Medicare, Medicaid, and Long Term Care Insurance

December 17th, 2008 | Posted in Long Term Care

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Medicare, Medicaid, and Long Term Care Insurance

What is Long-Term Care?

Long-term care is a variety of services that includes medical and non-medical care to people who have a chronic illness or disability. Long-term care helps meet health or personal needs. Most long-term care is to assist people with support services such as activities of daily living like dressing, bathing, and using the bathroom. Long-term care can be provided at home, in the community, in assisted living or in nursing homes. It is important to remember that you may need long-term care at any age.
You may never need long-term care. This year, about nine million men and women over the age of 65 will need long-term care. By 2020, 12 million older Americans will need long-term care. Most will be cared for at home; family and friends are the sole caregivers for 70 percent of the elderly. A study by the U.S. Department of Health and Human Services says that people who reach age 65 will likely have a 40 percent chance of entering a nursing home. About 10 percent of the people who enter a nursing home will stay there five years or more.

Medicare and Long-Term Care:

While there are a variety of ways to pay for long-term care, it is important to think ahead about how you will fund the care you get. Generally, Medicare doesn’t pay for long-term care. Medicare pays only for medically necessary skilled nursing facility or home health care. However, you must meet certain conditions for Medicare to pay for these types of care. Most long-term care is to assist people with support services such as activities of daily living like dressing, bathing, and using the bathroom. Medicare doesn’t pay for this type of care called “custodial care”. Custodial care (non-skilled care) is care that helps you with activities of daily living. It may also include care that most people do for themselves, for example, diabetes monitoring. Some Medicare Advantage Plans (formerly Medicare + Choice) may offer limited skilled nursing facility and home care (skilled care) coverage if the care is medically necessary. You may have to pay some of the costs. For more information about Medicare Advantage Plans, look at the Medicare Personal Plan Finder.

Medicaid and Long-Term Care:

Medicaid is a State and Federal Government program that pays for certain health services and nursing home care for older people with low incomes and limited assets. In most states, Medicaid also pays for some long-term care services at home and in the community. Who is eligible and what services are covered vary from state to state. Most often, eligibility is based on your income and personal resources.

Choosing Long-Term Care:

Choosing long-term care is an important decision. Planning for long-term care requires you to think about possible future health care needs. It is important to look at all of your choices. You will have more control over decisions and be able to stay independent. It is important to think about long-term care before you may need care or before a crisis occurs. Even if you plan ahead, making long-term care decisions can be hard.

The following links provide you with information on planning for your long-term care:

• What kind of care you need
• How your needs may change
• What long-term care choices you have
• How you will pay for your care
• Long-Term Care Planning Tool

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Speaking From Experience on Long-Term Care

November 18th, 2008 | Posted in 2008-Financial-Crisis, Long Term Care, estate-taxes, obama 401k

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Speaking From Experience on Long-Term Care
Long Term Care is getting to be a real hot issue with many of the baby boomers that are approaching retirement. This is due to the fact that so many of these individuals have been faced with the not so enviable task of taking care of their parents due to a Long Term Care situation. While most people realize the need for this insurance, many do not follow through with a policy due to the fact that Long Term Care policies are not cheap.

A friend of mine summed up the need for long term care in one sentence. He said that long-term-care is a wonderful product because, “You just don’t want people to be relieved when you die.”

This article is from an individual that has gone through the experience, yet had a long term care policy to pay for her parent’s needs. It is a powerful real life story that can illustration why long term care is imperative.

Having worked in the long-term care (LTC) industry for the past 18 years, first as a nursing home administrator and then as an LTC insurance agent, I thought I was absolutely prepared for everything. After all, I assist clients daily with the realization that someday they might need long term care.

It’s been another matter to experience what I do for a living when the one who needs the long-term care services is someone I love. Seven years ago, my father had a stroke. He recovered his ability to function daily with the assistance of therapy. However, four years after the stroke, more debilitating symptoms began. He was diagnosed with progressive supranuclear palsy. For the past three years he has needed assistance with all of his activities of daily living.

His wife has assistance seven days a week with his care that is paid for by his LTC insurance policy. You must understand that my father is a total care patient – he needs assistance with getting out of bed, transferring to a wheelchair, bathing, dressing, feeding himself – well, you get the picture. I am convinced that without the daily assistance from his fabulous caregiver, he would have long ago been in a long-term healthcare facility.

Seeing my father’s health decline has been quite difficult. He is no longer able to have a conversation with me – but we watch old westerns on TV together and share a laugh.

It has been, to say the least, a difficult journey emotionally. However, the financial burden is nonexistent. I can’t imagine having both of these issues to deal with – one is quite enough.
Knowing what I know, I made sure my family was prepared financially for these care needs, and you should too. I encourage you to support those who might be your primary caregivers by purchasing long-term care insurance. Preparing to maintain your independence and quality of life should be an essential part of your financial plan.

Not only is LTC insurance about asset protection – even though that is what most consumers think about when discussing the product. The support of your primary caregiver is an important feature as well. Being a primary caregiver can be backbreaking. The emotional and physical toll of caring for someone 24 hours a day is exhausting.

As you plan for retirement, you MUST accept responsibility for your healthcare needs. Failing to accept that your health could fail and you could be dependent on someone for daily assistance is like leaving your house unlocked while you go on vacation. Would you consider leaving your house unlocked? Then why not consider your long term care needs?

by Stacia Vetter, CLU, CLTC, LUTCF
The author is assistant vice president and long-term care specialist with National HealthCare Corporation. She is also a recipient of the LIFE Foundation’s 2006 realLIFEstories Client Service Award.

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What is Long Term Care?

October 4th, 2008 | Posted in Long Term Care

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What is Long-Term Care?
By eRollover 2008

Individuals need long-term care when a chronic condition, trauma, or illness limits their ability to carry out basic self-care tasks, called activities of daily living (ADLs), (such as bathing, dressing or eating), or instrumental activities of daily living (IADLs) (such as household chores, meal preparation, or managing money). Long-term care often involves the most intimate aspects of people’s lives—what and when they eat, personal hygiene, getting dressed, using the bathroom. Other less severe long-term care needs may involve household tasks such as preparing meals or using the telephone.

A report prepared by the U.S. Senate Special Committee on Aging (February, 2000) described long-term care as follows:
It [long-term care] differs from other types of health care in that the goal of long-term care is not to cure an illness, but to allow an individual to attain and maintain an optimal level of functioning….

Long-term care encompasses a wide array of medical, social, personal, and supportive and specialized housing services needed by individuals who have lost some capacity for self-care because of a chronic illness or disabling condition.1
Because long-term care needs and services are wide-ranging and complex, statistics may vary from study to study. Sources for the following information are cited at the conclusion of this Fact Sheet. For additional information, see the Family Caregiver Alliance Fact Sheet on Selected Caregiving Statistics.

Who Needs Long-Term Care?
• An estimated 10 million Americans needed long-term care in 2000.2
• Most but not all persons in need of long-term care are elderly. Approximately 63% are persons aged 65 and older (6.3 million); the remaining 37% are 64 years of age and younger (3.7 million).3
• The lifetime probability of becoming disabled in at least two activities of daily living or of being cognitively impaired is 68% for people age 65 and older.4
• By 2050, the number of individuals using paid long-term care services in any setting (e.g., at home, residential care such as assisted living, or skilled nursing facilities) will likely double from the 13 million using services in 2000, to 27 million people. This estimate is influenced by growth in the population of older people in need of care.5
• Of the older population with long-term care needs in the community, about 30% (1.5 million persons) have substantial long-term care needs (three or more ADL limitations). Of these, about 25% are 85 and older and 70% report they are in fair to poor health.6
40% of the older population with long-term care needs are poor or near poor (with incomes below 150% of the federal poverty level).7
• Between 1984 and 1994, the number of older persons receiving long-term care remained about the same at 5.5 million people, while the prevalence of long-term care use declined from 19.7% to 16.7% of the 65+ population. In comparison, 2.1%, or over 3.3 million, of the population aged 18–64 received long-term care in the community in 1994.8
• While there was a decline in the proportion (i.e., prevalence) of the older population receiving long-term care, the level of disability and cognitive impairment among those who received assistance with daily tasks rose sharply. The proportion receiving help with three to six ADLs increased from 35.4% to 42.9% between 1984 and 1994. The proportion of cognitive impairment among the 65+ population rose from 34% to 40%.9
• The prevalence of cognitive impairment among the older population increased over the past decade, while the prevalence of physical impairment remains unchanged.10
• In 2002, the percentage of older persons with moderate or severe memory impairment ranged from about 5% among persons aged 65–69 to about 32% among persons aged 85 or older.11
• Individuals 85 years and older, the oldest old, are one of the fastest growing segments of the population. In 2005, there are an estimated 5 million people 85+ in the United States.12 This figure is expected to increase to 19.4 million by 2050.13 This means that there could be an increase from 1.6 million to 6.2 million people age 85 or over with severe or moderate memory impairment in 2050.14

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Home and Community-Based Care
• Most people—nearly 79%—who need Long-Term Care live at home or in community settings, not in institutions.31
• More than 13.2 million adults (over half younger than 65) living in the community received an average of 31.4 hours of personal assistance per week in 1995.32
o Only 16% of the total hours were paid care (about $32 billion), leaving 84% of hours to be provided (unpaid labor) by informal caregivers.33
• The trend towards community-based services as opposed to nursing home placement was formalized with the Olmstead Decision (July, 1999)—a court case in which the Supreme Court upheld the right of individuals to receive care in the community as opposed to an institution whenever possible.
• The proportion of Americans aged 65 and over with disabilities who rely entirely on formal care for their personal assistance needs has increased to 9% in 1999 from 5% in 1984.34
• Between 2000 and 2002, the number of licensed assisted living and board and care facilities increased from 32,886 to 36,399 nationally, reflecting the trend towards community-based care as opposed to nursing homes.35 Most assisted living facilities, however, are unlicensed.
• Most assisted living facilities (ALFs) discharge residents whose cognitive impairments become moderate or severe or who need help with transfers (e.g. moving from a wheelchair to a bed.) This limits the ability of these populations to find appropriate services outside of nursing homes or other institutions.36
Nursing Home Care
• The risk of nursing home placement increases with age—31% of those who are severely impaired and between the ages of 65 and 70 receive care in a nursing home compared to 61% of those age 85 and older.37
• In 2002, there were 1,458,000 people in nursing homes nationally.38
Older individuals living in nursing homes require and receive greater levels of care and assistance. In 1999, over three-quarters of individuals in nursing homes received assistance with four to six ADLs.39
• Of the population aged 65 and over in 1999, 52% of the nursing home population was aged 85 or older compared to 35% aged 75–84, and 13% aged 65–74.40
• Between 1985 and 1999 the number of adults 65 and older living in nursing homes increased from 1.3 million to 1.5 million. In 1999, almost three-quarters (1.1 million) of these older residents were women.41

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Long-Term Care Expenditures
• Estimated public and private spending on long-term care services exceeded $180 billion in 2002. $37.2 billion, or 21%, was paid for out-of-pocket by individuals and families.42
• In 2002, $103.2 billion dollars were spent on nursing home care compared to $36.1 billion dollars for care in the community.43
• In 2000, the estimated economic value of informal (i.e., unpaid) caregiving is more than both community care and nursing home care combined—$257 billion.44
• Despite the trend toward community-based care as opposed to institutionalized care, only 18.2% of long-term care expenditures for the elderly are for community-based care.45
• In 2002, 16.4 billion Medicaid dollars were spent for home and community-based services within long-term care. This figure has increased at a 25% rate annually since 1990.46
• Expenditures for skilled nursing facility (SNF) care are much greater than care provided in other settings. Average expenses per older adult in a skilled nursing facility can be four times greater than average expenditures for that individual receiving paid care in the community.47
• In 2003, Medicaid paid $83.8 billion dollars for long-term care services, roughly one-third of all Medicaid spending. 27.8 billion of these dollars were spent on community-based long-term care services. Home and community-based (HCBS) waivers accounted for roughly two-thirds of community-based long-term care expenditures.48
In 2000, spending for older adults aged 65 or older accounted for 57% of Medicaid dollars, with the remaining 43% spent on those under age 65.49
• 31.9% of the annual estimated home care expenditures were paid for by Medicare in 2003, a little over 18% were paid for out-of-pocket or by private insurance, and approximately 13% were covered by Medicaid.50
• Only 7% of residents receive Medicaid coverage for assisted living.51
• Studies have shown that the delivery of home or community-based long-term care services is a cost-effective alternative to nursing homes. Care in the home or community—not nursing home care—is what most Americans would prefer.52,53
o In 2004, the average daily rate for a private room in a skilled nursing facility was $192 for a private room or $70,080 annually, and $169 or $61,685 annually for a semi-private room. The hourly rate for a home health aide was $18.12.54
o In 2000, annual cost estimates were $13,000 for adult day care and $25,300 for assisted living.55
• Over two-thirds of the current health care dollar goes to treating chronic illness; for older persons the proportion rises to almost 95%.56
• The aging of the population, especially those 85+—the most in need of long-term care—is expected to result in a tripling of long-term care expenditures, projected to climb from $115 billion in 1997 to $346 billion (adjusted for inflation) annually in 2040.57

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