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doubt you've heard the statistic before: Of those
persons age 65 and older, one in four will spend
a year or more in a nursing home, at costs ranging
from $30,000 to $60,000 a year. Although that daunting
statistic may strike fear for your own fate or that
of your aging parents, it is an understatement when
compared with the reality.
In
fact, when you or a family member requires nursing
home care, the expenses mount exponentially beyond
the mere nursing home fees themselves.
Your
business or practice can lose revenues as you spend
time away to provide care or make arrangements for
family members. Fees to doctors, hospitals and nursing
homes, not to mention professional counselors or
attorneys, also may arise and may have to be paid
up front, with reimbursements lagging far behind.
Plus,
who can tally the cost in grief and worry when family
home and prized personal assets are sold off to
meet rising nursing home and medical costs?
Women
are particularly vulnerable, because with longer
life spans, the finite resources tucked away for
just such emergencies may dwindle as they are pulled
out for day-to-day living expenses, leaving only
a slim margin to deal with unexpected expenses.
My own mother, who is 94 years old, has had Alzheimer's
Disease for more than 20 years.
The
impact of this devastating scenario can be minimized
by simple preparation and knowledge ahead of time.
While
the insurance industry has been offering long-term
care policies for the past few years as a one-stop,
no-worry solution, the truth is that government
programs exist that can pay for all the nursing
home and medical services you or your family may
need. Although many insist that these programs -
Medi-Cal/Medicaid - are reserved for the
poor, in truth, like Medicare, they are available
for all who meet the program requirements.
By
learning more about Medi-Cal/Medicaid and their
program requirements and rejecting misconceptions
about these programs, you can prevent loss of the
family home and assets and avoid having you or your
loved ones spend down into poverty. Plus, you can
still receive the nursing home care you or your
family members need.
The
Basics
Few people understand the basic health programs
provided by the U.S. government. They include:
- Medicare:
Created in 1965 as an amendment to the 1935 Social
Security Act, Medicare is a government-sponsored,
nationwide health care program for those 65 years
of age and over. Its various rules and regulations
concern co-payments, items covered, and length
of time payments are provided. Often, private
companies charge a fee to provide additional coverage
for Medicare gaps in coverage.
- Medicaid:
Also created in 1965, Medicaid is a needs-tested,
nationwide health care program that has additional
rules concerning assets. It has two segments -
one pays health care expenses for seniors, and
the other pays health care expenses for the poor.
It is administered state-by-state, and its rules
vary state-to-state.
- Medi-Cal:
The state of California provides this version
of Medicaid.
- The
Medicare Catastrophic Coverage Act (MCCA) of 1988
illustrates the important Medicaid provisions,
which were created to preserve the assets of the
aged due to catastrophic illness and to prevent
complete spousal financial ruin. The MCCA expanded
the current Medicare program to make it more comprehensive.
The
False Security of Savings and Assets
Make
no mistake: When a family is faced with placing
a loved one in long-term care, it is a catastrophic
event. It is a physical, emotional and financial
disaster to the entire family.
Many
women may initially feel that they or their elderly
parents have sufficient savings and investments
to take care of any "emergency" nursing home care
costs that may arise. Sufficient family funds may
actually exist to cover basic nursing home board-and-care
costs, which average around $3,000 to $4,000 monthly,
and to pay for any co-payments required under Medicare.
However,
if a patient needs extensive medical care, nursing
home costs can quickly zoom from $4,000 a month
to $40,000 a month. Most families are hard-pressed
to afford a bill of this size for more than a few
months, and the result is that they can acquire
major debt quickly in this situation. According
to the U.S. Senate Special Committee on Aging, 55
percent of those in nursing homes who pay for care
themselves use all their resources within a year
and then need to go on Medicaid. The average nursing
home stay is 2.3 years.
That's
why enrolling in Medi-Cal/Medicaid can be the solution.
Once
a patient is approved for care, Medi-Cal/Medicaid
pays 100 cents on the dollar for patient needs while
in the facility. The only cost to the family would
be a "share of cost" in some cases, and no cost
in most cases. That cost is based upon income, not
assets. That includes medications, speech and physical
therapy, personal items such as diapers, and equipment
such as specialized beds. Reimbursement continues
for as long as the patient needs care.
Medi-Cal/Medicaid
also pays a substantial portion, if not all, of
the daily room-rate. For example, in California,
the Medi-Cal daily rate is $118 per day ($3,500
monthly), close to the top rate charged for private
nursing homes.
The
False Security of Long-Term Care Insurance
Rather
than enrolling in Medi-Cal/Medicaid, some families
obtain long-term care insurance to cover their costs.
But, there are many drawbacks to this solution.
First,
the decision about whether to obtain long-term care
insurance must be made ahead of time, with payments
starting many years before actual need may exist.
In addition, as the insured gets older, premiums
become more expensive, so that often, the elderly
will stop paying on their policies to save money,
having spent thousands of dollars without once receiving
any benefit.
Second,
even if policy payments are kept up, many long-term
care insurance policies have a time limit on payouts.
They may end after one, two or three years, provide
no medical cost reimbursement, and have low, daily
reimbursement rates to nursing homes of only $50
to $100. Some of these policies will only pay if
the patient qualifies for skilled care and not for
custodial care (which is covered under Medi-Cal/Medicaid).
Indeed,
when all available payment options are examined
- Medicare, private pay, long-term insurance -
Medi-Cal/Medicaid offers the most complete payment
for patients and provides the most reimbursement
for nursing home operators. (See accompanying chart.)
The Reluctance to Enroll in Medicaid
Confusion over Medi-Cal/Medicaid often arises because
it has two major components: One for the poverty
stricken and another for older adult, long-term
care.
Admittedly,
Medicaid for the country's low-income population
does have its problems. They include fraud, lax
oversight, exceedingly slow payments, and partial
reimbursement for costs, all of which generate media
coverage that adds to the confusion.
But,
the Medicaid program for long-term care is well
run and efficient.
Oversight
is much stricter, payment occurs promptly within
30 days of submittal of invoices, and reimbursements
are 100 percent approved once a client is enrolled
via annual Treatment Authorization Requests (TAR).
Under TAR, reimbursement is insured for a full year,
even if the patient's condition changes and additional
care is needed or additional costs arise.
Many
middle-income families incorrectly assume that the
asset and income limitations under Medicaid preclude
them from enrolling at all and that they must obtain
long-term care insurance. This notion is fostered,
in part, by long-term care insurance companies that
seek to obtain paying customers from these same
mid-income families and in part by legislators seeking
to keep government costs down.
But,
Medi-Cal/Medicaid and private insurance can actually
complement each other. Legislators in the state
of California and in New York recognized this and
created Partnerships for Long-Term Care. The programs
work with insurers to enable individuals to use
both private insurance and Medi-Cal.
The
Fear That Nursing Homes Won't Accept Medi-Cal/Medicaid
Some families fear that nursing homes avoid Medi-Cal/Medicaid
patients because of complex rules and requirements
that they must meet as operators. Federal licensing
standards are strict, requiring a higher ratio of
skilled to non-skilled personnel. The licensing
procedure itself can take up to three years to complete.
The billing process also is more complex, requiring
documentation to back up costs for services.
Still,
an estimated 90 percent of all nursing homes are
currently Medi-Cal/Medicaid certified, meaning that
most nursing home operators have the capability
to accept Medi-Cal/Medicaid patients.
The Need for Eligibility/Financial Counseling
Many families, when faced with the need to pay for
nursing home care, may opt to simply spend resources
and put family homes up for sale, because that route
seems easiest. Yet, these actions can result in
a negative financial impact that can last for generations.
Entire
families can become impoverished and debt-ridden,
their future denied funds that would have provided
for higher education or family-run businesses. Some
family members may even lose housing if the family
home has to be sold to pay nursing home debts.
A
better route is to work with a nursing home admissions
or case manager to plan ahead to qualify for Medi-Cal/Medicaid.
Because most nursing homes are not qualified to
offer detailed financial counseling, referrals should
be made to specialty firms that provide such service.
Family members should exercise due diligence in
choosing only those firms that are expert in their
field, have been successful at helping families,
and have an excellent reference list.
Long-term
nursing home care does not have to be a financial
nightmare and crisis. By obtaining information before
a medical emergency exists, you can plan ahead to
ensure that you and your family members will be
able to easily handle the financial arrangements,
freeing you up to focus on each other.
E.
BONNIE MARSHALL, Esq. is retained by Nursing
Home Services, LLC (NHS), a Glendale, CA-based financial
and estate-planning company that specializes in
long-term care issues. She can be reached at 800-773-6467,
ext. 105.
(This
article is reprinted from the Winter 2003 edition
of Enterprising Women magazine. Copyright 2002 Enterprising
Women Inc. Reproduction in whole or part is prohibited,
except by permission of the publisher.)
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