Medicare is the US government’s medical insurance program for the retired.
If an individual enters a skilled nursing facility immediately following a hospital stay of at least three days and has a doctor’s certification that his or her medical condition is improving, Medicare may pay for some care in that facility:
- The first 20 days, it will cover 100 percent of the costs.
- A co-payment is required for days 21-100.
- At day 101, regardless of the individual’s medical state, Medicare stops payment for all services.
- After this time, Medicare will not pay for care received to assist with activities of daily living.
Refer to https://www.medicare.gov/ for additional information.
If individuals’ income and assets meet the Medicaid guidelines in their state, the cost of care in a skilled nursing facility may be covered.
Because Medicaid is a medical program for those who are financially needy, most states set maximum income levels near what is traditionally considered poverty levels.
The number of assets a person can retain varies, but it is a minimal amount as well. Rules vary as to which assets impact Medicaid eligibility. In general, if married, the community spouse may keep one car, a home, and personal belongings. Otherwise, possessions must be sold to cover the cost of care before Medicaid will take over.
Refer to https://www.medicaid.gov/ for additional information.
The U.S. government currently offers some long-term care benefits to veterans under the Veterans’ Health Care Eligibility Reform Act of 1996.
Eligibility for services will be determined based on an individual’s need for ongoing treatment, personal care and assistance, as well as the availability of service in his or her area. Other factors, such as financial eligibility, service-connected status, insurance coverage and ability to pay may also apply.
Refer to https://benefits.va.gov/benefits/ for additional information on veterans benefits.
Personal assets and income can be used to pay for care. But as costs continue to increase, retirement funds and other assets that were designated for income may need to cover the cost of care.
Individuals may also rely on family members, such as children or grandchildren, to provide care. Providing care for a loved one may take time away from their personal lives and careers and may create stress or unanticipated emotional hardships. Although family members may also help pay for care, doing so may negatively impact their own financial situation.
Transfer the Risk
Individuals can purchase an insurance product or supplemental agreement to help cover the expenses associated with needing care.
A long-term care or chronic illness policy or agreement can offer your clients:
- Independence – It may allow clients to stay in their home or community longer.
- Income and asset protection – Unlike government programs, clients won’t have to spend down their assets to qualify for benefits.
- Choice of care – Most products allow clients to choose in-home or facility-based care, as well as their caregivers.
- Peace of mind – Family members may not need to become full-time caregivers.
Currently there are two main ways to transfer risk:
- Traditional Long Term Care Insurance
- Hybrid/Asset Based Long Term Care Insurance