Medicare is the government’s health plan for those who are aged 65 or who are on disability. It is required for an individual to apply for Medicare when they reach age 65. If the individual continues to work and has employer provided health coverage, then medicare often becomes their primary care provider and their work coverage becomes secondary.
Since Medicare doesn’t pay all of a person’s medical expenses, an individual has two options with to pay what Medicare doesn’t cover.
- The first option is to go on traditional Medicare and then purchase a Medicare supplement to pick up most or all (depending on the supplemental plan chosen) of the “gaps” in Medicare . How many “gaps” are covered depends on the plan chosen. The person covered by traditional Medicare and a supplement will have little or no other out-of-pocket expense. Essentially if Medicare covers the care provided (at the benefit amount that Medicare approves), then the supplement picks up the difference. The premium varies by age and whether you use tobacco. The great thing about traditional Medicare with a supplement is that when you apply for your first Medicare supplement, the only medical question you can be asked about tobacco use.
- The second option is to take a Medicare advantage plan. These advantage plans provide for access to needed medical care with a co-pay for each doctor visit, specialist visit and hospital stay. The have an annual “out of pocket” maximum. The premium for a Medicare advantage plan can vary from zero to perhaps $75/month. The advantage plans usually offer prescription drug coverage and often other benefits such as some dental or vision coverage.
I prefer to recommend traditional Medicare with a supplement to my clients to fix costs into their budget. These client’s see very little other out-of-pocket expenses. But due to budget limitations, some applicants prefer to take an advantage plan due to the lower initial monthly expense, especially if they are healthy. My experience over the last 35 years is that sometimes those who take an advantage plan end up regretting it when their health worsens and they need frequent ongoing doctor/hospital visits and end up meeting their annual out-of-pocket costs which usually run into several thousand dollars.
Dollars that people on limited budgets cannot afford.
Long Term Care Insurance
Long-term care is one of the greatest crises facing our senior population in the next generation and beyond!
Medicare is fine for providing for your health care needs. But what if you become unable to do the basic things we all do to maintain our self-dignity. I am referring to ADLS (activities of daily living). Things like continence, toileting, bathing, dressing, walking and eating. Or what if we develop a cognitive impairment? Medicare provides care when the services of a licensed professional (doctor, nurse, therapist, etc) is required. However, when we are unable to perform the ADLS or become impaired cognitively, the services we need do not require a license to perform. Mainly we need someone with a kind and willing heart and a strong back.
When these events overtake us, the care we need can be provided at one’s home, at assisted living facilities or at nursing home-convalescent homes. Where the care is received depends on the degree of care required. Most people, understandably, want to stay at home. And if care is needed only for part of each day or a few days a week, home care is a viable option. However, as the need for care grows, it may require moving into an assisted living facility or nursing home to receive round the clock care.
Once long-term care is needed, the need can last for the rest of one’s life, often for years. Since this type of care is not covered by medicare, how are the expenses paid.
There are only two ways to pay for long-term care expenses.
- First is to pay cash from current income and resources. With the costs for nursing home care in East Texas running close to $4,500 per month or $54,000 per year for room and board (not including sitters, Depends, etc.), It doesn’t take long to make a serious dent in a families financial security. Besides the cost of care for a loved one, there are still bills, taxes, insurance and upkeep for the spouse at home to contend with.
- Second is to have a Long-term Care policy. These policies are not inexpensive to purchase and the premiums usually rise over time. The can provide care for expense incurred at home, an assisted living facility and/or a nursing home. Some only pay for one or two of these locations. With each policy there are certain limitations. There is a deductible, called an elimination period which means for those days of the elimination period, the insured pays all costs. Then there is a daily maximum benefit paid, set when the policy is purchased. The daily maximum may be the same for home care, assisted living and nursing home care or it can be a smaller percentage of the benefit for nursing home care paid for home care and assisted living care. Then there is a limit on the total amount of expense that will be paid, specified in either a total dollar amount of care paid or a fixed number of days (or years) of care that will be paid. These policies tend to be more expensive that most families can comfortably afford.
Lastly, there is the program called Medicaid, a program funded and regulated by the Federal and various state governments but administered by the various states with some variations from state to state.
There are five basic requirements to qualify for Medicaid:
- first, you must be an american citizen or green card carrying alien;
- second, you must be a resident of the State of Texas to get benefits in Texas;
- third, you must have a medical need to receive Medicaid benefits, that is the inability to perform any 2 of the 6 ADLS without assistance or have some form of cognitive impairment;
- fourth, you must not exceed a maximum monthly income limit; and
- fifth, you must not exceed a maximum resource limit.
These two financial requirements change annually. For 2018, the maximum allowable income for the Medicaid applicant is $2,090 per month gross income. The maximum allowed countable resources for the medicaid applicant is $2,000. A family usually has to go through a process called “Medicaid spend-down” before their loved one can receive Medicaid benefits. Wow!! But all is not lost!
Thankfully, the Medicaid program provided a number of means around these limits if there is a spouse at home (called the “community spouse”) to provide for. These provide for the spouse at home to have a minimal amount of income and to have a minimal amount of resources to provide for their own needs.
If you or a loved one is facing a nursing home stay, it is imperative that you get good advice from an elder law attorney or a certified Medicaid planner associated with an attorney.
For over 18 years, I have helped families reduce or eliminate the loss of income or resources (assets) to Medicaid “spend-down.” This provides more income and assets to provide for the “community spouse”, the loved one at home.
The goal of Medicaid planning is to get the loved one the care needed without bankrupting the spouse at home.