There are some common misconceptions concerning who is responsible for long term care expenses. Oftentimes consumers erroneously believe that government run Medicare and private supplemental insurance will pay the costs associated with extended care. Unfortunately, this is not the case.
Medicare, when combined with some supplemental Medigap policies, will only cover a maximum of 100 days of prescribed skilled care in an extended care facility. After 100 days has passed, there are no additional benefits from either of these two insurance programs.
Medicare is not designed to provide benefits for long term care expenses for any significant period of time. Parts A and B only provide full coverage for skilled care for the first 20 days of accident or illness. After 20 days, Medicare pays roughly 80% of the total cost for up to another 80 days. And after 100 days of care, there are no additional benefits for that stay.
It is important to understand that Medicare only provides benefits for extended hospital or medical facility stays when skilled care is prescribed. This would be care that is monitored by a doctor or qualified nurse. Medicare does not provide benefits for custodial or intermediate care.
Custodial and intermediate care might also be administered by a nurse and monitored by a doctor, but generally consist of help with the most common activities of daily living. These activities consist of bathing, eating, dressing, transferring, toileting, etc.
If a doctor prescribes intermediate or custodial care or help with the activities of daily living, then Medicare offers very little coverage for these services. Only those who are receiving skilled care will receive benefits from government run Medicare Parts A and B – and only for 100 days.
Private Medicare supplement insurance is designed to provide benefits for some of the common gaps not covered by Medicare. However, it only provides benefits for skilled care as well. Supplemental insurance policies do not provide benefits for custodial or intermediate care.
There are ten modernized Medicare supplements to choose from – Plans A-N. The six plans that fully cover skilled nursing care coinsurance not covered by Medicare are labeled C, D, F, G, M and N. Plans K and L cover 50% and 75% of the bill respectively.
Skilled nursing facility coinsurance is the amount due in days 21-100 of a hospital or facility stay. In 2014, the coinsurance amount due per day is $152.00 after day twenty. Each year, Medicare usually increases the skilled care coinsurance amount by a small amount.
Yes, so long as you spend down almost all of your individual assets and at least half of the assets shared with your spouse. Additionally, Medicaid will usually attach to the surviving spouse’s share of the assets (including the home and property) after passing.
The Medicaid spend-down and recapture process is a grueling one and can be very painful financially and emotionally for spouse and family. Not to mention the notion that the care received in some state run Medicaid facilities may not be up to family standards.
Government Medicaid assistance received after the estate spend-down process is usually a last resort for most families. It can be avoided with proper insurance planning ahead of time.
Long term care insurance coverage is the only insurance policy that provide benefits for skilled, intermediate and custodial care. Most policies pay for care received in-home or at an accredited medical facility. In some cases, policies will also provide benefits if a family member is the caregiver.
Long term care insurance policies come in several shapes and sizes. There are traditional plans that draw from a pre-purchased pool of money and there are hybrid plans that are connected to a life or annuity policy.
Most modern policies provide tax advantages to the insured at purchase or when the benefits are drawn and in some states the insured can protect a matching amount of money in their estate through qualified partnership plans.
In order to receive benefits from most long term care policies, the insured must have difficulty performing at least 2 activities of daily living or be diagnosed with a cognitive impairment. These requirements are usually corroborated by a doctor or medical expert.
LTC insurance plans usually have a short waiting period before the carrier will provide benefits as determined and agreed upon in the policy. Policies pay out in different ways but can be purchased to provide monetary benefits for several years or up to a lifetime. All policies payout a calculated amount of money daily, monthly or yearly and many adjust benefit payments for inflation.
There are several bells and whistles that can be added to long term care insurance plans at purchase. Insurance companies have designed benefit types with the insured, the spouse and the family in mind. It is important to remember that you must be in reasonably good health before a long term care policy can be purchased.
In summary, government Medicare when combined with the best available Medicare supplements (including Medicare Advantage) provide very limited benefits for long term care coverage and only provide benefits for doctor prescribed skilled care.
Those who have assets to protect, are concerned about a surviving spouse, want to pass their estate to family members or charity, and wish to avoid the Medicaid spend-down process should consider some type of long term care insurance plan. Traditional and hybrid plans can provide substantial benefits for the insured and protect a lifetime’s worth of accumulated wealth.
Hyers and Associates is a full service independent insurance agency offering several types of long term care insurance. Contact us today for more detailed information, quotes, brochures and illustrations.