Medicare and Medicaid
What Does Medicare & Health Insurance Really Cover?
There seems to be quite a bit of confusion about how Medicare and Medicaid play a role in long-term care situations. Medicare is health insurance for those who have reached the age of 65. Medicare does not pay long-term care costs. Medicaid is the safety net program for impoverished people who have no means of paying for care. Medicaid does cover long-term care costs however, the majority of care provide is for end of life care in a facility.
Medicare and Health Insurance: Covers acute care, meaning short-term or
active care for a medical condition that can be cured. Medicare will cover
up to 100 days of skilled nursing care, however, it only covers this for people who
are improving and does not cover long-term care or custodial care.
Long-Term Care: generally refers to someone who is needing assistance to get through the day with a condition that is expected to last more than 90 days.
Scenario: Client has a stroke and spends three days in the hospital followed by seven days in a nursing home or rehabilitation center. The administrator then tells the clients’ spouse that they can take the client home or they need to start paying for care at the nursing home. Although Medicare states they will pay for up to 100 days of skilled nursing, in this case they are only paying for the first 10 days as the client is no longer improving. The client is now in a permanent long-term care situation which may require years of assistance. Medicare and private insurance does not cover these ongoing costs.
Why Medicaid is Not an Option When Planning for a Long-Term Care Situation
Medicaid is a safety net for the poorest of our society. Many people believe, or are told Medicaid is an option for long-term care planning. In fact many attorneys and advisors build their entire practice around helping people qualify for Medicaid. The problem is you have to give up control or spend down your assets years ahead of a need to qualify. One of the biggest misconceptions is that you will have care options equivalent to private sector care options. This is simply not the case. Medicaid spends the vast majority of its budget on end of life care which takes place in a Medicaid nursing home. They do not provide around the clock home care or allow you to choose your assisted living facility. In fact, you or your family will have little say over your care options once you are on Medicaid. Here are a few things to keep in mind when it comes to Medicaid.
You Have Assets or Income…
Medicaid is not an option as you will be forced to spend down your assets to a level dictated by the state you live in. Income is also turned over to qualify for Medicaid as they will use it to offset any benefit they provide. New programs do allow you to protect assets from Medicaid spendown requirements. See below.
State Partnership Programs for Long-Term Care
State Partnership Programs are designed to help those individuals who have a qualifying long-term care insurance plan to protect assets from Medicaid spend down rules should their health care requirements extend beyond the term of their insurance policy. In otherwords, if you have a qualifying long-term care policy and you spend through it and still need care, you can now qualify for help from Medicaid and not have to spend down all your assets. You can actually protect a dollar of assets for you and your estate for every dollar your insurance company paid out. These programs are designed to reward individuals who have a long-term care insurance policy by not forcing them to spend through all of their assets to qualify for Medicaid. Most states have the partnership program in place but not all carriers offer a qualifying plan so check with your advisor.
Loss of Care Options and Control
Let’s face it, one of the most overlooked issues with Medicaid is the loss of care options. Forget about assisted living or having care givers come in and provide the level of care and service you will get with a private company. The largest expense to the Medicaid program for most states is providing end of life care in nursing homes. In many states, an overwhelming number of private nursing homes no longer accept Medicaid clients leaving even fewer options. Because of this, many people are surprised to find out the options for care are not only few, but many find the facilities unacceptable. Unfortunately, this is a safety net program that many people will have to rely on and will have no other options than to let the government step in and dictate the care they will receive.
You Can Protect Yourself
With new programs and recent rule changes, it is easier to protect yourself and your estate from the devastating costs of an extended medical or long-term care situation. Many individuals will give away control of assets or spend down assets in order to try to qualify for Medicaid. For a fraction of the amount many give away or put in irrevocable trusts, they can fund their own long-term care plan and still maintain control of the money and have the ability to choose their care setting and providers. Many attorneys are not aware of the new programs or recent changes that have happened so please look carefully into your planning options before you start giving up control of your assets. Many programs guarantee your assets will always be available should you need them for other uses and provide you with the leverage and tax savings that you can’t get on your own. See our examples page to see how these plans can be set up.
Article: Nursing Home Evictions Strand The Disabled In Costly Hospitals
This article is a great read if your are looking into long-term care planning and have been told that you could put your money in a trust or spend down assets to get on Medicaid. That is not a plan for people that have worked hard for their money. This article shows how Medicaid is not a very viable choice for care and not just for the one who is in long-term care but their family is affected deeply as well. Read the article here.