Moving a loved one into a nursing home is not an easy
decision. We want to make sure our loved ones receive the best in medical care
and are as comfortable as possible with the transition. There are numerous
factors to consider when a family member can no longer live alone because of
medical tragedies such as Alzheimer’s, a stroke, a heart attack, or Parkinson’s
disease. Not only will we consider the care facility’s services and
environment, but the decision will also involve finances: What is affordable?
How long will our savings last with all the economic turmoil? Can we consider
qualifying them for government benefits?
How Can I Pay
for Alzheimer’s Nursing Care?
Alzheimer’s
nursing homes can cost considerably more than other nursing homes. It is
important to understand the costs involved before agreeing to stay. Approximately
50% of patients pay for nursing home costs out of their own savings, yet there
are several other ways to finance nursing home care:
- Medicare will pay for some costs under some
conditions, however, only a Medicare-certified skilled nursing home will
qualify. Medicare offers supplemental personal insurance called Medigap.
- Medigap is private insurance that pays for gaps in
Medicare coverage and will pay for most nursing home costs.
- Medicaid is a state and federal program that will
cover most nursing home costs provided the resident has limited income and
assets. If a senior is paying for costs from their own savings, they
usually become eligible for Medicaid when those funds are spent down.
- Long-term care insurance is a private insurance policy
specifically designed for those who are in need of long-term health
services.
- Employer-based health plans may also cover costs. Employers and
insurance brokers can offer more information about specific policies.
Cost of Nursing Care for Alzheimer’s
Some nursing
homes (or skilled nursing facilities) provide dementia and/or Alzheimer’s care
in a separate wing or unit. The 2010 MetLife Mature Market Study indicates that
35% of the nursing homes surveyed provide this type of care with average daily
rates of $228 ($83,220 annually) for a private room and $206 ($75,190) for a
semi-private room.
In 2011, the national average amount paid for a private room
in a skilled nursing facility was $239 / day or $7,170 / month.
There is not a simple answer to the question "does Medicare pay for Alzheimer's care?" Medicare, like most health insurance, does not differentiate Alzheimer's and dementia care from other conditions such as heart disease. Instead, Medicare has certain policies with regards to when and how much it will pay for care. Actually, it is not exactly true, since Medicare does not pay for long term care of Alzheimer’s patients by default at all —it is excluded.
Yes, this is confusing, but the confusion is easier to
understand if you know that Medicare does pay for rehabilitation, no matter
what are the originating conditions. So, if a senior citizen enrolled in the
traditional Medicare plan is hospitalized for a stay of at least three days and
then is admitted into a skilled nursing facility, Medicare may pay for a while.
The maximum number of days one can receive is 100 consecutive days. However,
the payment period could be less than 100 days based on the patient’s response
to the rehabilitation—improvement is required, otherwise Medicare will
determine that the condition is a long term care need and stop funding. Plus,
there is a deductible of about $120 per day. So, this Medicare coverage is
really based on the possibility of rehabilitation. Since diseases like
Alzheimer’s have no known cure today, rehabilitation is not considered possible;
therefore Medicare will offer no assistance for payment.
So, as example, Medicare may pay for 100% of the cost of
nursing home care if it is medically necessary for 20 days and 80% of the cost
for an additional 80 days. Medicare does not pay for custodial or
personal care that is provided in an assisted living residence but will pay for
medical care provided in that location. The same applies for home care
and adult day care; personal care services, or assistance with the activities
of daily living which is typically necessary for Alzheimer's patients is not
covered but medical care is covered.
Medigap and Alzheimer’s
Care
Medigap or Medicare Supplementary Insurance does not
specifically provide additional benefits for Alzheimer's patients but does
offer supplemental assistance. For example, these policies usually pay
the 20% of the cost of nursing home care that Medicare does not pay.
Medicaid and
Alzheimer’s Care
Medicaid is a
joint federal/state health insurance program providing medical care benefits to
low-income Americans who meet certain requirements. Nursing home care is
covered through Medicaid, but eligibility requirements and covered services
vary widely from state to state.
Yes, Medicaid
will cover all the nursing home and medical expenses of a senior needing
nursing home care, if the senior meets both the income and asset limits of the
Medicaid program. Each state has a different set of rules, but generally a
single or widowed person can keep only $2,000 in total assets and still qualify
for Medicaid and the rest must be “spent down.” Again, this varies—for
example, in Ohio, it’s $1,500 and in Missouri it’s $999—but normally it’s about
$2,000. The spend down process includes nearly all assets. The
exempt assets are:
- Home (equity up to $500,000) if “intent to return” is established
- Personal belongings and household goods
- One car or truck
- Burial spaces and certain related items for applicant and spouse
- Irrevocable pre-paid funeral contract
- Up to $1,500 of face value life insurance or less; if the face value exceeds $1,500 the cash value is countable as a resource for payment
All other assets are generally non-exempt and are countable
as resources available for payment. Basically, any item of value that can
be turned into cash is a countable asset unless it is listed above as
exempt. Non-exempt items would include:
- Cash, savings and checking accounts
- Credit union share and draft accounts
- Certificates of deposit
- US Savings Bonds
- IRAs, 401(k)s, Keogh plans, 403(b) and all other defined compensation plans
- Pre-paid funeral contracts that can be cancelled
- Trusts (depending on the terms and conditions of the trust)
- Real estate (other than primary residence)
- More than one car
- Boat or recreational vehicles
- Stocks, bonds and mutual funds
- Land contracts or mortgages held on real estate sold
You may think, “Just give it to your kids and it will be
fine.” This is actually a major rule violation for Medicaid
called an “improper transfer.” There are very strict gifting rules for
Medicaid eligibility and it must be done correctly. Gifts made
after the enactment of the February 8, 2006 Deficit Reduction Act are subject
to a “five year look back period.” This means that if the gifts were made
any time in the previous 60 months, the state would not recognize the gift and
would expect the family to give the money back to pay for care.
Long-Term Care Insurance
With nursing home
care costing about $80,000 a year, and the government periodically threatening
to cut Medicaid payments for long-term care, many people have turned to
long-term care insurance as a way to guarantee payment of nursing home care.
Long-term care
policies must be purchased before the policy-holder needs long-term care. The
time to buy is as soon as possible after an Alzheimer's diagnosis.
Unfortunately, some long-term care insurers do not sell policies to people with
pre-existing conditions, such as Alzheimer's disease. Be sure to examine
excluded conditions before you buy.
Long-term care
insurance rarely covers the entire cost of care for the remainder of the
person's life. Most long-term care policies offer benefits that range from $50
to $200 a day, with a maximum number of days stipulated in the policy.
The cost of
long-term care insurance varies tremendously depending on:
·
The age
and health of the policy-holder. The older and sicker you are, the more
expensive the coverage.
·
The
daily pay-out. The more money, the more expensive the coverage.
·
The
pay-out duration. The longer, the more expensive.
Please do your
homework properly, before you buy insurance. Put attention to the following
variables:
·
Most
policies have deductibles and elimination periods. You must pay a certain
amount before the policy pays anything, and you must pay for a certain period
of time before the policy coverage begins.
·
Some
policies have fixed premiums. In others, the premiums increase annually.
·
Some
policies require continued payment of premiums while the policy-holder is in
long-term care collecting benefits. Others have "premium waiver" that
allows policy-holders to stop paying premiums while they are receiving
benefits.
·
Some
policies pay-outs offer inflation protection. Others do not.
Viatical Settlements
In recent years,
special brokerage firms-- viatical settlement companies--have made a business
of buying life insurance policies for cash. The viatical firm has a physician
examine the policy-holder, assesses how long the person is likely to live, and
then offers to buy the policy for an amount that gives the policy holder
immediate cash for long-term care while still living, and at the same time,
gives the brokerage and its investors a return on the investment. Viatical
settlements typically range from less than 60 percent of the death benefit if
the person appears to have more than two years to live, to around 90 percent if
the person appears likely to die within a few months.
Say the policy death
benefit is $100,000, and the viatical company believes the person's life
expectancy is four years. The firm might offer $45,000. The family can then use
this money to pay for nursing home care, and the brokerage collects the
$100,000 when the person dies. If the person dies sooner, the brokerage makes
more money. If the person survives longer, the firm loses money.
Sources and Additional
Information:
