Long Term Care
Americans can no longer afford to ignore the potentially devastating costs of nursing home care and other long-term care. Because life expectancies have continued to increase, so has the statistical likelihood that you will need nursing home care or other types of long-term care. According to the Centers for Disease Control and Prevention only 39% of men and 43% of women who were born in the year 1900 lived to age 65. However, it is anticipated that 77% of men and 86% of women who were born in the year 1997 will now live to age 65 and beyond. With extended life expectancies, nursing homes are becoming a more likely and one of the most expensive creditors that the average American will face in his or her lifetime. Consider the following statistics:
- About 70% of Americans who live to age 65 will require some form of long-term care, with over 40% needing such care in a nursing home.
- As of 2008, the national average of a private room in a nursing home was $212 per day or $77,380 per year.
- One study by a prominent long-term care insurance company found that 46% of its long-term care claimants were under the age of 65 at the time of disability.
- On average, a 65 year-old individual will need some type of long term care for three years. Women need care for longer (approximately 3.7 years on average) than men (approximately 2.2 years on average). 20% of today’s 65-year olds will need long-term care for more than five years.
With these statistics in mind, people can choose from four different possible ways of paying for their long-term care costs: (1) private pay, (2) procuring a long-term care insurance policy, (3) Medicare, or (4) Medicaid.
Obviously, the most preferable option for individuals would be to have sufficient liquid funds available to fully pay for their long-term care needs. However, the unfortunate reality is that this option is not available to most Americans today.
For those who can qualify, a long-term care insurance policy is a great protection against devastating long-term care costs and is the best option for most individuals who will be faced with long-term care needs in the future. Unfortunately, these types of insurance products are relatively new to the marketplace and many individuals only learn of these policies after they have become uninsuranble or the premium costs are unaffordable.
Without the options to privately pay or procure long term care insurance, people must then turn to Medicare and Medicaid.
Many people receive long-term care benefits under Medicare. For those enrolled in Medicare, nursing home benefits are limited to a maximum of 100 days per “spell of illness.” Out of those 100 days, the first 20 days are covered by Medicare and the remaining 80 days of coverage requires the patient to pay a daily deductible, which is currently $133.50 per day. Medicare only provides coverage to individuals who previously have had a hospital stay of at least 3 days and require skilled nursing care or physical, occupational, or speech therapy on a daily basis.
Nevada Medicaid is funded jointly by the State of Nevada and the federal government and is administered by the State. Unlike Medicare, in which individuals age 65 or older are automatically eligible for benefits, Medicaid in Nevada only provides benefits for people who meet certain eligibility guidelines. In general, there are three categories of eligibility that an individual must meet to receive Medicaid benefits: categorical, resource and income.
The categorical requirement is met where an individual resides in a skilled nursing facility, intermediate care facility or hospital and is aged (65 years or older), blind or disabled. The applicant must also be a U.S. Citizen or a permanent resident alien lawfully admitted into the United States or permanently residing in the United States under color or law.
Under resource eligibility requirements, Nevada Medicaid applicants must meet strict guidelines on the amount of assets that they can keep. Without any additional planning, the following assets can be kept by a Medicaid applicant who is seeking to become eligible for Medicaid:
- Up to $2,000 cash
- A principal residence which does not exceed $500,000 in equity
- One automobile
- Personal belongings and household goods
- Up to $1,500 designated as a burial fund for the Medicaid applicant and spouse
- Burial spaces, containers, markers and certain related items for the Medicaid
- applicant and spouse
- All term life insurance policies
Finally, the Medicaid applicant must also meet Medicaid’s income requirements. Presently, the Medicaid applicant may not allowed to receive more than $2,022 per month. Out of this amount received, all but $35 per month will be used to offset the cost of the applicant’s monthly long-term care costs.
Although Nevada Medicaid has strict eligibility requirements, the rules allow for both the Medicaid applicant as well as a spouse of a Medicaid applicant to retain a significant amount of assets if the proper planning is done prior to the time of application. This often involves the use of certain types of trusts or petitioning the Court to increase the amount of assets that can be kept. With the proper advice and planning an individual can qualify for Medicaid benefits while still retaining assets either for a spouse or to pass on to loved ones at death.