As we age, planning for long-term care becomes a crucial aspect of ensuring our well-being and financial stability. Navigating the various levels of care and understanding the associated costs can be complex. In this blog, we will explore the different sources of payment for various levels of care in elder law, providing you with the knowledge needed to make informed decisions for yourself or your loved ones.
Levels of Care in Elder Law
In-Home Care
Home Health Aides: Provide personal care and assistance with daily activities.
Skilled Nursing Care: Medical care provided by licensed nurses.
Homemaker Services: Help with household tasks such as cooking, cleaning, and shopping.
Personal Care or Assisted Living
Offers a combination of housing, personal care services, and healthcare to support independence.
There is an important difference between Personal Care as compared with Assisted Living. Individuals who are more acute and could receive care at a nursing home are considered “Nursing Facility Clinically Eligible” or NFCE. Personal Care is not appropriate for those who are NFCE. Assisted Living on the other hand is typically regulated and able to provide an alternative setting to those who are not NFCE but who prefer a more residential setting.
Nursing Home Care
Nursing Homes typically have two distinct types of services – short term rehabilitative services (typically covered under Medicare) and long-term care for those who require permanent placement.
In either setting, the nursing home provides 24-hour medical care and assistance with daily activities in a residential setting. In the short-term rehabilitative setting, the resident my possibly be receiving PT, OT or other skilled care.
Memory Care
Specialized care for individuals with Alzheimer’s disease or other forms of dementia.
Memory care can occur not only in a nursing home setting, but also in personal care or memory care. It is important for family and friends to consider when a transition from memory care at a Nursing Home may be appropriate.
Adult Day Care
Offers social, health, and therapeutic services in a community-based setting during the day.
This level of care is often overlooked and underutilized. It can have benefits not only to the participant but to caregivers as well.
Payment Sources for Different Levels of Care
Private Pay
Savings and Assets: Many individuals use their personal savings, retirement funds, or proceeds from the sale of assets to pay for care. Understanding how Medicaid may be applied to your situation is critical so that you are leveraging your savings and public benefits that may be available to you.
Long-Term Care Insurance: Policies specifically designed to cover the costs of long-term care services. These can be used for in-home care, assisted living, nursing home care, and sometimes adult day care and memory care. Long-Term Care Insurance as a product has evolved in the past 10+ years to include hybrid annuities and life insurance that may provide funds for care. For those who have existing policies, there have been numerous complaints of repeated substantial price increases. However, there may be important options to maintain some coverage.
Coverage: Medicare generally covers short-term, medically necessary care such as skilled nursing care or physical therapy, typically after a hospital stay.
Limitations: It does not cover long-term custodial care, which includes assistance with daily activities like bathing, dressing, and eating.
Medicare Choices: It is important for Medicare enrollees to understand their type of coverage (Original Medicare vs. Medicare Advantage) and that shopping for coverage annually is critical.
Eligibility: Medicaid is a joint federal and state program that assists with medical costs for individuals with limited income and assets. Each state has its own eligibility requirements.
Coverage: Medicaid covers long-term care services, including nursing home care and, in some states, in-home and community-based services.
Medicaid Planning: Medicaid planning can help protect assets while qualifying for benefits, and it often involves legal strategies to structure finances appropriately.
Important: While many of our public benefits programs are for those who are already impoverished, Medicaid provides important benefits for healthy spouses, caregiver children, siblings who share residences and much more. Medicaid rules vary by state to state, and each case is very unique, but Medicaid planning opportunities are designed to be part of the Medicaid program.
VA Aid and Attendance: This benefit provides financial assistance to veterans and their surviving spouses who require long-term care. It can be used for in-home care, assisted living, and nursing home care.
Eligibility: Applicants must meet specific service and financial criteria.
Important: The Veterans Administration (VA) has many more programs to help pay for long-term care in addition to Aid and Attendance. The VA health care system provides help along the continuum of care.
Life Insurance
Policy Conversion: Some life insurance policies allow for conversion to long-term care benefits, either by accessing the cash value or through a policy rider.
Life Settlements: Selling a life insurance policy for a lump sum, which can then be used to pay for care.
Reverse Mortgages
Home Equity Conversion: Seniors can use the equity in their home to receive funds that can be used for long-term care expenses.
Considerations: This option is typically used when the senior intends to remain in the home for a significant period. However, reverse mortgages result in significant application and processing fees and only a portion of the equity may be available. The other factor to consider is whether the needed care plan is best suited outside the home.
Planning Ahead
Understanding and planning for the different sources of payment for long-term care is essential for financial stability and peace of mind. It’s important to evaluate each option and consider consulting with an elder law attorney to navigate the complexities and create a comprehensive plan tailored to your specific needs. Elder care planning is a multifaceted process that requires careful consideration of various levels of care and payment sources. By understanding these options, you can make informed decisions that ensure quality care and financial protection for yourself or your loved ones. At Anderson Elder Law, we are here to assist you in creating a personalized plan that addresses your unique situation. Contact us today to learn more about how we can help you navigate the complexities of elder care planning.
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