Long Term Care Health Insurance

Once you have chosen a nursing home, the next issue that must be addressed is paying for the nursing home care. The financial department at the nursing home can explain payment options with you. You should be aware that nursing facilities are prohibited from requiring a waiver of Medicare or Medicaid coverage. It is also illegal for a nursing home to require a third party, such as yourself, to guarantee payment as a condition of admission.

There are a number of different ways to pay for nursing home care:

Medicaid is a joint federal and state program designed to cover the cost of certain medical expenses incurred by individuals with limited resources and to pay for the cost of their nursing home stay. Within the broad national guidelines set by the federal government, every state establishes its own Medicaid eligibility standards, determines the type, amount, duration, and scope of services, sets the rate of payment for services, and administers its own program. Medicaid will pay only for nursing home care provided in a facility certified by the government to provide service to Medicaid recipients. Individuals who are 65 or older, certified blind, or certified disabled are eligible for this program. There are income and resource limitations that affect Medicaid eligibility.

Individuals are eligible for Medicaid:

  • If they receive Supplemental Security Income
  • If they are determined to be "medically needy"
  • If their income is below a state-designated cap

If a nursing home resident is married and his/her spouse resides in the community, certain actions may be taken to accelerate the Medicaid eligibility of the nursing home resident by protecting the assets for the spouse at home at the time of the initial eligibility determination of the nursing home resident.

In a spousal situation before an institutionalized person's monthly income is used to pay for the cost of institutional care, a minimum monthly maintenance needs allowance must be established to bring the income of the community spouse up to a moderate level. This means there may be instances where the community spouse is permitted to keep his/her income as well as the income of the institutionalized spouse.

To learn more about Medicaid and if you qualify, check your state's eligibility requirements. The phone number for your state's Medicaid office can be found in the blue pages of the phone book. You can also visit the website for your state's government to find the information you need or go to http://www.cms.hhs.gov/home/medicaid.asp.

The traditional Medicare "fee-for-service program" is generally available to qualified individuals 65 years of age or older and those under age 65 who have been disabled for at least 24 months.

Medicare is divided into two parts: Part A Hospital Insurance Benefits and Part B Supplemental Medical Insurance

Part A covers hospitalization, skilled nursing care in a skilled nursing facility (SNF/NF), home health care, and hospice care. There is automatic enrollment for Part A. There are deductible and co-payments for hospital and nursing home care. To qualify for skilled nursing care in a SNF/NF, the following five requirements must be met:

  • 1. The resident requires daily skilled nursing or rehabilitation services that can be provided only in a SNF/NF.
  • 2. The resident was hospitalized for at least three consecutive days, not counting the day of discharge, before entering the SNF/NF.
  • 3. The resident was admitted to the facility within 30 days after leaving the hospital.
  • 4. The resident is admitted to the facility to receive treatment for the same condition(s) for which he or she was treated in the hospital.
  • 5. A medical professional certifies that the resident requires skilled nursing care on a "daily basis." A resident requires skilled nursing or skilled rehabilitation services on a daily basis when services are medically necessary and provided seven days a week. There is an exception if they are only provided by the facility for five days per week due to staffing levels at the facility. Additionally, there may be a one to two day break if the resident's needs require suspension of the services.

Where these five criteria are met, Medicare may provide coverage of up to 100 days of care in a SNF/NF. The first 20 days of covered services are fully paid for; and the next 80 days (days 21 through 100) of the covered services are paid for by Medicare subject to a daily coinsurance amount for which the resident is responsible.

With limited exceptions, a resident who requires more than 100 days of SNF/NF care in a benefit period will be responsible for private payment of all charges beginning with the 101st day.

A new benefit period may begin when the resident has either not been in a facility or has not been receiving a covered level of care in a SNF/NF for at least 60 days, returns to the hospital for another three day stay, and then re-enters the SNF/NF.

Part B Supplemental Medical Insurance covers physician services, ambulance, durable medical equipment, screening for pap smear, screening mammography, X-rays, out-patient care, and some prescriptions. Part B is voluntary and requires a monthly premium payment. Medicare payment for the previously mentioned services is based on Medicare's "reasonable charge" standard rather than the actual bill. The resident in a SNF/NF is responsible for private payment of therapy charges and any other ancillary charges above the Medicare Part B coverage limitation.

The nursing home facility can bill and receive payment if the resident fills out a Medicare assignment of benefits form. If the resident completes an assignment of benefits form, a health care provider cannot charge the resident above the Medicare approved charge.

Contact the Social Security Administration to determine the Resident's Part B coverage. For more information about Medicare, visit: http://www.medicare.gov.

Managed Care Medicare HMO insurance is supposed to provide the same benefits as the Medicare fee-for-service program. However, enrollees are limited as to which facilities are providers in their HMO, as well as the types of coverage. The HMO will require reports on the resident's progress on a regular basis to determine the resident's need for continued coverage.

Medigap insurance is supplemental health insurance that provides payment for Medicare deductibles and co-payments. You can purchase Medigap insurance policies from private insurance companies. There are numerous insurance companies which sell these policies. The plans range from Plan A through Plan L and vary in terms of basic and extra benefits. Generally, when you buy a Medigap policy you must have Medicare Part A and Part B. You will have to pay the monthly Medicare Part B premium, as well as a premium to the Medigap insurance company.

For more information about Medigap insurance, visit: http://www.medicare.gov/medigap/Default.asp

Individuals who are not eligible for Medicare or Medicaid or those who have exhausted their benefits, and who have no insurance or other sources of payment, will be responsible for paying for the costs of nursing home care. Daily nursing home rates should be discussed with the staff at the nursing home facility, as well as the costs for any extra services that may be needed during the course of the nursing home stay.

Residents who are covered by a private insurance plan that does not have a contract with the facility must exhaust all available insurance coverage before seeking Medicare or Medicaid coverage. If the insurance benefits under the private plan are insufficient to cover the cost of care, the resident will be responsible for any difference. The coverage requirements for nursing home care vary depending on the terms of the insurance policy. Questions regarding private insurance coverage should be directed to the social work staff and/or the nursing home resident's insurance carrier or agent.

Residents who are members of a managed care benefit plan that is under a contract with a facility to provide specified services to plan members will receive those services with full coverage so long as the resident meets the eligibility requirements of the managed care benefit plan. The resident is then financially responsible only for those services that are not included in the list of covered services, co-payments and deductibles. Residents who have not received a list of covered services and eligibility requirements from their managed care benefit plan are advised to contact their social worker and/or managed care benefit plan.

Long term care insurance policies are purchased to cover the cost of nursing home care and/or home care services. There are many different issues that require careful review before purchasing long term care insurance, including:

Type of Coverage:

  • Daily or Monthly Benefit
  • Benefit Period
  • Elimination or Waiting Period
  • Inflation Protection
  • Non-forfeiture Benefit

Many people don't consider long-term care insurance until they get into their 70s and 80s and begin to have health problems. At these ages, you may be too high a risk for an insurer to cover you; or if you do qualify, the premiums can be very expensive. In addition, some long-term care policies have restrictions on age and health status. It is best to plan ahead and purchase long term care insurance when you are middle aged. At this time in your life, you will have the highest likelihood of being eligible for a policy and premium costs will likely be lower.

The Department of Veterans Affairs contracts with community facilities to care for patients who have served in the armed forces. A rate is usually established annually and provides for a small percentage above the facility's Medicaid rate. The VA rate is usually all-inclusive, and the facility may not be able to bill another source, such as Medicare B, for physician services, lab, x-ray, therapies, and other expenses. As with managed care contracts, the facility must ensure that the agreed-upon rate covers the cost. Most contracts cover veterans for six months for service-related conditions and three months for non-service related issues. The facility must be sure to make provisions for another payer source when the benefits for the veteran end.

For more information, visit the Department of Veterans Affairs Office of Geriatrics & Extended Care: http://www1.va.gov/GeriatricsSHG