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Paying for Long-Term Care

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Ways to pay for long term care

In the next 25 years, the U.S. population is expected to include 82 million Americans over the age of 651, the vast majority of whom will require some type of long-term care as they age. Policymakers, health care systems, and families are all facing the question of how to provide high-quality long-term care and how to finance that care for this country’s growing senior population.

In 2013, Americans age 65 or older made up only 14 percent of the national population, but by 2040, it is expected that the senior population will nearly double to comprise about 22 percent.  The majority of these seniors will require some form of long-term care; that is, help with activities—such as cooking, bathing, or remembering to take medicine—that can be provided in a home or institutional setting.

What is Long Term-Care

Long term care is care that you need if you can no longer perform everyday tasks (activities of daily living) by yourself due to a chronic illness, injury, disability or the aging process. Long term care also includes the supervision you might need due to a severe cognitive impairment (such as Alzheimer's disease).

This type of care is not intended to cure you. It is chronic care that you might need for the rest of your life. You can receive long term care in your own home, a nursing home or another long term care facility, such as an assisted living facility.

As the American population ages, the need for long-term care services and supports to assist seniors with activities of daily living will exponentially increase. How to finance the provision of high-quality services so that the costs are manageable for families and governments will remain a primary challenge.

The average costs for long-term care in Texas is as follows:

  • Semi-Private Nursing Home
    2016 Cost: $4,502 / mo.

  • Private Room
    2016 Cost: $5,931 / mo.

  • Assisted Living Facility
    2016 Cost: $3,515 / mo.

How to Pay for Long-Term Care

It is never too early to begin weighing your options from among the four major sources for funding long-term care: Long-term care can be expensive. Americans spend billions of dollars a year on various services. How people pay for long-term care depends on their financial situation and the kinds of services they use. Often, they rely on a variety of payment sources, including:

Medicare generally doesn't cover long-term care stays (room and board) in a nursing home. Also, nursing home care isn't covered by many types of health insurance.

If you have long-term care insurance, check your policy or call the insurance company to find out if the care you need is covered. If you're shopping for long-term care insurance, find out which types of long-term care services and facilities the different policies cover. Also, check to see if your coverage could be limited because of a pre-existing condition. Make sure you buy from a reliable company that's licensed in your state.

Federal employees, members of the uniformed services, retirees, their spouses, and other qualified relatives may be able to buy long-term care insurance at discounted group rates.

Help from Your State (Medicaid)

Medicaid Coverage is Broader. Medicaid pays for health care services for people with limited income, and it is an important source of payment for long-term care services. Personal care, home health care, adult day care, and nursing home care are examples of the types of Medicaid-covered services used by older adults.

Texas is an income cap state, meaning that in order to be eligible for Medicaid long term care benefits, there is a hard income limit. Non income cap states allow applicants to spend down money for their care, whereas income cap states require the amount to be no higher than their limit at time of application.

Eligibility:

1. Residency and Citizenship – the applicant must be a resident of Texas and a U.S. citizen or have proper immigration status.

2. Age/Disability – the applicant must be age 65 or older, or blind, or disabled. The applicant must meet certain medical requirements consistent with the level of care requested. Persons must need care for thirty (30) consecutive days.

3. Income Limitations – Texas allows applicants to place money into what’s known as a Miller Trust, which specifically designates any funds above the income limit for the payment of Medicaid services.

Monthly income (wages, Social Security benefits, pensions, veteran’s benefits, annuities, SSI payments, IRAs, etc.) must be no higher than:

Texas Medicaid Eligibility Requirements

If you qualify for Medicaid, you may be able to get help to pay for nursing home care costs. Not all nursing homes accept Medicaid payment. Check with the nursing home to see if it accepts people with Medicaid, and if it has a Medicaid bed available. You may be eligible for Medicaid coverage in a nursing home even if you haven't qualified for other Medicaid services in the past.

Sometimes you won't be eligible for Medicaid until you've spent some of your personal resources on medical care. You may be moved to another room in the Medicaid-certified section of the nursing home when your care is paid by Medicaid. To get more information on Medicaid eligibility requirements in your state, call your Medicaid office.

You may have to pay out-of-pocket for nursing home care each month. The nursing home will bill Medicaid for the rest of the amount. How much you owe depends on your income and deductions.

Most people who are eligible for Medicaid have to reduce their assets first. There are rules about what's counted as an asset and what isn't when determining Medicaid eligibility. There are also rules that require states to allow married couples to protect a certain amount of assets and income when one of them is in an institution (like a nursing home) and one isn't.

A spouse who isn’t in an institution may keep half of the couple’s joint assets, up to a maximum of $119,220 in 2015, as well as a monthly income allowance. For more information, call your Medicaid office. You can also call your local Area Agency on Aging to find out if your state has any legal services where you could get more information.

Transfers for less than fair market value may subject you to a penalty that Medicaid won’t pay for your nursing home care for a period of time. How long the period is depends on the value of the assets you gave away. There are limited exceptions to this, especially if you have a spouse, or a blind or disabled child. Generally, giving away your assets can result in no payment for your nursing home care, sometimes for months or even years.


NOTE: Federal law protects spouses of nursing home residents from losing all of their income and assets to pay for nursing home care for their spouse. When one member of a couple enters a nursing home and applies for Medicaid, his or her eligibility is determined under "spousal impoverishment" rules.

Spousal impoverishment helps make sure that the spouse still at home will have the money needed to pay for living expenses by protecting a certain amount of the couple's resources, as well as at least a portion of the nursing home resident's income, for the use of the spouse who is still at home. For more information, call your Medicaid office.

Applying for Medicaid

To apply for Medicaid, call your Medicaid office. They can tell you if you qualify for the Medicaid nursing home benefit or other programs, such as the Programs of All-Inclusive Care for the Elderly (PACE), or home and community-based waiver programs.

Source: Medicare.gov

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