Paying for long-term care is a topic that causes worry and stress for older adults and caregivers. It can be expensive and wading through the payment options can be daunting. Long-term care can be paid for in a variety of ways. We break them down for you here.
Funds may come from personal savings, pensions, investment income, distributions from an IRA or 401(k), annuity payments and the sale of real estate/personal property. If you have assets which could be used to pay for care it is a good idea to consult with an Elder Law Attorney for assistance in structuring and protecting assets to facilitate care through end of life.
Medicare is health insurance for people 65 and older, people under 65 with certain disabilities, and people of any age with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant).
Medicare Part A: (also called Original Medicare) provides benefits and coverage for:
- Inpatient hospital care
- Inpatient stays at certain skilled nursing facilities (not long term)
- Hospice and home health services
Medicare Part B (also called Original Medicare): provides benefits and coverage for:
- Doctor and clinical lab services
- Outpatient preventive care
- Home health care
- Screenings, surgical fees and supplies
- Physical and occupational therapy
Medicare Part C (also called Medicare Advantage): is a different way of getting Medicare Part A and Part B coverage. Medicare Advantage (MA) Plans combine Part A (hospital insurance) and Part B (medical insurance) together in one plan. They can also be combined with Part D prescription drug coverage creating a Medicare Advantage Prescription Drug (MA-PD) Plan. Generally, these plans are offered as:
- Medicare Advantage Health Maintenance Organizations (HMO plans)
- Medicare Advantage Preferred Provider Organizations (PPO plans)
- Medicare Advantage Private Fee-for-Service (PFFS plans)
- Medicare Advantage Special Needs Plans (SNP plans)
Medicare Part D Prescription Drug Plan (PDP): can be a stand-alone plan (not joined with other insurance) or it may be combined with a Medicare Advantage Plan, also called a Medicare Advantage Prescription Drug (MA-PD) Plan. Part D plans:
- Help cover the cost of prescription drugs
- May help lower prescription drug costs and protect against higher costs in the future
Medicaid is the medical assistance program that provides access to health care for eligible families and individuals. Medicaid assists the elderly and people with disabilities with the costs of nursing facility care and other medical and long-term care expenses. In Florida, the Agency for Health Care Administration is responsible for Medicaid. Medicaid recipient care is managed through the Statewide Medicaid Managed Care (SMMC) program, implemented in 2014. Under the SMMC program, most Medicaid recipients are enrolled in a health plan. Medicaid covers long term care expenses at home, an assisted living facility or a skilled nursing facility, as well as medical and prescription expenses. Please consult an elder law attorney to determine eligibility and to protect assets.
Long Term Care Insurance
The sole purpose of buying a long-term care (LTC) insurance policy is to ensure that funds will be available to pay long-term care bills for a set period. Depending on the type of LTC policy you purchase, a long-term care insurance policy does pay for assisted living, nursing home and in-home care.
LTC policies are not standardized, resulting in many different policy designs. It is important to know the types of coverages available, then to compare each policy before purchase to make sure the policy quoted carries the desired benefits.
While LTC policies vary in coverage, they will usually pay either a fixed dollar amount (an indemnity)) or the actual costs of care (reimbursement policy). However, policies that pay for actual costs typically have a specified daily benefit that places a limit on how much can be paid out each day. There may also be a limit of a specified number of days to be covered.
To encourage individuals to purchase private long-term care insurance, the State of Florida has developed a partnership program between Medicaid and private insurers. Florida Long-Term Care Partnership Program policies are tax qualified, provide inflation protection and provide dollar for dollar asset protection in the event you need to pay for long-term care Medicaid assistance.
Certain life insurance policies can be converted into long-term care Benefit Plan Account to pay for long-term care. In converting the policy, ownership of the policy transfers to an entity that acts as a benefits administrator and assumes all responsibility for premium payments. To convert, the previous policy holder must have an immediate need for long-term care, and he or she arranges monthly payouts to help cover services. Payouts are made directly to the care provider, not the previous policy owner. Contact your insurance agent to see if your policy is eligible for conversion.
A reverse mortgage is a loan program available to homeowners, 62 years or older, that allows them to convert part of the equity in their homes into cash. The reverse mortgage was created to help retirees with limited income use the accumulated wealth in their homes to cover basic living expenses and pay for health care. Funds from a reverse mortgage can be used for any purpose. The loan is called a reverse mortgage because instead of making monthly payments to a lender, as with a traditional mortgage, the lender makes payments to the borrower. The borrower is not required to pay back the loan until the home is sold or otherwise vacated. The borrower is not required to make any monthly payments towards the loan balance as long as they occupy the home. The borrower remains responsible for property taxes, homeowner’s insurance and homeowners association dues (if applicable).
Giving a reverse mortgage on a home is often a tempting prospect for seniors struggling to pay for care. Though the funds from a reverse mortgage can be used for any purpose, including long-term care, one should exercise caution before pursuing a reverse mortgage as it is, after all, a loan and will have to be paid back at some point.
Learn more about reverse mortgages:
The U.S. Department of Veterans Affairs (VA) may provide long-term care or at-home care for some veterans and/or their spouses. All Veterans enrolled in the VA’s health care system are eligible for home and community based long-term care services. A series of clinical indicators and conditions help VA staff identify the need for these services. Specific eligibility and admission criteria are unique to each type of care. Under the Millennium Act of 1999, VA must pay for nursing home care for veterans who require nursing home care and meet the following criteria:
- A Veteran who has a service-connected disability rating of 70 percent or more
- A Veteran who needs nursing home care for a service connected disability
- A Veteran who is rated 60 percent service-connected and is either unemployable or has an official rating of “permanent and total disabled”
- Non-service connected Veterans and those officially referred to as “zero percent, non-compensable, service-connected”
- Veterans who require nursing home care for any non-service connected disability and who meet income and asset criteria are eligible for VA CLC care on a resource available basis.
Several benefit/compensations programs are administered by the VA, but one of the most popular benefits used for long-term care services is the Aid and Attendance and Housebound increased monthly pension. Aid and Attendance provides funds for care at home, in assisted living, independent living, or a nursing home to veterans who require assistance with activities of daily living (bathing, toileting, dressing, etc.), are bedridden, residing in a nursing home due to physical or mental incapacity, are blind, or permanently and substantially confined to home due to a disability. Applying for benefits can be lengthy and confusing, so it is best to seek assistance from a Veterans Service Office or an accredited VA attorney.