- Long Term Care Insurance;
- Pay with Your Own Funds;
- Medicare; and
It is crucial that all of us (at or nearing our retirement years) take the time to educate ourselves and then implement a plan that will address long-term care costs:
- Of people turning 65, 69 percent will need some form of long-term care and Women are more at risk (79 percent).
- More than half of the U.S. population will require some type of long-term care during their lives (nursing home care, home health care, assisted living, or rehabilitative facility care).
- The average nursing home stay is approximately two and a half years, however 20 percent will need more than five years of care.
The corner stone to this education and planning process is to understand the roll Medicare and Medicaid will play.
What About Medicare?
There is a great deal of confusion about Medicare and Medicaid. Medicare is the federally funded health insurance program primarily designed for older individuals (i.e. those over age 65). There are some limited long-term care benefits that can be available under Medicare. In general, if you are enrolled in the traditional Medicare plan, and were admitted to a hospital with “inpatient” status (rather than “observation” status) for at least three days, and then you are subsequently admitted into a skilled nursing facility (often for rehabilitation or skilled nursing care), Medicare may pay for a while. (If you are a Medicare Managed Care Plan beneficiary, a three-day hospital stay may not be required to qualify.)
If you qualify, traditional Medicare may pay the full cost of the nursing home stay for the first 20 days and can continue to pay the cost of the nursing home stay for the next 80 days, but with a deductible that’s $157.50 per day (in 2015). Some Medicare supplement insurance policies will pay the cost of that deductible. For Medicare Managed Care Plan enrollees, there is no deductible for days 21 through 100, as long as the strict qualifying rules continue to be met.
So, in the best-case scenario, the traditional Medicare or the Medicare Managed Care Plan may pay up to 100 days for each “spell of illness.” In order to qualify for this 100 days of coverage, however, the nursing home resident must be receiving daily “skilled care” and generally must continue to “improve.”
(Note: Once the Medicare and Managed Care beneficiary has not received a Medicare covered level of care for 60 consecutive days, the beneficiary may again be eligible for the 100 days of skilled nursing coverage for the next spell of illness.)
Also, Medicare does not pay for treatment for all diseases or conditions. For example, if a long-term stay in a skilled nursing facility becomes necessary because of Alzheimer’s or Parkinson’s disease, Medicare will typically not pay because these stays are called custodial nursing stays. Medicare doesn’t cover custodial care, if that’s the only care you need. In that instance, you’ll either have to pay privately (i.e. use long term care insurance or your own funds), for custodial nursing home stays unless you qualify for Medicaid.
While it’s never possible to predict at the onset how long Medicare will cover the rehabilitation, many times it falls far short of the 100 day maximum. Even if Medicare does cover the full 100-day period, what happens after the 100 days of coverage have been used?
At that point, in either case you’re back to one of the other alternatives – long-term care insurance, paying the bills with your own assets, or qualifying for Medicaid.