What Is Long-Term Care?

Long-term care is the kind of help you require for taking care of your personal needs, such as bathing, dressing, eating, continence, toileting, and transferring. These needs are commonly referred to as Activities of Daily Living or ADLs. You might need this kind of help because of a chronic medical or physical condition like Martha had. Frequently, people with Alzheimer’s disease or other health conditions may need ongoing supervision as well because of cognitive impairment. People who can no longer drive, manage their medications, or their finances often need help with these “instrumental activities” before they will need or qualify for formal long-term care services. Long Term Care covers a broad range of needs and services. Services to meet those needs include care at home or in a community program like adult day care, as well as assisted living or nursing home care.  As Martha improves, she may be able to go home and have services brought to her— such as a nurses aide to help with ADLs, homemaker services to help her with housework, or perhaps physical therapy to help her recover from her broken hip. These services could be covered by the Medicare Home Health benefit if she meets the requirements for care; otherwise she will have to pay out of her own funds for any services she may need.

Paying for Long Term Care

• Nursing home costs in California can range from $130 to $200 a day. (The statewide average was $190 in 2006);xiii
• Assisted living care can cost an average of $88.48 or more a day, depending on their size, location, and amenities;
• A live-in companion or homemaker can cost $150 or more a day, depending on where you live. The cost is much higher if you need someone with medical training;
• Home caregivers provided through an agency can cost an average of $25.32 an hour or more;

How Much Does Long-Term Care Cost?

• A visit in your home by a registered nurse can cost $100 a visit or more;
• A home visit by a medical social worker can cost $110 a visit or more;xiv and
• Dementia Day Care can cost $25 to $65 a day or more depending on where you live.xv

How Much Money Will I Need To Pay For Long-Term Care?

Nursing home care can average $68,000 or more a year.xvi People with very high incomes are likely to have the financial resources to pay for the care they need. They may also be able to deduct some or all of their costs as an itemized medical expense on their state and federal income tax returns because of changes in the federal tax law. If you have the time to save and you invest well, you might be able to save enough to pay for your own long-term care. However, that may not be enough to pay all of your costs if you need care for an extended period of time or if you need care before you’ve saved enough money.

Can I Deduct Any Of The Costs Of Long-Term Care?

Yes, if you meet all of the requirements of a 1996 federal tax law. This law, the Health Insurance  Portability and Accountability Act, or HIPAA, amended the federal tax code. You may be able to deduct qualified long-term care expenses, including costs for personal care and homemaker  services as a medical expense if you meet all of the requirements of the federal law. California passed similar legislation allowing a medical deduction for some long-term care expenses on state tax returns. All of your medical expenses, including those for federally qualified long-term care costs, must first exceed 7.5 percent of your adjusted gross income (AGI). Then you can deduct amounts that exceed that percentage. You should consult your tax advisor for more information on how this could affect you.

Will Medicare Pay For Long-Term Care In A Nursing Home?

Most long-term care delivered in nursing homes is provided to people with chronic, long-term illnesses or disabilities. The care they receive is personal care, sometimes still referred to as custodial care. Medicare does not pay for this kind of care. It pays less than 10 percent of all nursing home costs. Medicare only pays when you are receiving medical and rehabilitative care, and then only for a set period of time. To qualify for the limited Medicare nursing home benefit, you must first have spent three full days in a hospital within 30 days of your admission to a  nursing home. You must also need skilled care that only a licensed professional can provide, every day of your stay. If you meet these requirements Medicare will only pay the full cost of nursing home care up to the first 20 days of a covered stay. After the first 20 days, if you still require daily skilled care, Medicare will pay part of the nursing home bill. You will have to pay a co-payment ($119 in 2006) for each day of the next 80 days that Medicare continues to pay for your stay. Medicare will not continue to pay after it has paid for your nursing home care for 100 days within a benefit period.
NOTE: Some Medicare Advantage plans may waive the 3-day prior hospital stay requirement, but you will still have to meet all the other requirements for payment of a skilled nursing stay.

Martha received only 35 days of care paid by Medicare (the average number of days Medicare pays for nursing home care).xvii This was because during the weekly review of her Plan of Care she no longer met Medicare’s requirement for daily skilled rehabilitative care.

Will Medicare Pay For Long-Term Care In My Home?

Yes, but only if you meet certain stringent requirements of the Medicare program and only for a set period of time. These requirements apply whether you are in a Medicare managed care program like an HMO or receiving traditional Medicare fee-for service benefits. You must be homebound and require skilled nursing or rehabilitation services at least several times weekly that only a licensed professional can provide.  The services you receive must be from a home health care agency that participates in Medicare.  You may also receive some personal care services along with any skilled care you require.

However, Medicare does not pay when personal care is all you need, and it doesn’t pay for general household services such as laundry, shopping, or other services you 20 receive in your home. Remember that Medicare also may not pay for all of the services that a home health agency provides, and you may need to pay those costs yourself.

Do Medicare HMOs Pay For Long-Term Care?

No. Some Health Maintenance Organizations (HMOs) and other Medicare Advantage plans have a contract with the federal government to provide Medicare covered services to Medicare beneficiaries.

Members of these plans generally have no more coverage for long-term care than someone with traditional Medicare fee-for-service benefits. Medicare HMOs and other Medicare Advantage plans usually provide only those skilled nursing facility services and home health services that are covered by Medicare and meet the same requirements for skilled care. However, members of these plans may or may not have to pay co-payments for these services depending on the  equirements of that person’s Medicare Advantage plan.

Does Disability Income Insurance Cover Long-Term Care?

No. Disability Income insurance doesn’t pay for medical care, personal care, or long-term care, regardless of whether it is “short term” or “long-term” disability income protection. The purpose of this type of insurance is to replace earned income. Disability Income insurance generally pays a percentage of an employed person’s earned income if they are disabled while covered by the plan. Because it’s called disability insurance, some people may mistakenly assume they are also covered for the cost of long-term care services. Some newer disability income policies may include a rider that does pay  benefits for long-term care services, but those benefits are generally separate from the income portion of the policy.

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John Hancock

Genworth