The Financing of Long Term Care


There are three basic ways to pay for long term care - Medicare, Medicaid or "private pay" (meaning that you pay personally out of pocket or by using long term care insurance).

Medicare is the federal program offered to those who are needing a skilled level of care after a 3 day hospital stay. Skilled care is best described by the type of care you would need due to a hip fracture or stroke, i.e. therapy on a daily basis.

Medicare is limited in the number of days it will pay - up to 100. Medicare pays 100% for the first 20 days (after a 3 day hospital stay and if skilled care is needed). Beginning on day 21-100 Medicare requires a co-payment. Most Seniors have a Medicare Supplement policy. Medicare supplements will pay in conjunction with Medicare. Once Medicare stops paying for care, most supplements will not continue to pay.

If you have exhausted Medicare payments, the only other options are Medicaid and paying out of pocket (private pay). Medicaid is available for those individuals that are low income or have limited resources. Medicaid is the state welfare program and has limitations as to the amount of assets you can own and the amount of income you may receive each month before you are eligible.

The federal government has instituted restrictions on the transferring of assets out of an estate to qualify for Medicaid. There is a look back period of several years (and even longer if a trust has been established). Recent federal law makes it a crime to shift assets to become eligible for Medicaid.

Federal funding of state Medicaid programs has been cut quite a bit during the last 6 years. Unless there is a drastic change inpolicy, both by the Administration and Congress, the White House and Capital Hill will continue cutting state Medicaid funds. To help stem the future tide of long term care cost paid by Medicaid, states have begun creating Long Term Care Partnership Programs. They are sounding an alarm to all that will hear: Get long term care insurance now, because the future of Medicaid is uncertain.

If you can't afford long term care insurance, you can learn about Medicaid at: