Thursday, July 23, 2015

Four Ways to Pay for Long-Term Care


The Sandwich Generation refers to those caregivers, generally between the ages of 45 and 59, who are caring for aging parents while also caring for young children or dependent young adult children.  

One of the issues facing many of those caregivers is how to pay for the aging parent’s long-term care needs.  Long-term care refers to ongoing assistance to meet some of the basic activities of daily living, such as bathing, eating, dressing, using the toilet, transferring from bed or chair, caring for incontinence or eating.  The type and cost of long-term care depends on the services necessary for the health and safety of the person.

Keep in mind that Medicare does not pay for long-term custodial care.

There are four basic ways to pay for long-term care.

1. Self-Pay: The person will use their own personal resources to pay all of the costs of their long-term care.  How much should you expect to pay for that care?

According to a recent Genworth Cost of Care Survey, the average cost of an assisted living facility in the Atlanta area is about $46,140 for a private one bedroom apartment, or about $3,845 per month. The annual cost for homemaker services in the Atlanta area is about $51,480 for a 44- hour work week for 52 weeks, or about $4,290 each month.  The annual cost of a semi-private room in a nursing home is $90,338, or  $7,528 per month.  For a private room, that rate is over $103,113 per year.

2. Insurance: With Traditional Long-Term Care Insurance, typically you pay an annual premium or monthly premium until you need long-term care.  The long-term-care insurance begins to pay a daily or monthly amount once you have met the criteria. For most policies, you must be deficient in a number of the activities of daily living and be receiving home care, or be in an assisted living or nursing home.

Depending on the policy you have purchased, there is usually a waiting period of 30-90 days when you will privately pay before the long-term care insurance begins to pay.   The downside for some people is that if you are never deficient in the activities of daily living, you or your family will not receive any of your money back from all of the premiums you have paid over the years. 

Hybrid Insurance- hybrid insurance is generally a life insurance policy with long-term care coverage that allows you to draw down the death benefit amount to pay for your long-term care, subject to a monthly maximum amount.  The policies usually require a single, up-front premium, with $50,000 typically the minimum required for a hybrid.  The advantage is that even if you use the entire death benefit the life insurance company would still provide additional long-term coverage. Another type of hybrid policy is a long-term-care annuity, which provides long-term care coverage at a multiple of the initial investment amount.  The long-term care annuities are not as available right now because of the low-interest environment we are in now.

3. Veterans Benefits: The good news for war veterans and their surviving spouses is that the VA has a program that can pay for some of that care.

The program is called a Pension, but it is nothing like a Pension awarded to a long-time employee who retires.  Rather, a Pension for VA purposes refers to a monetary amount paid to a wartime veteran, or a surviving spouse of a wartime veteran, who is disabled, and has low income and assets.

The Pension has three levels of payment, the amount of the monetary award depends on the level of care needed by the veteran or surviving spouse and the number of dependents the veteran or spouse has. 

The top amount of the Pension is for a veteran with one dependent (the spouse is considered to be a dependent) is $29,175 per year, or $2,431 per month.  For a surviving spouse, the maximum pension is $15,816, or $1,318 per month in 2022. (Click for more information)

In order to qualify for this Pension, the veteran or surviving spouse has to satisfy four requirements: 

  1. Wartime veteran status- the veteran must have served 90 days on active duty, one day of which was in a declared wartime
  2. Disability
  3. Income limits
  4. Asset, or net worth limits

4. Medicaid is a medical assistance program that provides medical care for some people who cannot afford to pay for health care or health insurance on their own.  Medicaid pays for long-term care in skilled nursing facilities, and provides services and medical supplies for persons with disabilities who meet eligibility criteria.

In general, Medicaid only pays for long-term care that is provided in a skilled nursing facility, or at home for persons who would otherwise be in the skilled nursing facility but for the fact that they can be cared for in their home.  The home care program is called is CCSP, and provides a caregiver to come into the home for a set number of hours during the week.

In order to be eligible for Medicaid the person applying for Medicaid can have only $2000 in their own name, plus $10,000 worth of burial items or burial accounts.  In addition, the applicant can have a home, a car and the personal property in the home.  A married couple can have $119,220, plus the home car and personal property in the home.  There are some additional resources that may be exempt for Medicaid counting purposes, so be sure to check with an Elder Law Attorney to determine qualifications.

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