Long-Term Care Funding Options
Long-term care can be expensive. The cost depends on the amount and type of care
you need, as well as where you receive the care. According to
Genworth Financial's "2009 Cost of Care Survey," the national average daily cost of
care for a private room was $203.31 and for a semi-private room was $183.25 while
the hourly rate for home health care ranged from $18.50 to $46.22, depending on
the certification credentials of the provider. Based upon these averages, the cost
of long term care services could range from $66,800 to well over $74,000 per year
for a nursing home stay and from $38,500 to $96,100 for a home health care aide
5 days a week, 8 hours a day.
Where will you get the money you would need to pay for your long-term care? Most
people rely on one or more of four sources.
Individual Personal Resources
Individuals and their families pay one-third of all nursing home costs out of their
own pockets. Many use savings and/or investments intended for their retirement.
Many people exhaust their life savings and end up on welfare after spending down
their assets as required by Medicaid.
Medicare and Medicare Supplement Insurance
Medicare usually will not cover most nursing home stays. You will qualify
if you require skilled care in a Medicare-approved facility following a minimum
3-day hospital stay. Also, the nursing home stay must begin within 14 days
of the hospitalization. Should you qualify for Medicare benefits, the maximum benefit
you will receive is as follows:
- Days 1-20: full cost based upon Medicare approved amount.
- Days 21-100: Medicare will pay the difference of your co-payment amount of $133.50
(as of 2009)
Medicare does not cover homemaker services. Medicare does not pay for home health
aides to give you personal care unless you are homebound and are also getting skilled
care such as nursing or therapy, and even then it is subject to restrictions.
Medicare supplement insurance is private insurance that helps pay for some of the
gaps in Medicare coverage, such as hospital deductibles and excess physicians' charges
above what Medicare approves. Medicare supplement policies do not cover long-term
care costs. However, four Medicare supplement policies - Plans D, G, I, and J -
do pay up to $1,600 per year for services to people recovering at home from an illness,
injury, or surgery. The benefit will pay for short-term, at-home help with activities
of daily living. You must qualify for Medicare-covered home health services before
this Medicare supplement benefit is available.
Medicaid
According to a 2003 survey by the federal government, Medicaid pays for nearly half
of all nursing home care. Medicaid also pays for some home and community-based
services. To get Medicaid help, you must meet federal and state guidelines for income
and assets. Many people start paying for nursing home care out of their own funds
and "spend down" their financial recourses until they are eligible for Medicaid.
Medicaid may then pay part or all of their nursing home costs. You may have to spend
down or use up most of your assets on your health care before Medicaid is able to
help. Some assets and income can be protected for a spouse who remains at home.
State laws differ about how much money and assets you can keep and be eligible for
Medicaid. (Some assets, such as your home, may not count when deciding if you are
eligible for Medicaid.) Contact your state Medicaid office, office on aging, or
state department of social services to learn about the rules in your state. The
insurance counseling program in your state may also have some Medicaid information.
Long-Term Care Insurance
Long-term care insurance is one other way you may pay for long-term care. This type
of insurance will pay for some or all of your long-term care. Long-term care insurance
is a relatively new type of insurance. It was introduced in the 1980s as nursing
home insurance, but has changed a lot and now covers much more than nursing home
care.
A federal law, the Health Insurance Portability and Accountability Act of 1996,
or HIPAA, gives some federal income tax advantages to people who buy certain long-term
care insurance policies. These policies are called Tax-Qualified Long-Term Care
Insurance Contracts, or Qualified Contracts. Your state may have taken action to
offer additional tax advantages, so check with your state insurance department or
insurance counseling program for information about tax-qualified policies. Contact
your tax advisor to find out if the tax advantages make sense for you.
This Web site is intended for general information purposes only. It does not nor is it intended to constitute legal, tax or investment advice. United Financial Systems, Corporation is not a lawyer, registered investment advisor or investment advisor representative, and is not engaged in the practice of law or the business of investment advice.