care except in specific circumstances.
Long term care insurance can be purchased to provide some payment for nursing center care and personal care home/assisted living care.
Some Medicare supplementary insurance policies, often referred to as “Medigap” insurance, also may provide some limited payment. Many health maintenance organizations (HMOs) and other coordinated care plans participate in the Medicare and Medicaid programs. These health care plans often cover certain benefits in addition to those required by Medicare and Medicaid and are experienced in “coordinating” a member’s health care. Some HMOs may also offer more medical or supportive services; others may not require a hospital stay before approving a nursing facility admission.
Medicare is a federal health insurance program for people age 65 and older, as well as certain people with disabilities younger than 65. It does not provide a comprehensive long term care component and generally does not cover personal care home costs but may pay for short term services (for example, physical and other therapies) contracted through a home health care agency and provided to the resident at the personal care home. Medicare covers only those nursing center services rendered to help someone recover from an acute illness or injury. Medicare is administered by the federal government’s Centers for Medicare and Medicaid Services (CMS) and is divided into two parts: Hospital Insurance (Part A) and Medical Insurance (Part B).
Nursing center coverage falls under Part A of Medicare and is very limited. If certain conditions are met, Medicare only pays fully for the first 20 days of care in a skilled nursing center. For the 21st through the 100th day, the patient must share, or co-pay, for the cost of care by paying a daily coinsurance rate, which changes yearly. (This is typically what a Medigap policy covers.)
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Medicaid is a joint federal-state government program designed to provide health care assistance to low-income people with limited assets, and it has become the major payer of services for care in skilled nursing centers across the country.
Medicaid will pay for nursing center care for those individuals who meet a state-determined poverty level and certain health-related criteria, provided the nursing center is certified and meets a stringent set of government standards.
Florida Medicaid Program
In Florida, the Agency for Health Care Administration (AHCA) is responsible for Medicaid and has implemented the Statewide Medicaid Managed Care program.
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Long Term Care Insurance
Long term care insurance can protect personal assets and inheritance for the family, provide greater choice in the selection of long term care settings (home care, nursing center care, etc.) and generally provide for financial security.
Because costs for long term care policies can vary widely, even for similar policies, shopping and price comparison is important.
Long term care insurance policy premiums are set based on several factors: age, health, length of deductible period, amount paid and duration of benefits. Higher daily benefits and optional features, such as inflation protection and non-forfeiture benefits, increase the premium.
According to the Health Insurance Association of America, the annual premium for a low-option policy for a person at age 50 is about $850 annually; at 65, that same policy costs about $1,800; and at 79, about $5,500. You should consult with your insurance or financial advisor on current costs. Counseling services may help you select a policy most appropriate to your needs.
People purchase long term care insurance for several reasons. If you are deciding whether and when to buy long term care insurance, you should consider the following questions:
- Will your income cover long term care expenses, along with other ongoing expenses?
- If you purchase such insurance, can you pay for the deductible period and coinsurance?
- Can you pay the premiums now? Can you pay if the premiums rise?
- Will you be able to pay the premiums if your spouse dies?
- Will you be able to pay for upgrading benefits to meet inflation?
- Would you become eligible for Medicaid if you had large medical bills, or entered a nursing center where average yearly costs run almost $30,000?
According to the Centers for Medicare and Medicaid Services, before signing a long term care insurance policy, you should also ask if you have a period during which to cancel the policy and receive a refund for the first premium.