Before you decide to purchase an LTCI policy to fund your long term care services, you should be well informed of the other options available to you and what they cover in terms of care services. Based solely on your own personal agenda and objectives, there are 3 ways you can pay for long term care services. Private funding, which consists of paying for long term care through your assets or an LTCI policy. Or, government aid funding through Medicare or Medicaid.
Medicare is the federal health insurance program offered to people aged 65 and older, some younger with specific disabilities or those of any age that are in End Stage Renal Disease. This product is served as health insurance after most retire and no longer have health insurance through their company plan. Medicare covers expenses for medical services such as skilled nursing care after a 3 day stay in the hospital, inpatient hospital care, hospice care and home health care. Skilled care typically consists of daily care such as physical therapy that is needed after a stroke or bone fracture. Medicare also has a limit to the number of days it will pay for care which is up to 100 days. For the first 20 days in a skilled care facility, Medicare will pay 100% of the costs, then from days 21-100 a copay will be required.
Standard medicare covers a portion of medical services but not all and even coupled with Medicare Part B to help cover extra services, you still don’t have coverage for long term care services.
Medicare does not cover long term care services also known as custodial care such as assistance with your daily living activities which is the most common type of care provided at nursing homes. This means that under traditional Medicare, you will pay 100% of all services that are not covered such as long term care services. Once you have exhausted all Medicare payments, you are left with private pay and Medicaid for long term care funding.
Medicaid is a joint federal and state welfare program available to those who are low income or have minimal assets. Each state has its own contingencies and limitations regarding the amount of assets you can own with the amount of income you receive. Medicaid has a look back period, which in most states is 5 years, to prevent applicants from giving away or spending down assets in order to qualify for Medicaid coverage. The federal government has made it a crime to gift and/or spend down assets in order to qualify for Medicaid and an uninsurability penalty will be established if found in violation of this law.
Over the years, government funding for Medicaid has been in a decline and will continue to do so as the States continue to face budget short falls. This will jeopardize coverage and access to health care services for many people. With the uncertain future of Medicaid, long term care insurance can put your mind at ease.