Too many middle and upper income consumers still believe that Medicare, Medicaid or some other government program will pay for their long term care or the long term care of other elderly family members.
Medicare, the Federal healthcare program for those age 65 and over, pays for hospital care (Part A), physician care (Part B) and prescription drugs (Part D) and is often combined with private Medicare supplemental insurance to help cover copays. Some consumers opt for a Medicare Advantage (MA) /managed care plan (Part C) in lieu of Fee for Service Medicare that combines A, B and D benefits and may add other benefits in exchange for a restricted network of providers. Medicare will cover home health care or care in a skilled nursing or other post-acute care facility but only after a three-day inpatient hospital visit (observation status doesn’t count). While some MA plans may waive the mandatory 3-day hospital visit and provide home health or skilled nursing care to avoid a hospital stay, Medicare only pays for home health or skilled nursing care on a short-term basis to avoid or recover from an inpatient hospital visit. The basic Medicare Fee For Service benefit for skilled nursing care is for a maximum of 100 days in a given year only after a 3-day inpatient hospital stay, with only 20 days fully funded and the remainder with a 20% co-pay and only as long as the patient is progressing toward recovery. Long term custodial care for a senior who needs assistance with the activities of daily living, at home or in a facility, is not covered by Medicare.
Under the Medicare hospice benefit, Medicare will provide comprehensive palliative care but only for those (1) whose hospice doctor and regular doctor (if you have one) certify that you’re terminally ill (with a life expectancy of 6 months or less) (2) accept palliative care (for comfort) instead of care to cure their illness and (3) who sign a statement choosing hospice care instead of other Medicare-covered treatments for your terminal illness and related conditions. Hospice care is provided under the Medicare Fee for Service Part A even if you are a member of a MA plan. The Medicare hospice benefit offer comprehensive in-home or in-institution care for those expected to live six months or less. It is an extremely valuable, and still somewhat underused, benefit but it does not provide long term custodial care.
Medicaid, the joint Federal / State program that pays for medical care for the poor will pay for long term care in a skilled nursing facility or in a home and community based setting, which in some states includes assisted living facilities. However, there are strict income and asset tests for Medicaid, which in Maryland are an individual income of approximately $12,000 or less ($16,000 or less for a couple) and assets of no more than $4,000, $6,000 for a couple. A spouse is generally allowed to exclude a home from the asset test and his/her retirement savings but all joint savings and investments would have to be spent down to at least $6,000 before Medicaid benefits can be used and states have become increasingly good about looking back at least three years to see that assets have not been distributed to other family members to meet the asset test. These tests effectively exclude middle and upper income individuals and families from using Medicaid for long term care without first exhausting the large majority of their savings. Medicaid may also limit which facilities and programs you can use since not all assisted living facilities or home health agencies accept Medicaid patients.
With this post, I hope to kick of a series of posts on the issue of Paying for Care that will provide information on the cost of care and strategies for funding it through savings or long term care insurance.