Articles

FINANCING LONG-TERM CARE

Elderly clients often have concerns with regard to how they will finance long-term care if such care becomes necessary.  Long-term care is a term used to describe the medical and non-medical care required by individuals who have chronic illness or disability.  Long-term care may be provided at home, in an assisted living facility, or in a nursing home.

Individuals have the following options for financing long-term care:

• Paying out-of-pocket
• Purchasing private long-term care insurance
• Utilizing public benefits, such as Medicaid, Medicare, and Veterans Benefits

Knowledge of and experience with long-term care services, long-term care insurance, and public benefits are necessary to create a comprehensive plan for financing long-term care.  In addition, it is important to plan early in order to maximize all available financing options.

PAYING OUT-OF-POCKET AND LONG-TERM CARE INSURANCE

Due to longer life expectancies, many individuals do not have sufficient income or assets to pay out-of-pocket for all of their long-term care needs.  In addition, many individuals wish to retain some assets which they can pass on to their family upon their death. 

Although long-term care insurance is an attractive alternative to paying out-of-pocket, some individuals may not be eligible for long-term care insurance or may be unable to afford such policies.  In addition, expenses of long-term care may exceed the benefits provided under a long-term care insurance policy.

PUBLIC BENEFITS

Individuals who plan to utilize public benefits to finance long-term care need to understand which long-term care services are covered by such programs and the strict eligibility requirements for obtaining such benefits.

Medicaid

Medicaid is a state government program (funded in part by the federal government) which, for purposes of long-term care, pays for certain health services and nursing home care for eligible elders. 

Two of the factors considered for purposes of Medicaid eligibility are the resources and the income of the applicant.  Resources include any property which a person owns; has the right, authority, or power to convert to cash; and is not legally restricted from using for his or her support and maintenance.  However, some resources are exempt for purposes of determining Medicaid eligibility.  For example, the home is an exempt resource if the spouse, minor children, or disabled children of the Medicaid applicant still reside in such home.  In addition, in order to prevent the impoverishment of the spouse of a Medicaid applicant, Medicaid regulations permit the spouse of a Medicaid applicant to retain a portion of the assets titled in the name of both spouses.   

Those who wish to apply for Medicaid benefits may wish to seek the assistance of an attorney who is experienced with Medicaid laws and regulations to prevent ineligibility or penalties.  For instance, Medicaid applicants who attempt to make uncompensated transfers of assets during the look back period will face an ineligibility period as a penalty (however, some transfers are exempt).  The look back period is a statutorily defined period in which Medicaid may consider gifts and undervalued sales to disqualify an applicant from certain Medicaid services.  The ineligibility period is determined using a formula which considers the amount of assets transferred during the look back period.

Medicare

Medicare is a federal government program which provides limited long-term care services.  For those eligible, Medicare only provides medically necessary skilled nursing facility care or home health care. 

Veterans Benefits

Another federal program which provides long-term care services is administered by the Department of Veteran Affairs (the “VA”).  The VA provides institutional long-term care services for eligible veterans.  The eligibility for long-term care services from the VA varies; therefore, only certain veterans or veterans under special situations are entitled to such services.

© 2010 GANDERSON LAW, P.C.