Financing of long-term care.
There are three basic ways to pay for long-term care in a nursing
home: Medicare, Medicaid or private pay (out of pocket or by using
long-term care insurance).
Medicare is the federal program offered to those who are
needing a skilled level of care after a 3 day hospital stay. Skilled
care is best described by the type of care you need due to a hip
fracture or stroke - therapy on a daily basis.
Medicare is limited in the number of days it will pay - up
to 100.
Medicare pays 100% for the first 20 days (after the 3 day
hospital stay and if skilled care is needed), beginning on day
21-100 there is a copayment required with Medicare. Most Seniors
have a Medicare Supplement policy. Medicare supplements will
pay in conjunction with
Medicare. Once
Medicare stops paying for care, most supplements will not
continue to pay.
If you have exhausted Medicare payments the only other options
are Medicaid and paying out of pocket (private pay).
Medicaid is available for those individuals that are low
income or have limited resources.
Medicaid
is the state welfare program and has limitations as to
the amount of assets you can own and the amount of income you may
receive each month before you are eligible.
The federal government has instituted restrictions on the
transferring of assets out of an estate to qualify for
Medicaid. There is a look back period of 36 months or 60 months
if a trust has been established. A law was passed in 1996 making it
a crime to shift assets to become eligible for
Medicaid.
The average annual cost for a year in a nursing home today is around $50,000. This can be financially devastating. Especially if a patient stays the average of 3 years or even longer.
Costs are projected to nearly triple in the next 20 years.
Two of every five Americans over 65 will need nursing home care.
The fact is the longer you live the greater the chance you will need some form of long term care, such as extended care in a nursing home or through a home health agency.
Besides paying out of your own pocket you can purchase
long-term
care insurance. This insurance must be purchased prior to
needing long-term care. The eligibility for the insurance is based
on your current health. Therefore if you are already ill, you
probably will not be insurable.
Most financial planners recommend that LTC insurance be purchased in your late 50's or early 60's. In this range the cost is quite affordable and your health is probably still pretty good. The premiums are based on your age, health, and the type of plan that you purchase.