Paying for Long-Term Care
It is important to understand the different types of insurance that are available to older people. Many people believe that Medicare will cover long-term care needs. It will not.
Medicare is a Federal health insurance program, which helps defray many of the medical expenses of most Americans over the age of 65. Medicare has two parts:
(Part A) Hospital Insurance helps pay the cost of inpatient hospital care. The number of days in the hospital paid for by Medicare is governed by a system based upon patient diagnosis and medical necessity for hospital care. Once it is no longer medically necessary for the person to remain in the hospital, the physician will begin the discharge process. If the person or the family disagrees with this decision, they may appeal to the state’s Peer Review Organization.
Medicare does not pay for custodial care or nursing home care. It will, however, cover up to 60 days in a nursing home as part of convalescence after hospitalization.
(Part B) Medical Insurance pays for many medically necessary doctors’ services, outpatient services, and some other medical services. Enrollees pay a monthly premium.
Medicaid is a joint federal-state health care program for people with a low income. The program is administered by each state and the type of services covered differs. There are strict income requirements so it is necessary for the person to “spend down” all income and assets to poverty levels before becoming eligible. Medicaid is the major payer of nursing home care.
The Medicaid requirement to “spend down” all income and assets created a great hardship for the spouse of a person needing nursing home care. Changes in the Medicaid rules now allow the spouse to keep a monthly income and some assets, including the primary residence. The amounts allowed change, so you must check for current levels.
Why buy other insurance? The purchase of additional insurance gives the policy holder access to a greater choice of facilities without dipping into additional financial resources.
Medigap is privately-purchased supplemental health insurance designed to help cover some of the gaps in Medicare coverage but does not cover long-term care. Study Medigap policies carefully to be sure they provide the protection needed and do not duplicate other health insurance.
Long-Term Care Insurance is a private insurance that is usually either an indemnity policy or part of an individual life insurance policy. An indemnity policy pays a set amount per day for nursing home or home health care. Under the life insurance policy, a certain percentage of the death benefit is paid for each month the policyholder requires long-term care. Policies are priced differently depending on the age of the policyholder, the deductible periods chosen, and indemnity value or duration of benefits.