There are five ways of paying for Long Term Health Care; Medicare, Medicaid, Long Term Care Insurance, Aid and Attendance Benefits for Veterans, and Private Pay.
The median annual cost for a private room in a skilled nursing facility in Oregon in 2015 is $102,018. Assisted living costs about $46,500. In a 2015 annual Cost of Care survey, results showed that Americans paid approximately $16,060 more per year in 2015 for a nursing home than they paid in 2010. How families are going to pay for these costs is a difficult question. Often families are concerned that all of their assets will be spent on Long Term Care expenses.
Remember that Medicare doesn’t pay for long-term care, including home care, aside from 100 days of skilled services or rehabilitative care. After that, it’s up to the family to figure out how to pay.
Medicaid is the government program that will pay Long Term Care Costs for individuals that qualify. When it comes to paying for care, many people incorrectly assume they have too much money to qualify for Medicaid. Talk with an elder law attorney and see whether you or your loved one qualifies because Medicaid can help pay for both in-home and out-of-home care. The individual must be medically eligible—cognitively impaired or unable to perform at least two activities of daily living on their own (like bathing and eating). Single applicants are not allowed to have resources of more than $2,000. Applicants who do have more than $2,000 should talk to an attorney about creating a burial fund, or buying a house or car, as these are all exempt.
Although the gross monthly income limit is $2,199 for an individual, sometime those with a higher income can set up an “Income Cap Trust” for the money above that limit. For married couples where only one partner is applying, the income limit is either $2,199 for the applicant, or an average of the two spouses, whichever is more favorable to the applicant.
It’s important to remember that Congress set a five-year look-back period on gifts. So someone who gives money and other assets to children and other family members in order to be eligible has to do this five years before they apply. An elder law attorney can help a single person with too many assets to qualify to spend down those resources on long-term care or on any legitimate expense that benefits either the applicant or the spouse, and then apply.
People whose incomes are too high to qualify can consider long-term insurance or self-pay. With long-term insurance, typically the buyer defines a monthly amount they’d like to get for a set number of years. For example, a couple could each choose a $2,000 benefit for five years, and they’d have access to a maximum $125,000. However, buyers may have to supplement with their own money.
The best time to buy long-term care insurance is when buyers are in their mid-50s to early 60s. If you wait, you might have a medical condition arise and fail the underwriting. For example, a policy might guarantee $5,000 per month for five years if the individual needs it. Expect the premiums to go up every five years, and note that they are not fixed like level term life. Some folks are surprised by big premium hikes and cancel the coverage. If you buy long-term care, read the policy carefully.
Veterans Aid & Attendance Benefits
Certain Veterans may qualify for Aid & Attendance Benefits to help offset the cost of Long Term Care. This does not pay for all of the Long Term Care, but can help pay for a fraction of the cost. If you are a Veteran, talk to an attorney to see if this option is available to you.
If you are concerned about paying for Long Term Care, consult with an attorney who specializes in Medicaid Planning to determine what options are available to you.