How to Pay for Long Term Care

How am I going to pay for Nursing Home care?

It’s not a scenario any adult child wants to consider: having to put their ailing, elderly parent(s) into a nursing home or assisted living facility. But it’s a decision that people face and agonize over every day. We’re living longer and the never-ending stream of new illnesses that could inflict our bodies grows daily. Yet, rather than send mom or dad to a long-term care facility (LTC), more and more adult children are instead assuming the role of caregiver. Why is that? Is it because we’re caring for a parent with whom we may have treated poorly growing up? And this is our chance to make up for that troubled relationship? Is it the guilt of “sending” them away for someone else to look after? Is it because we perceive LTC facilities to be unsafe or unfit to properly care for our ailing parents? Or is it the cost? Is it the lurking dread of receiving a monthly bill from mom’s nursing home in conjunction with Junior’s fall semester bill from Towson? With nursing home and LTC facility costs in the Southern Maryland region reaching the low six-figure mark (~$95,000 annually according to a 2016 Genworth study), it would be no surprise if everyone admitted to that being at least part of the reason they’re up at night, worrying. “How am I going to pay that bill this month? Will Medicare or Medicaid help me out? What about the insurance company? Are there other options I haven’t considered? Should I hire an attorney to help me sort through it all?”

Relax; take a breath, because you have options. The key is understanding those options and deciding which is right for you and for your family.

Medicare and Medicaid

It’s important to understand that while Medicare and Medicaid can help you pay for long term care, there are certain restrictions and limitations to the coverage. It’s also important to understand the differences between the two.

Medicare is the federal program that helps pay your doctor and hospital bills if you are over age 65 or have certain disabilities. Almost everyone who receives Social Security benefits is covered by Medicare. Where long term care is concerned, Medicare will generally only pay for skilled or rehabilitative nursing care for a short time after hospitalization.

Medicaid (also known as Medical Assistance) is a joint federal and state program that pays nursing home costs for people who cannot afford to pay the full costs themselves. Each state administers its own Medicaid program with slightly different eligibility rules. Medicaid’s long-term care nursing home program is available only if you are unable to care for yourself at home. You must also meet financial eligibility limits regarding income and assets, which differ depending on your marital status. Be aware that some nursing homes limit the number of Medicaid residents they will accept.

Long Term Care Insurance

If Medicare and Medicaid are not available to you, or if they do no suit your needs, another option to consider is Long Term Care Insurance (LTCI). LTCI can be purchased at any point in your life, though typically premiums are less costly if you purchase them when you are younger. The Maryland Insurance Administration (MIA) maintains a list of the insurance companies that are approved to sell individual long term care policies in Maryland. You can find that list here.

The Maryland Insurance Administration also has information about the Maryland Long-Term Care Insurance Partnership Program. This program is a partnership between Maryland and private insurance companies who issue long-term care insurance policies. A policy sold under the Long-Term Care Insurance Partnership Program, by law, must meet the same standards as a long-term care policy not sold under the program. In addition, a partnership policy must meet certain specific federal and state requirements, and be certified as a “long-term care partnership policy” by the Commissioner of the MIA.

The benefit to partnership policies is that if you have a partnership policy, the amount of money that the LTCI pays out on your behalf is an addition to the amount of resources you can keep for Medicaid purposes. For example, under typical circumstances, you can only keep $2,500 of assets as of the first of the month of application. If you have a LTCI partnership plan, and the plan pays out $300,000.00 of benefits over a 3 year period, you now get to keep $302,500.00 of assets and still qualify for Medicaid.  To learn more about the Maryland Long-Term Care Insurance Partnership Program, click here.

Personal Resources

Personal trusts, annuities and reverse mortgages are also sources of funds for LTC. You may need the assistance of a financial planner or other advisor to consider the benefits and drawbacks of these options. Which option is best for you depends on many factors including your age, your health status, your risk of needing long-term care, and your personal financial situation. It is best to discuss these options with a financial planner.

To learn more about any of these options or what the best course of action would be for you and your family, consider contacting an attorney who focuses on areas such as Estate Planning or Elder Law. The attorneys of Ferrante and Dill’s Estate Planning and Elder Law group understanding that planning for a future in which you are incapacitated and otherwise unable to care for yourself can be scary and tough. However, it is also one of the greatest gifts you can give to a family member or loved one by removing this burden from their shoulders. Let us help you and your family plan for the future. Give us a call today at (410) 535-6100 or send us an email at info@ferrantedill.com.