Long Term Care "Long-term care" refers to a variety of medical care giving services that generally can be grouped into two broad categories: - Skilled nursing care refers to intensive daily nursing care administered within a skilled nursing facility, under the supervision of licensed medical personnel, and in accordance with a doctor's orders.
- Custodial care refers to assistance with "activities of daily living" (ADL's), such as getting in and out of bed, bathing, use of restroom, dressing, moving about, eating and taking medications. Services are performed under a doctor's certification that such assistance is required, but the care is not necessarily provided by licensed medical personnel.
Medicare, the federal government's health insurance program for persons age 65 and over, does not pay for custodial care. Medicare will pay for skilled nursing care, subject to several limitations. Here are the most important: - First, care must be provided in a "skilled nursing facility" (SNF) that is certified by Medicare. Most conventional nursing homes do not qualify as SNF's, and many SNF's are not Medicare-certified.
- Second, the patient must have spent at least three days in a hospital prior to being admitted to the SNF, and generally must be admitted within 30 days after leaving the hospital.
- Third, Medicare pays 100% of allowable charges for the first 20 days of a patient's stay in a SNF, but days 21 through 100 are subject to patient-paid coinsurance of $128 per day (amount for 2008). Medicare pays nothing after 100 days. A 100-day stay in a SNF in 2008 would cost the patient a minimum of $10,240 out-of-pocket (and more if the patient incurs uncovered charges).
Custodial care is not covered by Medicare, but it may be covered by Medicaid. Medicaid is a welfare health program funded in part by the federal government and administered by the state governments in conformity with federal guidelines. Medicaid was intended to be health insurance of last resort for the indigent. Thus, a person must qualify for Medicaid coverage by meeting low income and asset levels established by each state. Law changes in the 1990s made it much more difficult to "spend down" or give away one's assets for the purpose of qualifying for Medicaid. About 45% of the custodial care provided by U.S. nursing homes and home health care providers is paid for by Medicaid. Long-term care insurance is private insurance purchased to cover the costs of custodial care for persons who do not want to depend upon qualifying for Medicaid. Some of the important characteristics of long-term care insurance include: - Long-term care (LTC) policies typically pay a flat amount for each day in a benefit period.
- The policyholder may select the amount based on local nursing home costs. Modern LTC policies usually offer inflation protection (for an additional premium) so the benefit amount may keep pace with current costs.
- LTC policies are usually issued on a "guaranteed renewable" basis. This means the insurance company cannot cancel the policy as long as premiums are paid when due.
- A LTC policy may specify the types of institutions and providers whose services are covered under the policy, including any licensing or certification requirements they must satisfy.
Persons covered under LTC policies qualify for important tax benefits: Premiums paid on LTC policies are treated as medical expenses up to a maximum amount based on the insured's age. The maximums for 2006 are: | Age | Amount | | 40 or under | $280 | | 41 -50 | $530 | | 51 - 60 | $1,060 | | 61 - 70 | $2,830 | | 71 or over ( in 2005) | $3,400 |
Benefit payments received under a qualifying LTC policy issued in 1997 or later are excludable from gross income up to a maximum if paid for services provided to a "chronically ill individual." The maximum exclusion is $220 per day in 2003 (adjusted in later years). If the LTC coverage is provided under a qualifying employer health plan, neither the employer's premium payments nor any benefits received are taxable to the employees. |
