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. The Garrett Law Firm can help.
Contact an Austin elder and estate planning lawyer you can trust.
It is also easy to forget that, unless we have a need for skilled nursing or therapy or have experienced significant cognitive decline, neither Medicare nor Medicaid will pay for assistance with the Activities of Daily Living. It is these we will have trouble with soonest and longest — even if we never need more.
VA benefits or long-term care insurance might help. VA Aid & Attendance and most long-term care insurance policies will pay for assistance with activities of daily living at home, in an assisted living facility or a nursing home if we require “substantial assistance” with at least two activities of daily living for more than 90 days.
ACTIVITIES OF DAILY LIVING (ADLs)
The basic “activities of daily living” or “ADLs” are
- dressing and grooming
- maintaining continence
- using the toilet
- moving from one place to another
- getting sufficient nutrition and hydration
INSTRUMENTAL ACTIVITIES OF DAILY LIVING (IADLs)
More complex tasks are sometimes called “instrumental activities of daily living” or “IADLs.” These include managing finances, grocery shopping, preparing meals, transportation and managing medication. Very little of this is provided by home health care agencies. Medicaid considers these tasks which children should perform for their parents without compensation. Bill paying services, Instacart, Meals on Wheels, Drive a Senior, Uber and Lyft and medication reminder programs can help.
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 scheduled caregivers. They move to a nursing home when their medical needs become greater than is covered by Medicare. According to Genworth Financial, in 2018 a single room in an assisted living facility in the Austin area averaged $62.280/year, comparable to $63,875/year for a shared room in a nursing home. (In 2005 it was $35,160.) Where available, a private room in a nursing home averaged $88,330/year, It is easy to understand why 96% of Texans run out of money within six months of entering a nursing home and must apply for Medicaid. Those who run out of money while at home or in an assisted living facility and do not have help from family or long-term care insurance have even more difficulty.
Too many people assume that “this will never happen to me.” But it will.
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 — at least online. Nursing Home 411, Medicare Nursing Home Compare and ProPublica’s Nursing Home Inspect are good places to start. Assisted living facilities are not subject to the same scale of regulation but are licensed by the state and categorized by the level of mobility and independence required of residents.
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
Medicare is health insurance used by 16 million Americans 65 and older and disabled workers receiving Social Security Disability Income (SSI). It is 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, $275,000 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 first few years of retirement but if 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 doctors and 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, labeled 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 to a Certified Financial Planner to make sure that you are pointed in the direction you want to go.
Medicaid is a needs-based benefit for which none of us have paid other than through the general tax revenues. It is for people who qualify financially as well as medically. At least 35% of us will have a medical need for nursing home care: we will have a need for “on call” nursing or experience significant cognitive decline.
A very large majority of us will also qualify financially, Nursing home care has become so expensive that 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. While the Texas agency reviewing Medicaid applications has a goal of completing each review within 45 days, if your documents are incomplete or your application is unclear, it could take much longer.
There is a spousal income and asset allowance. In addition, in Texas, up to $572,000 (2018) in equity in 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.
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 give or otherwise shift the assets in order to qualify. 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. In addition, you and the person to whom you transferred the assets could be prosecuted for Medicaid fraud. Don’t risk it.
Even if there were no criminal prosecution, the facility could bill you at its private pay rate, substantially higher than what it would receive from Medicaid. If your family could not pay, you could wind up spending the penalty period in a board and care home. You might later qualify but see a home or ranch or business you planned to leave to your children subject to Medicaid estate recovery.
Using an extended life 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
There are three levels of benefits: basic, housebound and aid & attendence, sometimes called improved pension benefits. Eligibility 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. If you are disabled or are 65 or older, you may be eligible for both. People commonly use VA Aid and Attendance first and then apply for Medicaid. You, your spouse or your children may need 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?
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.
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 $420 for people under 40 to $5,200 for people above 70 (2018).
There are many types of long-term care insurance policies. Some are only for nursing home care. Some are only for home health care. Some are for care at home, in an assisted living facility or a nursing home. They are for a number of days or months or years or for “a pot of money.” The days or weeks, months or years are counted based on the policy provisions on visits and hours, not necessarily based on the calendar.
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 have less restrictive underwriting requirements.
It is also possible to convert an annuity or a life insurance policy to a long-term care policy. Life insurance benefits can be accelerated. A small long-term care policy can be converted to a special long-term care account.
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 waiting 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.
Policy jargon is arcane. The industry continues to experience turmoil with more and more companies exiting the market. Before talking to 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. An insurance policy is only as good as the company which issues it will be when it is time to change. In addition to A.M. Best and Standard & Poor’s, check out the Weiss ratings of both financial strength and ability to pay. The $25 charge could be well worth it…Ask an experienced 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 well differ,
People are generally advised to spend no more than 7% of their income on long-term care insurance, a challenge for those living on a fixed income if premiums rise faster than investment values. The Texas Partnership recommends that people purchase long-term care insurance only if they can afford annual premium increases averaging 20%. No year is “average.” Between 2012 and 2013 premiums on policies offered through the Texas Partnership rose between 11% and 43%.
Most long-term care insurance policies are reimbursement policies. You must pay up front, submit records and seek reimbursement from the insurance company. Some must pre-approve a facility and 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 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
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