Long-Term Care

One of the facts of aging is that some of us will eventually be unable to take care of ourselves and will need some form of assistance, either with home health care, an adult care home or a nursing home. Aside from the personal aspects of being debilitated, which can be devastating, there is the equally devastating financial cost. In Arizona, the cost of a nursing home is $3000-5000 per month. At that rate it would not take long to deplete the resources of most families. What can be done to protect against this potential impoverishment? Among options available to us are what might be called "self insurance" whereby we use our own dollars to pay for the costs. That might be done through savings or long- term care insurance. Another option is reliance on federal support through Medicaid (Arizona Long-Term Care System-ALTCS- in Arizona).

Insurance

We all know about the usual methods of accumulating dollars that might be used to cover cost of care such as IRAs, CDs, scrimping, etc. The insurance option is long-term care insurance. It comes with many variations but generally it pays for the home health care or nursing home costs. Now, having a long-term care policy has become even better. The Kassebaum-Kennedy bill makes premiums for long-term care insurance deductible from your federal income tax. The maximum deductible varies with age. If you are forty or less, the most you can deduct is $330. Age 41-50 is $620. At 51-60 you can deduct $1,230, 61-70 is $3,290, and over 70 the maximum is $4110. This is pretty much in line with what you might pay at those ages.

The amount deductible is subject to the over-all maximum deductible of 7 ?% of adjusted gross income, or 10% with the alternative minimum tax treatment of medical expenses. (Check with your accountant for exact details.)

For more details, click here.

ALTCS Requirements

Dollar values updated for 2011

If you don't have the insurance or you don't have the financial cushion when a long-term need arises, the remaining option is ALTCS. If you meet the eligibility requirements, ALTCS will guarantee a nursing home bed or will supply in-home respite care. It will pay room and board, medications, and what is considered medically necessary.

There are two sets of criteria used to determine eligibility, medical and financial. To be medically eligible, the individual must score a minimum number of points during a physical examination given by ALTCS appointed medical personnel. Points are given for varying degrees of inability to handle the activities of daily living. The more functionally or medically disabled the person is, the more points are given.

Because ALTCS is a needs based program, only those able to show minimal income and assets are financially eligible. In Arizona, there is a standard for married couples and one for single applicants. The differences are in what is excluded when assets are totaled. In any case, the applicant can have no more than $2,000 in cash equivalents and, for a single person, not more than $2,022 in monthly income. Proper planning with an attorney familiar with this system can greatly limit the impact of these severe requirements. Do not just spend until you reach the $2,000 limit.

Medicare

Dollar values updated for 2011

One assumption often made is that if you are covered by Medicare, you have long-term care taken care of. Not true. Only Medicare Part A covers any hospitalization or post hospitalization care costs, and that coverage is very limited.

Hospitalization:
Part A generally covers the first 60 days of hospitalization for one "spell of illness" with a deductible of about $1,132. It then pays day 61 through day 90 with a required co-pay of about $283/day. If more days are required, there are 60 lifetime days available to tack on after day 90. Those lifetime days will have a co-pay of about $566/day. Once those lifetime days are used they are gone forever. The first 90 days are renewable with a new "spell of illness". Note that none of this is really long-term care.

Post-hospitalization
Only if a skilled nursing facility is needed will Part A cover any costs of care after leaving the hospital. Skilled care is required primarily where there is a reasonable chance of rehabilitation but can include preventing further deterioration. To be eligible for coverage, an individual must have had at least a three day hospitalization and must enter the skilled nursing facility within 30 days of discharge from the hospital. The first 20 days are covered 100%. The next 80 days have a co-pay of about $141.50/day. There is no coverage past these 100 days. Part A will not pay for the custodial care in a nursing home which is what constitutes most long-term institutional stays.

For more information please contact The Law Office of Paul C. Moors.

For More Information

  1. Costly Advice In Long-Term Care - Beware of the Myths
  2. The Need for Long Term Care Insurance
  3. 15 Myths About Medicaid (ALTCS)

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