Options for Paying for Long-Term Care Expenses

Retirees and Seniors should plan for the potential need for an extended long-term care need. Making informed decisions about planning for long-term care begins with an understanding of the options available to pay for long-term care. There is often confusion about the different types of care, and whether Medicare covers long-term care expenses. As explained below, Medicare pays for a very limited amount of long-term care and under limited circumstances.

There are three levels of long-term care:

Skilled Care is around the clock care ordered by a doctor and provided by skilled care givers (e.g. registered nurses) to treat a medical condition.

Intermediate Care is occasional rehabilitative and nursing care provided by skilled care givers under a doctor’s supervision.

Custodial Care is care provided by unskilled medical providers to assist with activities of daily living (ADLs)- eating , dressing, bathing, etc. Custodial care is what is typically referred to as long-term care.

Long-term care is paid for by Medicare, Medicaid, VA benefits, long-term care insurance, or out-of-pocket (private pay). This blog post will provide a basic review of each of these payment options.

Medicare provides a limited number of days of long-term care and only after specific criteria are met. Medicare pays for a maximum of 100 days of skilled nursing care but only after a three day stay in the hospital. There must be a daily need for skilled care, rather than just assistance with activities of daily living. Retirees and seniors should understand that Medicare is not a permanent solution for long-term care but rather provides short term coverage when recovering from an illness or injury. In addition after the first 20 days, the patient is responsible for a co-pay for the next 80 days.

Medicaid pays for long-term care for those who meet the income and asset thresholds. Recipients must have limited income and are generally restricted to owning $2,000 of non-exempt assets. See my prior blog posts explaining the income  and asset rules for Louisiana Medicaid. Individuals who exceed the asset amount must either spend-down their assets to qualify or use planning strategies to avoid spending down their assets. Planning early rather than when a long-term care need is imminent can help protect the most assets from spend-down. Click here  for more information amount qualifying for Medicaid long-term care benefits in Louisiana.

Veterans Benefits commonly known as the improved pension or aid and attendance can provide monthly cash benefits to qualifying veterans to help pay for un-reimbursed medical expenses. These expenses can include care provided in the home, in an assisted living facility, or in a nursing home. The cash benefit for married veterans can be as much as $2,054 per month (2014). Service connected injuries or illness are not a requirement to receive VA pension benefits. VA compensation benefits are available for veterans who are disabled because of service related illness or injury.

Long-Term Care Insurance pays for a relatively small portion of all long-term care expenses in the United States. The policy may pay for care in a facility or at home. It provides the most flexibility with regard to choice of facility or the ability to receive care in your home. It also allows you to retain control of your assets and provides financial security that retirement assets will not be consumed by long-term care expenses. If you qualify and can afford the premiums, I highly recommend long-term care insurance.

Private Pay is the last and least desirable option to pay for long-term care. Over half of all nursing home residents private pay for their long-term care expenses. With monthly nursing home cost in Louisiana running $4,000-$7,000 or more, paying for long-term care out of pocket can quickly exhaust retirement funds. Married couples are particularly at risk as the healthy spouse may be left with insufficient assets to maintain their standard of living. Without proper planning and sound legal advice you may unnecessarily pay out of pocket for all of your long-term care expenses.

If you have questions about paying for long-term care or how to qualify for Medicaid long-term care benefits or Veterans Benefits in Louisiana, contact Houma attorney John Sirois at 985-580-2520 or email him at . You can find more information on John’s website and in his book, Louisiana Retirement and Estate Planning, 2014 Edition.