WHAT IS LONG TERM CARE?
The U.S. Administration on Aging predicts that 1/3rd of today’s 65 year olds may never need long-term care. But 2/3rds of us will. 1 out of 5 of us will need it for more than 5 years. Longer-lived people are more likely to need long term care: 70% of people age 65 will become disabled; half of people age 85 or older suffer from some form of dementia or cognitive decline. The Garrett Law Firm can help.
Contact an Austin elder and estate planning lawyer you can trust.
Medicaid, Medicare, the VA and long-term care insurance policies view long term care as care needed due to significant cognitive impairment or the need for substantial assistance (for at least 90 days), with:
Activities of Daily Living (ADLs)
The basic “activities of daily living” or “BADLs” are
- dressing and grooming
- maintaining continence
- using the toilet
- moving from one place to another
- getting sufficient nutrition and hydration
More complex tasks are sometimes called “instrumental activities of daily living” or “IADLs.” These include managing your finances, grocery shopping and preparing meals, transportation and managing medication.
Basic or instrumental, these are the activities with which most of us will need help soonest and longest.
This assistance may be provided at home or in a facility. Often people enter an assisted living facility when they need more help with Activities of Daily Living than can be provided at home by family or by scheduled caregivers, moving to a nursing home when their medical needs become greater. According to Genworth Financial, in 2015 single room in an assisted living facility with the possibility of “on call” care averaged $43,200/year (compared with $46,300/year for 8 hours/day of scheduled care at home); a shared “semi-private” room in a nursing home averaged $80,300. (In 2005 it was $35,160.) Evaluating Senior Facilities
If family members help, they should have support. Resources for Family Caregivers
If you receive assistance away from home, there are several things to check out. Assisted Living Facility and Nursing Home Residents’ Rights
Important Activities of Daily Living (IADLs)
At some point almost all of us will need help with important activities of daily living (IADLs).
We will need help with cooking and housekeeping, shopping and transportation. We may need help managing medication or keeping in touch with friends and family.
Little or none of this assistance is paid for by Medicare, Medicaid, the VA or long term care insurance.
Medicare is health insurance, not long term care insurance. It pays for much less than most people think. It is estimated that over their lifetimes a couple aged 65 will pay, on average, $266,000 in Medicare premiums, co-pays and deductibles. Half will pay more. There is no co-pay for the first 20 days of hospitalization within a 60-day period. For days 21-100 of hospitalization, the co-pay gradually increases from 0 to 100%. Traditional or “original” Medicare with the right Medicare Supplemental Insurance (sometimes called “Medigap”), hospital insurance or catastrophic illness insurance could help.
Medicare Advantage policies have lower premiums but a 20% co-pay. This may work for very healthy people in the early retirement years but it they do not maintain excellent health, they will not be able to switch to traditional Medicare with Medicare Supplemental Insurance later. This will increase their lifetime costs. In addition, some nursing homes and some hospitals (such as M.D. Anderson) only accept traditional Medicare.
Medicare, whether traditional or Medicare Advantage, is divided into Medicare Part A (hospital Medicare), Medicare Part B (out-patient Medicare) and Medicare Part D (prescription drugs). The “C” can be thought of as the wellness programs provided by Medicare Advantage (formerly called “Medicare Choice”) or the Medicare Supplemental Insurance available with traditional Medicare.
Medicare Supplemental Insurance comes in a variety of programs, labelled A through N.
Whether you choose traditional Medicare or Medicare Advantage, you should apply in the 3-6 months before your 65th birthday. There is a penalty for applying late. However, if you continue to work and receive health insurance from your employer, the penalty is waived.
Medicare pays for “medically necessary” nursing home care or home nursing care and therapy. But it only does so following in-patient (not observation status) hospitalization for at least three midnights. If nursing or therapy is required, Medicare also pays for assistance with ADLs. Your physician must reauthorize this care every 90 days. Many people living at home or in an assisted living facility receive these services through Medicare.
For detailed information on when to sign up for Medicare, Medicare plans and what they offer, visit your local Area Agency on Aging and other sites listed on Resources for Older Americans
Talk with an elder law and estate planning attorney as well as a Certified Financial Planner to make sure that you are pointed in the direction you want to go.
Medicaid is for people who qualify financially as well as medically. At least 35% of us will have a medical need for nursing home care. Nursing home care has become so expensive that many middle class people qualify for, and need, Medicaid. 78% of Texans qualify for Medicaid. An AARP study found that 96% of Texans exhaust their personal resources within 6 months of entering a nursing home. That may be how long it takes for your Medicaid application to be approved.
There is a spousal allowance. In Texas, your home is exempt as long as you have an intent to return. But to truly protect your spouse and any dependents, you may want to plan far in advance, consulting a qualified elder law attorney.
Transfers of assets for less than fair market value within the 60 months before the month in which you apply for Medicaid are disregarded unless you can prove that you did not give or otherwise shift the assets in order to qualify for Medicaid. You could be required to sell assets you no longer own. You could be financially disqualified for months, even years, because you transferred property within that 60-month period. You could need nursing home care but have no way to pay for it.
If you or your family could pay, the facility could bill you at its private pay rate, which could be substantially higher than what it would receive from Medicaid. You could qualify but see a home or ranch or business you planned to leave to your children subject to Medicaid estate recovery.
Using an extended estate or “Lady Bird” deed or a transfer on death deed, you can save your home for your family. Using a DMV form could save your vehicle. Forming a limited liability company or other legal entity could keep your ranch or business operating even when you are not there to run it. An elder law and estate planning attorney can show you ways to do this.
An opportunity for more limited planning arises once you are actually in a Medicaid-certified nursing home. Fortunately, your home, furnishings, car and certain other things are generally not “countable assets” in determining financial eligibility for Texas Medicaid. You may be able to transfer assets to your spouse, fund a Texas Medicaid qualified annuity, create a qualified income trust (also called a “Miller Trust” or “QIT”) or make other arrangements to protect yourself and your spouse. You may be able to protect one another by incorporating a special needs trust in your wills or creating an irrevocable life insurance trust. Consult a qualified elder lawyer.
Don’t just “spend down,” giving the nursing home money you or your family may need. Consider what will enhance your life. Consider applying to receive care at home using Star + Plus, a Texas Medicaid waiver program: you may not need to “spend down” at all. Texas Medicaid Eligibility: Assets and Income
Eligibility for Veterans Pension Benefits is determined differently than eligibility for Medicaid. Be careful not to do something which would help you qualify for VA benefits but would impair financial eligibility for Medicaid. You, your spouse or your children may need both. If you are disabled or are 65 or older, you, and they, may be eligible for both.
VA pension benefits may pay for things which Medicaid does not. These could include an assisted living facility and care by unlicensed family members. Because of the high cost of long term care, many veterans and their surviving spouses or children may be eligible for Pension Benefits and for Aid and Attendance or Housebound benefits even if they have significant income and assets.
You may want to ask, Am I Eligible for VA Pension Benefits?
From 2005 to 2015, average long-term care insurance premiums rose 44.5% while nursing home costs more than doubled (American Association for Long Term Care Insurance.) Premiums are deductible as medical expenses, subject to age based limitations ranging from $410 for people under 40 to $5,110 for people above 70 (2016).
There are many types of long-term care insurance policies. Some are for nursing home care only. Some are only for home health care. Some are for both. Some are for “a pot of money.” Some are for a stated number of days or weeks, months or years, counted based on the policy provisions on visits and hours, not according to the calendar. Recently policies which combine long-term care insurance with life insurance or an annuity have become available.
Most long term care insurance policies are reimbursement policies. You must pay up front, submit records and seek reimbursement from the insurance company. Some pre-approve a facility and plan of care. Some do not. Being reimbursed by them can be a challenge. Facilities and state regulations change. The policy and its riders and the facility license should be carefully examined. A written plan of care, based on your doctor’s plan of care and specifying what the insurance company will pay for in services, hours and amounts, how these will be calculated and when the insurance company will pay, should be signed by your long-term care insurer before you sign a home health care or facility resident’s agreement.
You may also want to review the proposed resident’s agreement with an elder law and estate planning attorney. Resident’s agreements are negotiable. They are prepared by and to benefit the facility and typically contain provisions which you will want deleted. Assisted Living Facility and Nursing Home Residents’ Rights
The Texas Partnership is a partnership between the State of Texas and certain insurance companies which sell some policies through the partnership. Once the policy benefits have been exhausted, the policyholder can apply for Medicaid and keep a dollar amount of assets equal to the dollar amount of benefits received. A Texas Partnership policy seems to be most attractive to people who want to protect $100,000 -$400,000 in “countable assets” for the second spouse. It could also benefit single people who want to supplement Medicaid’s measly $60 monthly personal needs allowance.
People are generally advised to spend no more than 7% of their income on long-term care insurance. The Texas Partnership recommends that people purchase long term care insurance only if they can afford an annual premium increase of 20%. No year is average. Between 2012 and 2013 premiums on policies offered through the Texas Partnership rose 11-43%. As of 2015, the company with the largest premium increase, a highly rated insurer, no longer offers policies through the Texas Partnership.
Long term care insurance can be purchased as a stand-alone policy.
It can be purchased as a rider to a life insurance policy, paying a death benefit if it is not used for long-term care.
A life insurance policy or annuity can be converted into long term care insurance.
A small life insurance policy can be converted into a special long-term care benefits account.
Life insurance benefits can be accelerated.
Policy jargon is arcane. The industry continues to experience turmoil. Before you meet with a salesman, read the Texas Department of Insurance’s “A Shopper’s Guide to Long-Term Care Insurance.” www.tdi.texas.gov/pubs/consumer/cb032.html Ask an experienced person with no financial interest at stake to explain the fine print during the 30-day review period. Your interpretation and that of the insurance company may well differ.
Do this, too, if you consider purchasing a deferred annuity which begins paying when you are 80 or 85 or an annuity which doubles the monthly payment if you need long-term care.
QUALITY OF LIFE
We want to choose where we receive care and who will provide it. We want to enjoy a good quality of life and good care. We want to move from one setting to another without compromising this.
This affects where and how we live and when and how we arrange our insurance and investments. It may mean that, like 45% of Americans in 2010, we choose hospice care, which by focusing on how we want to live can actually extend as well as improve our lives.
It also affects how we create documents to help us Stay in Charge
Let an elder and estate planning lawyer experienced in asset, spousal and family business protection, long-term care and Medicaid planning help you stay in charge. The Garrett Law Firm works with individuals and families throughout Central Texas to create practical, low-cost solutions. 512-800-2420