Paying For Long Term Care
Sam and Emma planned to live out their days at their comfortable home in Chandler, Arizona. When Sam had a stroke, though, Emma had to drastically change her vision for their future. His doctor advised her that Sam would need 24/7 nursing care, at least for a time. Her biggest problem initially? Figuring out how to pay for Sam’s long-term care.
Most people don’t hope to be in long-term care as they grow older. In fact, many Americans expect to remain in their homes as long as possible. Since long-term care includes more than the traditional nursing home, that may be possible. Long-term care may include:
- in-home care,
- residential care (nursing homes and assisted living facilities),
- home-based health care services,
- community-based health care services, and
- assistance with daily activities.
About 70% of people age 65 and over will need some form of long-term care. The average monthly cost of long-term care can be:
- Home Health Care – more than $4,000
- Assisted Living Facility – more than $3,500
- Nursing Home (semi-private room) – about $6,400
- Nursing Home (private room) – more than $7,600
We have a better idea of how common long-term care is and about how much it costs. Let’s look at how people can pay for that much-needed care.
Self-Pay & Insurance
Some people in need of long-term care have carefully scrimped and saved to build their nest eggs. But long-term care is expensive as we mentioned above. It may not take long to completely empty savings accounts that took years to build. Still, self-pay is one way to go if 24/7 care is needed.
It’s also possible to buy long-term care insurance. Like all insurance, however, not everyone will qualify for it.
In fact, insurance that provides coverage for some long-term care may be out of reach for several reasons:
- Age. Insurance typically must be purchased well before the coverage is needed. Older people or people with serious health conditions may not be able to buy insurance or will pay a much higher premium.
- Income. Premiums may be too high – thousands of dollars each year. People with a modest income may not be able to justify such a high premium, especially since many policies are considered “use it or lose it” policies.
- Health. Insurers may reject applicants with pre-existing health conditions.
Fortunately, people who want to buy long-term care insurance have several options:
- State-Sponsored Insurance Partnership Programs. Arizona Partnership for Long Term Care offers insurance policies that help defray the costs of long term care.
- Employer-Sponsored Plans. Some employers offer insurance benefits to their employees, including plans that cover disability and/or long-term care.
- Private Policies. As baby boomers age, long-term care insurance policies may evolve to meet their needs. Meeting with a qualified broker of long-term insurance may help consumers choose a plan that is right for them.
For those unable to pay for long-term care, either as a self-pay or through insurance, public benefits options are available.
Sam and Emma did not have long-term care insurance. Their savings and retirement benefits might pay for Sam’s care for a while, but Emma needed to consider her future needs also. She looked beyond self-pay and insurance options to public benefits that might pay for some of Sam’s care.
This federally-funded, state-administered program provides coverage for health-related services. In fact, Medicaid benefits pay for the majority of long-term care services. So, it’s an important benefit for those who qualify.
And that is where many people get hung up – eligibility.
To receive Medicaid benefits, a person must submit an application and quite a bit of supporting documentation. In addition, income and resource limits must be met. Those limitations change from state-to-state. Arizona Medicaid is administered by the Arizona Health Care Cost Containment Systems (AHCCCS). Coverage is offered for various groups of people, including the Elderly and Disabled.
Eligibility for Medicaid is determined in part by the applicant’s income and resource limits. For example, an applicant can:
- Have a monthly income of up to $2,250 for an individual;
- Own up to $2,000 in resources.
Not everything an applicant owns is considered a “resource.” Also, there are special exceptions to some requirements for married applicants.
Applying for Medicaid is complicated and frustrating. It’s best to have a qualified Arizona attorney assist during your Medicaid application process.
If applying for Medicaid is so difficult, why would anyone want to go through that?
Medicaid does offer important coverage for services that may otherwise be unavailable including:
- Children’s general medical needs and rehabilitation;
- Care for pregnant women;
- Assistance for adults who serve as caregivers;
- In-home and nursing home care for the elderly and disabled; and
- Assistance with paying for Medicare.
How To Apply For Medicaid benefits:
When faced with high costs for long-term care, you may need to check every available option. Medicaid benefits can help cover long-term care, but you have to apply first.
The AHCCCS website has an online application and a form that can be printed and completed by hand.
First, find out which program will meet your needs.
- Read the instructions carefully.
- Complete the sections of the application that apply to you.
- Submit the application, either online, by mail, or in person to a local office.
- Talk to an attorney if you need help understanding the application process.
You may be interviewed by someone from AHCCCS and additional documents may be requested.
If eligible, Medicaid does provide a way for individuals like Sam and Emma to pay for long-term care. The difficult application process can be eased by consulting with an experienced Arizona attorney. You don’t have to go it alone. Emma applied for Medicaid, but looked toward other benefits that might help defray the cost of Sam’s long-term care.
The Arizona Health Care Cost Containment System (AHCCCS) is Arizona’s Medicaid agency. However, the Arizona Long Term Care System (ALTCS) is the long-term care arm of this agency.
As we mentioned earlier, Medicaid is a federally-funded, state-managed program. The federal government provides the money, or most of it, for individual states to use for eligible individuals. AHCCCS was developed to help prevent waste and misuse of Medicaid money provided by the federal government. Initially, AHCCCS programs did not provide coverage for otherwise eligible people who happened to live in nursing homes. ALTCS was developed to pay for eligible long-term care needs, whether provided in a residential facility or at home.
So why are there two agencies that administer Medicaid? There are some important differences, the largest, or course, being that ALTCS manages long-term care benefits. This all may seem confusing: many people use the terms AHCCCS, ALTCS, and Medicaid as if they are the same. However, remember that Medicaid is the federal program. Arizona residents will apply for general Medicaid benefits through AHCCCS and for long-term care Medicaid benefits through ALTCS.
So, what ALTCS benefits are available and how would someone apply for them?
ALTCS may provide coverage for the following:
- Institutional care in a nursing facility;
- Home and community based services, like out-patient and in-home care;
- Medical services like office visits and prescriptions,
- Behavioral health services,
- Preventive and well care for children; and
- Hospice services.
As you can see, long-term care is not limited to nursing home residency or 24/7 skilled nursing care. In Sam and Emma’s case, they need to explore long-term residential care. Under other circumstances, Sam might have been able to remain at home and receive in-home care.
ALTCS applicants must meet financial and non-financial eligibility requirements. Adjustments are made if the applicant is married.
Financially, applicants cannot have countable resources valued at more than $2,000. However, people whose resources exceed that limit may still be able to qualify. That’s why it’s important to talk to an attorney about applying for Medicaid/ALTCS benefits. An attorney may suggest setting up a Miller trust, for example. Medicaid recipients may be able to transfer money to this special trust to retain eligibility. Also, the exceptions for spouses can be difficult to understand.
Non-financial requirements include things like:
- An AHCCCS determination that the applicant needs a nursing home level of care,
- S. Citizenship or qualified immigrant status,
- Having a Social Security number,
- Arizona residency status,
- Applying for other cash benefits;
- Living in an approved facility or your own home.
The application and eligibility processes are confusing and lengthy. It’s best to get help. However, if you want to go it alone, call your local ALTCS office for more information.
VA Aid & Attendance
Our military veterans deserve special treatment, especially as they begin to need more intensive long-term care. One little-known veteran’s benefit is called Aid & Attendance. Veterans who qualify receive an additional amount over and above their monthly pension.
To receive Aid & Attendance payments, a veteran must already be eligible for a VA pension. In addition, they must also meet at least one of these requirements:
- Need help from another person to handle daily activities like bathing, feeding, dressing, adjusting prosthetic devices, or protection from hazards.
- Be bedridden due to a disability or disabilities.
- Patient in a nursing home because of mental or physical incapacity.
- Eyesight is severely limited.
Finding out if you’re eligible for Aid & Attendance can be difficult. Some applicants are denied benefits. There is an appeal process, but the whole application-appeal process can take years. It helps if you have the assistance of an attorney who has handled Aid & Attendance claims before.
By the way, you should know that it is illegal to charge for helping someone apply for VA benefits, including Aid & Attendance.
Sam receives a veteran’s pension. Emma applied for Aid & Attendance benefits, but may not be eligible. Pension benefits, including Aid & Attendance, are calculated based on need and income. Sam needs the care, but their income may be too high. She will continue looking for additional benefits that might pay for Sam’s care.
How To Apply for Aid & Attendance Benefits:
If you or a loved one is a veteran or the surviving spouse of a veteran, Aid & Attendance benefits may be available. To apply, write to the Pension Management Center for your state. The Center that manages Arizona veterans is:
Department of Veterans Affairs
Claims Intake Center
Attention: St. Paul Pension Center
PO Box 5365
Janesville, WI 53547-5365
You’ll need to send evidence that the applicant needs Aid & Attendance. This might include a report from an attending physician. The report should include detailed information about how you or your loved one handles daily personal functions and how the applicant is able to get around.
Address Incapacity With Your Life Care Plan
As Sam and Emma work out how to pay for Sam’s long-term care, one important fact became obvious: it all would have been easier if they had just planned ahead.
One of the best ways to prepare for the cost of long-term care is through your estate planning.
Yes, estate plans are not just about death.
For example, Sam and Emma could have signed durable powers of attorney. This legal document allows them to give each other, or another trusted person, the ability to make financial decisions for them in the event of incapacity. Health care powers of attorney would also allow Sam and Emma to make medical decisions for each other. These documents would not have helped them pay for long-term care, but could help them avoid legal fees and court costs if a guardianship or conservatorship proceeding became necessary.
Trusts may also have offered a way for Sam and Emma to pay for their future long-term care needs, while maintaining an income or providing an inheritance for their family.
Revocable living trusts are a common estate planning tool. Individuals can transfer some or all of their assets to a trust, but still control the assets. Although the person creating the trust can serve as trustee, a successor trustee can take over if the trustee becomes incapacitated.
A Miller trust, as mentioned above, help people qualify for Medicaid and remain qualified. Income that exceeds the limit set by Medicaid can be transferred to the Miller trust.
How to Set Up an Estate Plan That Works for You:
Setting up and maintaining a trust is not the right option for everyone. Talk to your estate planning attorney to learn more about your incapacity planning options. It’s especially important that planning be done early and kept updated for people who may need Medicaid. Financial transactions made in the 60 months prior to applying for Medicaid may cause reduced or delayed benefits.
Planning For The Worst Hope For The Best
We all hope to avoid the need for long-term care. But it happens. People every day are faced with making tough financial and medical decisions.