Financing Long-term Care

Understanding the "ins and outs" of health care financing can be as confusing as finding the resources themselves. Because everyone's financial situation is unique and each State has slightly different guidelines for many of their economic programs, it is important to seek the advice of a financial planner or attorney specializing in elder care.

The following information attempts to clarify several financing programs. It is important to understand what costs you may be facing, how they have been determined and how they will be paid.

Medical Assistance (also called Medicaid or MA) is a public benefit available to long-term care recipients who are Minnesota residents, over age 65 or disabled and who qualify under the program's strict financial eligibility criteria.

• The applicant is limited to $3,000 in "Available" assets.
• Available assets include such items as, cash, bank accounts, investments, life insurance and annuity cash value, real estate such as cabins or contracts for deed, IRAs, 401(k)s and other pension plans.

• Unavailable or excluded assets include the homestead for six months, or while a spouse or disable child lives there, prepaid funeral plans, one vehicle and household and personal items.
• With a married Medical Assistance applicant, the available and unavailable assets are valued on the first day of institutionalization. The community Spouse can retain "one-half" of the available assets, but is limited to a maximum of $89,960.00 or is entitled to a minimum of $23,171.00.
• Income is allocated when Medical Assistance is in place. An institutionalized person keeps $65 per month for personal needs. The Community Spouse is ensured at least $1357.00 per month with an allocation from the institutionalized spouse's income if necessary.

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Asset Transfers (gifts) cause a period of ineligibility for Medical Assistance during which no long-term care benefits are available.

• The period of ineligibility is calculated by dividing the amount of the transfer by the average monthly nursing home cost in Minnesota (currently $3134,00).
• The period of ineligibility begins with the month when the transfer was completed.
• A look-back or reporting period requires disclosure of all transfers completed during the 36 months (60 months for trusts) before the month of application).

Home and Community-Based Care may be funded through the Elderly Waiver or Alternative Care Grant programs.

• The Elderly Waiver program requires full Medical Assistance eligibility. The individual is allowed to retain more income each month (currently $467.00). Reimbursement for home and community-based services can continue so long as the cost to have the individual remain at home safely stays below the cost of caring for that person in a nursing facility.
• The Alternative Care Grant program is funded entirely by the State of Minnesota. Financial eligibility is established when the individual's resources would last only six months if they were admitted to a nursing facility and forced to pay on their own. Reimbursement for home and community-based services can continue so long as the cost to have individual remain at home safely stays below 75% of the cost of caring for that person in a nursing facility.

Phone Numbers for County Social Service/Economic Assistance Programs

Medicare is a Federal health insurance program that assists individuals age 65 and older (as well as some disabled persons under age 65). Eligibility is linked to eligibility for Social Security or Railroad Retirement benefits. Unlike Medicaid, Medicare is not a means-tested program.

Medicare Part A pays for the following:

• Cost of normal hospital services.

• Extended care services (in a "skilled-nursing facility" assuming the following conditions are met):

• 3 day prior hospital stay
• Admittance to a Skilled Nursing Facility within 30 days of hospital release
• Treatment in Skilled Nursing Facility for same condition of hospitalization
• Need for skilled care on a daily basis
• Condition shows measurable improvement
• Facility is Medicare certified and physician writes a care plan.

This benefit is limited to 100 days, and can be terminated when the service becomes custodial in nature. While days 1 through 20 are covered in full, days 21 through 100 are subject to a $95 per day co-payment which may or may not be covered by private health insurance.

• Home Health Services (which meet certain criteria):

• Short term; intermittent basis for skilled nursing Care.
• Physical and/or speech therapy if patient is home bound and Dr. ordered.
• 80% of durable medical equipment that meets guidelines
• Not in excess of 35 hours per week or 8 hours per day of skilled nursing care.

• Hospice Services:

• In-home or facility
• Dr. certified that patient is terminally ill and prognosis of less than six months to live
• Care provided by Medicare participating program

Medicare Part B covers:

• Eighty percent of reasonable charges from Physicians and other health care professionals after deductible is met including:

• Medically necessary ambulance service
• Physical, speech and occupation therapy (within limited financial parameters)
• Home health services, doctor certified as medically necessary
• Medical supplies and equipment
• Out patient surgery

What Medicare does not cover:

• Most nursing home Care
• Prescription drugs not given in the hospital
• In-home daily routine care/maintenance
• Routine physical exams and x-rays
• Hearing aids and hearing loss examinations
• Dental care.

Filling Medicare's Gaps:

Given the expense of medical care, individuals are searching for ways to fill Medicare's gaps. While it is an individual decision as to how much you can afford and what you need, the following are several options that provide additional coverage:

• Medicare Supplements
• Managed Care Plans
• Long term care insurance

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Medicare Supplements (also called Medigap policies) are designed to supplement Medicare's benefits. Federal and State law regulate these policies. These policies range from Plan "A" through Plan "J", with Plan A providing a basic benefit package while the other 9 plans include the basic package plus different combinations of additional benefits. All Medigap insurers must at least offer Plan "A".

Medigap policies pay most, if not all, Medicare coinsurance amounts and may provide coverage for Medicare's deductibles. Enrollment in Medigap Supplements can be purchased within a time-limited period after your Medicare becomes effective. Medicare Supplements do not pay for services that Medicare is not paying.

Managed Care Plans (also called Coordinated Care or Prepaid Plans or HMO's), allow you to select care providers from those who are part of the network. You will have a primary care doctor who is responsible for managing your medical care, admitting you to a hospital and referring you to specialists. Most plans require a fixed monthly premium and small co-payments when you use services. You continue to pay the Part B premium to Medicare. You however do not pay Medicare's deductibles and coinsurance.

Long Term Care Insurance are policies which cover nursing home care costs as well as some home health care costs (depending on your policy). While premiums for these policies can be more expensive then other types of insurance, they are a good protection against long-term care costs that can be devastating. Look to your financial advisor or insurance agent specializing in long term care insurance to discuss the appropriate policies for you.

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Phone Numbers for County Social Service/Economic Assistance Programs