WHAT IS LONG TERM CARE?
Today it is said that 80% of us will need personal and medical care as we age: women for eight to ten years; men for five to six. Perhaps 60% of us will spend time in a nursing home while at least 40% of us will live there. One out of five of us who live in a nursing home will live there for more than five years.
The longer we live, the more likely we are to need long-term care, maybe first at home and then in assisted living, memory care, or a nursing home. By age 80, fully 90% of us will suffer from at least one chronic condition. After 65, the rate of dementia doubles every five years.
We will need long-term care.
Medicare pays for very little and then only in limited circumstances.
Almost all of us will need help, paid or not, with the activities of daily living.
The Garrett Law Firm can help you arrange for long-term care at home, delaying and possibly preventing a move to an assisted living or skilled nursing facility. We can help you determine how to pay for assisted living or nursing home care while protecting your spouse and leaving a financial legacy for your children.
Contact an Austin elder and estate planning lawyer you can trust.
ACTIVITIES OF DAILY LIVING (ADLs)
The basic “activities of daily living” or “ADLs” are
- Dressing and grooming
- Maintaining bowel and bladder continence
- Using the toilet
- Moving from one place to another
- Getting adequate nutrition and hydration
VA Aid & Assistance and long-term care insurance, both of which are discussed below, will pay for help with ADLs if someone is expected to need substantial assistance for at least 90 days.
Medicare will pay for a certified nurse’s assistant to help, typically to help with bathing three days a week, only if a physician has prescribed home visits by a nurse, physical or speech-and-language therapist.
Medicaid home health, for those who qualify, is designed to delay entry into a nursing home. Eligibility turns on the need for a nursing home level of care, not just for help with ADLs.
INSTRUMENTAL ACTIVITIES OF DAILY LIVING (IADLs)
More complex tasks are sometimes called instrumental activities of daily living (“IADLs”). These include managing medicines and finances, shopping for groceries and preparing meals, and transportation to health care providers. Some home health care agencies may include medication management and preparing simple meals. Other agencies provide purely non-medical assistance. Neither is paid by Medicaid, which considers these to be tasks which children should perform for their parents without compensation. People sometimes turn to automatic medication reminder devices and commercial bill paying services. Meals on Wheels, Drive a Senior and other services provided under the umbrella of the Capitol Area Agency on Aging. See Resources for Older Americans.
Family caregivers provide ever-increasing hours of help.
They need support. Caregiving can be isolating, involve unpredictable and increasing demands, and hurt the caregiver’s own health and well-being. www.lotsahelpinghands.com lets people ask for and sign up to help. Getting groceries, driving mom to the doctor, researching an emerging condition, and giving the primary caregiver a weekend break can be a big help. There are several Caregiver Café support groups in Central Texas There is even a podcast, www.thecaregivercafe.buzzsprout.com. Other possibilities can be found at Resources for Family Caregivers.
Family caregivers should be paid. A Family Caregiving Agreement, signed by all family members, even those who will only provide care occasionally, at a distance or in a pinch, acknowledges that caregiving is valuable work. A caregiver who quits paid employment to care for a family member loses, on average. $324,000, not to mention countable quarters for Medicare and Social Security benefits. A caregiver can lease part of her home using a contract for room-and-board. The caregiver and person being cared for should take full advantage of the tax credit and deductions available for elderly and disabled people and those who care for them. If the person being cared for is a veteran, compensation may be available. See VA Benefits below. If no payment is possible now, a family caregiver can be named on a transfer on death or Lady Bird deed (formally known as a general warranty deed reserving extended life estate), or as the beneficiary of a 401k, IRA or life insurance policy, of a pay-on-death bank account or a transfer-on-death brokerage account.
Medicare is health insurance used by 16 million Americans 65 and older and by disabled workers receiving Social Security Disability Income (“SSDI”). Medicare does provide very limited home health care under a doctor’s prescription. If a doctor prescribes home visits by a nurse, physical therapist, or speech-and-language therapist, an occupational therapist and certified nurse’s assistant may also visit. While regulations allow for up to 28 hours per week (35 in exceptional cases), the payment structure usually allows for no more than 6 hours per week.
Medicare pays for much less than most people think. It is estimated that over their lifetimes, a couple aged 65 will pay, on average, $275,000 in Medicare premiums, co-pays and deductibles. Half will pay more. Unless Congress acts, we will all pay more beginning in 2028, when the trust fund for Medicare Part B, which pays for doctor visits and labs, will be empty.
Medicare does not require a 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 to 100%. Unless Congress acts, this, too, is expected to change in 2028, which Medicare Part A, hospital Medicare, is predicted to be able to pay about 83% of what it does now.
If someone enters a nursing home shortly after three nights as a hospital in-patient, Medicare will pay for the initial 90 days. Medicare is designed to pay for acute care and rehabilitation, not for long-term care.
There are two types of Medicare. Traditional or “original” Medicare with the right Medicare Supplemental Insurance (sometimes called, “Medigap”) has higher monthly premiums than insurance companies’ Medicare Advantage. But after age 70, traditional Medicare costs the average person less. It is also accepted by more physicians, nursing homes, and hospitals. For example, M.D. Anderson only accepts traditional Medicare.
At 65, we can choose either traditional Medicare with Medicare Supplemental Insurance and a stand-alone Medicare Part D policy to cover prescription drugs or a bundled Medicare Advantage policy. Later, we must have excellent health or move out of the coverage area to switch from Medicare Advantage to traditional Medicare.
Whether you choose traditional Medicare or Medicare Advantage, you should apply in the three to six 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.
For detailed information on when to sign up for Medicare, Medicare plans and what they offer, look at www.Medicare.gov, contact the Capitol Area Agency on Aging and other sites listed on Resources for Older Americans.
MEDICAID HOME HEALTH
Unlike Medicare, Medicaid is a needs-based public benefit for which none of us has paid in advance. Texas has Medicaid home health through Medicaid waiver programs, which waive some of the Medicaid financial requirements with the goal of delaying entry to a nursing home. The three which are most widely used are Community Attendant Services, Community Care for the Aged and Disabled and Star Plus. Because funding for these and payment of providers is now in a state of flux, it is best to consult a member of the National Academy of Elder Law Attorneys to obtain the most current information.
Veterans who were on active duty for at least 90 days, at least one of which was during a time of war, and whose discharge was other than dishonorable may qualify for VA benefits other than those provided to career military and people who were wounded in action. You may want to check Am I Eligible for VA Pension Benefits?
There are three levels of benefits, the most generous of which is VA Aid & Attendance, sometimes called, “improved pension benefits.” VA Aid & Attendance provides a dollar amount for home health care, generally pays the entire cost of assisted living, and, when Medicaid pays for nursing home care, pays an additional monthly personal needs allowance.
Like Medicaid, VA Aid & Attendance has income and asset limits. These are calculated a bit differently for VA benefits than for Medicaid. The VA has a 36 and Medicaid a 60, month “look back” period during which uncompensated transfers, such as gifts, can temporarily disqualify the applicant. In determining eligibility for VA Aid & Attendance, the home with up to two acres is exempt. Vehicles used by family members are exempt. “Net worth” for VA purposes consists of countable assets and one year’s annual income of both spouses after subtracting unreimbursed medical expenses to the extent that they exceed 5% of the Maximum Annual Pension Amount of $31,714 (2023). Married or single, countable assets cannot exceed $150,538 (2023).
A list of accredited representatives, agents and attorneys who can help you apply can be found at www.va.gov/ogc/apps/accreditation/index.asp. You can also apply online at www.va.gov/disability-file-disability-claim-form-21-526ez/Introduction. Whatever you do, you may want to work with a member of the National Academy of Elder Law Attorneys to make sure that you will continue to also qualify for Medicaid home health or nursing home Medicaid. Many people who start in an assisted living facility eventually need nursing home care. For 96% of Texans, this is care paid for by Medicaid.
A career veteran’s caregiver may receive help, including respite, through the VA Program of General Caregiver Support. www.caregiver.va.gov.
A caregiver for any veteran may receive training and payment of $13-20/hour (or hire someone for this) for up to 20 hours/week through the VA Geriatric and Extended Care Aid Program. One coordinator of this program is the Care Planning Institute at 877-487-8166.
LONG-TERM CARE INSURANCE
Long-term care insurance is expensive, even if a portion of the premiums is deductible as a medical expense. But considering how likely we are to need long-term care, not having long-term care insurance may, in the end, prove more expensive. This is especially true if we need home health or assisted living but not nursing home care.
There are many types of long-term care insurance policies. In the past some were limited to nursing home care or were only for home health care. Today most policies pay for care at home, in assisted living. memory care or in a skilled nursing facility. (A skilled nursing facility is a nursing home which accepts Medicare or Medicaid.)
Policies are for a number of days or months or years (as those terms are defined in the policy) or for a certain amount of money. There is usually an “elimination period” before the policy will pay. Lengthening the elimination period lowers the premium.
Recently policies which combine long-term care insurance with life insurance or an annuity have become available. These typically cost more than those policies would if purchased individually. But they have less restrictive underwriting requirements.
It is also possible to convert an annuity or a life insurance policy to a long-term care policy. A small long-term care policy can be converted to a special long-term care account. Life insurance benefits can be accelerated.
The Texas Long-Term Care Partnership is a partnership between the State of Texas and insurance companies which offer certain policies through it. Once the policy benefits have been exhausted, the policyholder can qualify for Medicaid and keep assets equal to the policy benefits received. A Texas Partnership policy seems to be most attractive to someone who hopes to preserve $100,000 to $400,000 for the other spouse. It could also help a single person who wants to supplement Medicaid’s measly $60/month personal needs allowance.
There is also “short-term long-term care insurance,” which has no elimination period and pays for up to one year. This may be all you need. Or it may give you time to sell some assets in order to pay for care later on.
Most long-term care insurance policies are reimbursement policies. You must pay up front, submit records and seek reimbursement from the insurance company. Some insurers specify that they must pre-approve a facility and a written plan of care. 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 to prevent unexpected bills.
Policy jargon is arcane. The industry continues to experience turmoil with more and more companies exiting the market. Before talking to a salesperson, read the Texas Department of Insurance’s “A Shopper’s Guide to Long-Term Care Insurance.” www.tdi.texas.gov/pubs/consumer/cb032.html. An insurance policy is only as good as the company which issues it will be when it is time to file a claim. In addition to A.M. Best and Standard & Poor’s, check the Weiss ratings of both financial strength and ability to pay. The $25 fee could be well worthwhile. Also ask a person with no financial interest at stake to review the policy with you during the 30 day review period. Your interpretation and that of the salesman may differ.
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 annual premium increases averaging 20%.
NURSING HOME MEDICAID
While there are over 100 Medicaid programs in the State of Texas, most of us think of Medicaid as health insurance for the desperately poor, for impoverished children, and for people in nursing homes. Nursing home Medicaid is critical to the long-term care, however inadequate, of well over half of Americans.
In 1965, when Medicaid was enacted, the average American man lived to 67; the average American woman to 73. Most of us died of an acute illness. We did not live for a decade or more with a chronic condition. Because of this, no trust fund was created for Medicaid. Medicaid is a needs-based public benefit paid out of the general tax revenues.
We now live much longer. There are fewer people in the workforce contributing to the general tax revenues. In addition, care has become so expensive that 78% of Texans qualify for Medicaid the day they enter a nursing home. An AARP study found that 96% of Texans exhaust their personal resources within six months of entering a nursing home.
To qualify for nursing home Medicaid, a person must first have a need for a nursing home level of care. This means that they must (1) need daily care by, under the supervision of or at the direction of a nurse; (2) need therapy five days a week; or (3) be experiencing cognitive decline to the extent that it is unsafe for them to remain in the community, whether at home or in an assisted living facility.
There are also income and asset limits.
The monthly income limit in Texas is $2,742 (2023). Someone with a higher monthly income may nonetheless be eligible using a Qualified Income Trust (also called a Miller trust). For example, income can be diverted to the spouse, bringing the spouse’s monthly income up to $3,715.50 (2023). It can also be used to pay for medical expenses not covered by Medicare or Medicaid.
Some assets are not countable: the home, up to a certain equity amount, one car, household goods, an irrevocable funeral policy and others. Employment-related annuities and similar assets may be viewed not as assets but as the monthly income they produce. Other financial assets are limited to $2,000.
A spouse’s income is not counted. A spouse is also allowed to keep up to $148,620 (2023) in otherwise countable assets such as a bank account. Since Texas is a community property state, the spouse may keep more with a Marital Property agreement, a Qualified Domestic Relations Order, a Medicaid-compliant annuity or other arrangement. The best approach to preserving assets for a spouse varies with the nature and amount of assets and from person to person.
To try protect your spouse and any dependents, you may want to plan in advance, consulting a member of the National Academy of Elder Law Attorneys. But even if you have not planned, have not considered Medicaid until the day you find yourself in a nursing home, there is almost always something that can be done.
The one thing not to do is to give away your assets. The value of assets transferred for less than fair market value within the 60 months before the month in which you apply for Medicaid is counted in determining eligibility. Unless you can prove that you did not transfer assets in order to qualify or those assets are returned and used to pay for your care, you could incur a penalty period during which Medicaid would not pay. This could be lengthy: months, even years.
You could need nursing home care but have no way to pay for it. You and the person to whom you transferred the assets could be prosecuted for Medicaid fraud. Why risk it?
Even if there were no criminal prosecution, during the penalty period the nursing home could bill you at the private pay rate, substantially higher than what it would receive from Medicaid. If your family could not afford to pay this, you could spend the penalty period in a board and care home with neither nursing care nor therapy.
Most of us will need Medicaid. Most of us also want to leave a financial legacy. Medicaid today is like a loan, repayable when you die. Every state has a Medicaid Estate Recovery Program. But in Texas this does not apply to property which transfers on death. Using a transfer on death or “Lady Bird” deed (formally called a general warranty deed reserving extended life estate) you can save your home from Medicaid Estate Recovery. A similar DMV form could save your car.
Do not just “spend down,” giving the nursing home the money you or your family may need. Consider what will enhance your life: warm sweaters and socks; subscriptions and hobby materials; massages and manipedis. The nursing home may well be your last home: 52-53% of us die in one. Do everything you can to make it feel like your home.
EVALUATING SENIOR LIVING FACILITIES
Instead of having your distraught family choose from the two or three facilities found by a discharge worker at the hospital, look over places in advance, beginning online. Nursing Home 411, Medicare Nursing Home Compare and Propublica’s Nursing Home Inspect are good places to start.
You may want to review the proposed Resident’s Agreement and Handbook, a 30-50 page contract, with an elder law attorney such as a member of the National Academy of Elder Law Attorneys. Resident’s Agreements are negotiable. The Resident’s Agreement and Handbook is prepared to benefit the facility and typically contains provisions which you will want to delete. However amiable the people you meet, remember that “corporate” is likely a multistate or multinational holding company focused on profits, not people. Ask for names and contact information of people on the Family Council and attend meetings of the Residents Council at a nursing home. Ask to meet the volunteer Ombudsman. Visit at lunch, in the evening and on Sunday, the least-staffed day of the week. Be aware of Assisted Living Facility and Nursing Home Residents’ Rights.
Independent Living Facilities
Independent living facilities are completely unregulated. Read the contract carefully, at least twice, before handing over a check. Be sure that you know what will happen as your needs change. An independent living facility could be more restrictive and more expensive than truly living independently in your own home, condominium or apartment.
Assisted Living Facilities
Assisted living facilities do not accept Medicare or Medicaid and so are not subject to the same level of oversight. They are state-licensed and subject to fire department regulations, categorized by the level of mobility and independence required of residents. Unlike in hospitals and nursing homes, their employees are not required to be a certified nurse’s assistant or obtain certification as an health facility administrator.
People often go to an assisted living facility when they need substantial assistance with activities of daily living and cannot afford the necessary help at home. As their needs progress, they may move to a skilled nursing facility. Most assisted living facilities require that the person be mobile and able to feed themselves, coming down to the dining room for three meals a day. There are usually additional fees for medication management and hands-on as opposed to hands-off or stand-by assistance. A family financial guaranty is usually required.
Memory care is a type of assisted living. Investigate carefully what is provided, who provides it and at what cost. While 40% of the people in assisted living have some sort of dementia, many of them may qualify for nursing home care and have been placed in “memory care” by their families because nursing homes have such a bad reputation.
While none of us wants to go to a nursing home, or skilled nursing facility, most of us will. 52-53% of us will die there. In Texas 3% of nursing homes are private pay only. Only 3% of nursing homes meet the federally mandated minimum number of hours of daily patient interaction. This may be the same 3%. They may provide slightly better care. VA nursing homes are said to rank next.
Nationwide, Medicare pays a nursing home an average of $504/day while Medicaid pays an average of $219/day. Nursing home administrators have a strong financial incentive to say they do “rehab only” and that a resident must move elsewhere to receive long-term care paid by Medicaid. It may be closer to the truth to say that the nursing home has a limited number of Medicaid beds and, while it could ask to increase that number temporarily, has no financial incentive to do so. Nursing homes can and do limit the number of “Medicaid pending” beds, beds held available for someone whose Medicaid application is pending approval, due to cash flow considerations. If you can pay privately for two or three months, letting the nursing home know this and that you will eventually need a Medicaid bed, you may well have a wider choice.
Quality of care is important to us all. A study published in the Journal of the American Medical Association found that it is closely tied to regular, substantial staffing by LVNs. Look for that.
QUALITY OF LIFE
We all want to choose where we receive care and who will provide it. We want to enjoy a good care and a good quality of life. 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 about half of Americans, 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 help you stay in charge. The Garrett Law Firm works with individuals and families throughout Central Texas to create practical, low-cost solutions.