As our loved ones and their families look at long term care costs, it quickly becomes apparent that home care is an affordable alternative to institutional placement. Many clients have not prepared for long term care costs and when their needs force them to look at their choices, it can be pretty intimidating. Do not despair! A variety of resources are available to help pay for their long term care. Sometimes, two or three sources of funding can be packaged together to pay for long term home care.
The first step is to take account of financial resources including all assets and monthly income. No matter which long term care payment option is available, it all starts here!
Assets break down into two main categories; sources of funds that are quickly available and those that are not quickly available.
Quick available funds are assets like stocks, bonds, annuities, pensions, life insurance, certificates of deposit, savings and checking.
Slow available funds are assets like real estate, vehicles, investment properties, trusts, etc. These can take months or years to sell and recover. After reviewing your finances, your journey can take you in a number of directions.
Area Agency on Aging
If your loved one has minimal resources to pay for home care, your first call should be to the local Area Agency on Aging (AAA). AAA has a wide array of services and funding available to seniors. These services include meals, transportation, personal care, protective services, and nursing home transitions, all of which have some funding from federal, state or local governments. These benefits will be explained by AAA after you communicate the needs and personal financial resources of your loved one.
Originally, a joint federal and state government program that helps pay medical costs for some people with limited incomes and resources. In addition to medical costs, it pays for a nursing facility and long term home care costs if eligibility standards are met. Eligibility is based on personal assets and income as determined by your local Pennsylvania County Assistance Office. (This year it’s quick available assets of roughly $8000 and monthly income under $2000.) Also, AAA will determine if the functional impairment(s) of the recipient meet state standards. If the recipient qualifies for Medicaid benefits, the state has a program called “Medicaid Estate Recovery” so that the state can recover long term care costs from the real estate of the recipient who received this Medicaid assistance. The state will attach a lien against the property and, upon death of all who live in the home, recover the state’s expenditures for long term care. Pennsylvania Medicaid will not pay for costs of living in Assisted Living Facilities or Personal Care Homes.
Medicare is a federal health insurance program for persons ages 65 and older, certain disabled persons, and anyone who has end-stage renal (kidney) disease.
Medicare Part A covers hospital charges such as bed and board, operating room costs, and lab tests. Premiums for Part A are paid for by the government.
Part B pays for doctor’s charges and for other outpatient treatment and requires a premium payment by the individual. Both Part A and Part B require the individual to pay a deductible and possible co-payments.
Home health care and hospice are reimbursable by Medicare. Both require a physicians order that documents a need for “skilled” home care. This means that services are provided by a registered or licensed nurse, occupational therapist, speech therapist, physical therapist, pharmacist, etc. Home health nurse aides are reimbursed by Medicare when in conjunction with these healthcare professionals. When the patient’s need is considered no longer “skilled” or the patient is no longer home-bound, the aide services are not reimbursed. These services are considered short term and limited, but can be effectively used with Medicare paying the bill.
Long Term Care Insurance
Long Term Care (LTC) insurance has been sold for many years and is included in many individuals benefit programs through their employers. In recent years, fewer of these plans have been sold because of their increasing and expensive premiums. LTC insurance pays for care that is generally not covered by health insurances and Medicare. Individuals who require assistance performing basic activities of daily living (ADLs) such as dressing, bathing, eating, toileting, incontinence, ambulating or getting out of bed all quality for benefits.
LTC insurance will pay for home care, assisted living, nursing homes and Alzheimer’s facilities. Sometimes it is difficult to determine if a senior has this insurance, especially when it is included in the employer’s benefit package. Call the employer benefits department to see if this insurance exists.
Veterans Administration has a program where all veterans who were in the military during an active war can receive financial assistance for personal care. The Aid and Attendance Program allows veterans and surviving spouses who require a regular attendant for eating, bathing, dressing and other ADLs, to receive monetary benefits for their care. It also reimburses for nursing home and assisted living facilities.
This program can take up to a year for approval but will pay retroactively from the beginning of service. The local office is in Scranton, PA. and is open Monday through Friday from 9am-4pm. Call Anissa Fetchen, Veteran Service Officer, at 570-963-6778.
Typically, people have life insurance to protect themselves and family members against sudden loss of income after the death of a breadwinner. Most seniors are years past employment so loss of income may not be a primary factor. However, life insurance policies contain riders that sometimes allow benefits to be paid for chronic illness care. Policies even allow accelerated death benefits payments for long term care. These riders are very useful for current elderly needs as well as planning for future Long Term Care costs.
A reverse mortgage is a federally insured loan that allows you to convert some of the equity in your home into tax-free cash. It is a unique loan that is easy to obtain if you are at least 62 years old and own your own home. You always remain the owner of your home.
Reverse mortgage features:
- No monthly mortgage payments.
- There is no income or credit requirements.
- Proceeds can be used however you want.
- Proceeds do not affect Social Security or Medicare benefits.
- Loan is not due until the last homeowner passes away, sells the home or permanently moves out.
- Both fixed rate and adjustable rate programs are available.
Reverse mortgages can be used to improve lifestyle, cover healthcare costs, pay off existing mortgages, fix up the home, or simply give a peace of mind. Whatever the goal, a reverse mortgage will help to maintain financial independence.
Health insurance policies for the elderly generally do not pay for long term care. These policies generally wrap around the Medicare benefit and do not add any new benefits. However, there are exceptions. You would need to look at your individual policy to determine if home care aides are covered and for how long. The only time we have experienced increased nurse aide benefits is following a hospital stay and being covered through the supplemental policy. These benefits are limited to the health condition of the recipient, considered short term in nature and as recipient’s health condition improves, will be terminated.
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