Medicare, Medicaid, and Long Term Care
By David Braze (TMF Pixy)
We've now looked at the definition of long term care and the problems many folks face in paying for such services when they are needed. We know that such costs are covered in just four ways: by us out-of-pocket, by Medicare, by Medicaid, or by insurance. Let's see how Medicare and Medicaid handle long term care services.
Medicare is the retiree medical insurance program with which most people are familiar. For retirees, Medicare kicks in at age 65, and it has two parts, Part A and Part B. Part A covers hospitalization and Part B covers doctor visits and various other medical services. For almost all Medicare recipients, Part A is free. Part B, though, has a monthly premium that changes each year. This year the Part B monthly premium is $45.50 per person. For a comprehensive description of Medicare, I encourage those who are or will soon be eligible for this program to get and read the booklet Medicare & You 2000 published by the Health Care Financing Administration. For the purposes of this discussion, we just need to be aware that both parts of Medicare may pay for certain long term care services.
Part A, the hospitalization portion of the coverage, will provide payment for long term care associated with hospital stays, home health care, hospice care, and skilled nursing facility care. Unfortunately, many believe that Medicare will always pick up those costs. Nothing could be farther from the truth. Medicare only covers costs for services that are medically necessary and that are provided by doctors or by skilled medical personnel under the supervision of a physician.
Hospital stay coverage is self-explanatory, but home health care and hospice care are not. Home health care provides coverage for part-time skilled nursing care, physical therapy, speech-language therapy, durable medical equipment (e.g., oxygen, wheelchairs, walkers, hospital beds), and certain other medical supplies and services. To qualify for home health care, a doctor must certify that you are homebound, that medical care at home is necessary, that a medical plan for that care has been prepared, and that a Medicare-approved home health agency will provide that care. Note that Medicare does not pay for 24-hour care, prescription drugs, meal delivery, homemaker services (shopping, cleaning, laundry) or personal services (bathing, dressing, toileting). Thus, while some home health services are provided, the needs of a homebound individual who requires 24-hour care are not. Only medically necessary needs are covered.
Hospice care is for the terminally ill. To qualify for hospice services under Medicare, an individual must be determined by an attending physician and the medical director of a Medicare-approved hospice facility to be within six months of death. Services may be provided at the hospice facility or at home and include medical care and support services; drugs for symptom control and pain relief; short-term respite care (temporary care given by someone else to provide a brief rest to the primary care giver, usually a female family member); and other services not necessarily provided by Medicare. Except for a $5 co-pay for drugs and a 5% co-pay for inpatient respite care, Medicare pays for 100% of these services.
That brings us to nursing home care. Be aware that when it comes to nursing homes, there are three levels of care. There is skilled nursing care, which is provided by trained medical personnel under the supervision of a doctor around the clock. There is intermediate care, which is provided by skilled medical personnel under the supervision of a doctor at certain periods of the day. And, finally, there is custodial care, which does not require the services of skilled medical personnel. The vast majority of nursing home stays are those that require custodial care wherein someone must receive help in two or more of the Activities of Daily Living discussed last week.
Medicare pays for but one type of nursing home stay, skilled nursing care provided at a Medicare-approved facility. To qualify for nursing home reimbursements under Medicare, the resident must have been hospitalized for at least three days prior to transfer to that facility. That means no one can go from a residence to the skilled nursing facility without a prior hospital stay. Once in a Medicare-approved facility, then Medicare will cover the cost of a semiprivate room, meals, skilled nursing and rehabilitative services,
plus medically necessary supplies and services. These costs will be covered at a rate of 100% for the first 20 days. After that, you will pay $97 per day for the 21st through the 100th days of the stay. On the 101st day, all costs must be borne entirely by the individual involved. And that, folks, is all she wrote for Medicare nursing home coverage. After that, the average $130 daily cost must come from personal assets, insurance, or Medicaid. Medicare will not pay one more cent.
At this point, many people without long term care insurance begin thinking about Medicaid. Medicaid is a medical welfare program funded jointly by the federal and state governments and administered solely by each state under general legal guidelines. In essence, it is a program for those without assets or income sufficient to pay for the services needed. While each state determines eligibility for Medicaid under its own rules, in general the person receiving such services may retain just a very modest amount of personal assets (less than $2,000) and only about $30 per month in income for personal needs. Certain assets such as a home, its contents, and one car are exempt. Everything else goes to the state to pay for the care provided, and that includes any pension and/or Social Security income. A spouse of someone who is in a Medicaid-approved nursing facility may keep the house, its contents, one car, up to about $82,000 in other assets, and a monthly income of some $2,000. All else goes to help pay for the nursing home care of the other spouse. And by the way, Medicaid authorities, not the family, will select the nursing home facility.
When it comes to paying for nursing home care, I list the use of Medicaid as my least favorite option. Visit some of those facilities, observe the type of care received by the residents, talk with the overworked and underpaid staff, and you would probably agree.
Next: The Issue of Long-Term Care Insurance »
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