Long Term Care Planning

Planning for the Care of Seniors

At-Home Care

Preferably, a senior would be able to age-in-place at their home. They may need the assistance of a caregiver to provide the activities of daily living. We will review options for paying for in-home care, which would include self-pay, long-term care insurance, life insurance policies, Medicare, and In-Home Supportive Services.

Seniors may have to use their savings to pay for home care. Funds from retirement savings, such as an individual retirement account (IRA), 401(k) or investment account can be used to pay for in-home care.  A Health Savings Account (HSA) can be established to help pay for home care at a pre-tax savings and can roll over from year to year.

A reverse mortgage is a federally insured loan that uses approximately 70% of home equity as a financial resource to pay for home care, assisted living, nursing home care, home modifications to allow aging in place, and even to purchase long-term care insurance. The proceeds of the loan are received tax-free and the borrower does not have to pay any monthly payments. The reverse mortgage becomes due when the borrower sells the home, moves from the home, or passes away.

Long-term care insurance pays for home health aides in at-home care to avoid nursing home costs. Coverage varies from plan to plan, but most will not pay for non-medical home care services, and in-home skilled care is rarely covered at 100%.

Seniors who have life insurance policies may be able to take a loan from the policy’s cash value or surrender the policy entirely in exchange for the cash value. Some policies have an “Accelerated Death Benefit” rider that allows a cash advance that is subtracted from the amount the beneficiary receives upon the death of the policy holder. A life insurance policy may be “converted” to a “long-term care” or “life care” benefit through a life settlement company that purchases the life insurance policy and assumes the monthly fees and subsequently collects the death benefit when the policyholder dies.

Medicare would pay for short-term medically necessary services at home, when ordered by a physician.  If the senior requires only non-medical care, Medicare will not pay for these services. Medicare Supplement Insurance, known as Medigap, is additional policy coverage that works alongside original Medicare benefits (Part A and B). A Medigap policy is purchased from a private company to pay for the “gaps” in costs not covered by Medicare, such as copays and deductibles. Neither Medicare nor Medigap policies are designed to pay for long-term care, so their coverage of in-home services is typically limited to medically necessary care over the short term.

In-Home Supportive Services (IHSS) is a Federal, California, and locally funded program designed to help pay for services provided to seniors so that they can remain safely in their own home. The caregiver can even be, and often is, a relative that cares for the senior. To be eligible for IHSS, the senior must be eligible for Medi-Cal. An IHSS caregiver can provide housecleaning, meal preparation, laundry, grocery shopping, bathing, dressing, personal care services, accompaniment to medical appointments, and protective supervision for the mentally impaired. For more information, see the San Bernardino County IHSS or Riverside County IHSS.

Assisted Living

Assisted living is out-of-home care in a Residential Care Facility for the Elderly (RCFE). An RCFE is licensed by the California Community Care Licensing Division of the Social Services Department to provide the activities of daily living to seniors.

Generally, assisted living is private pay with the same types of planning that may be used for at-home care. Long-term care insurance may provide assisted living services as a benefit. However, Medicare does not pay for assisted living services. We would plan to provide enough income and assets for the senior to afford assisted living for their lifetime.

Medi-Cal offers an Assisted Living Waiver that will pay for the costs of an assisted living home. Generally, the senior must have care needs at the nursing home level, but is willing to live in an assisted living setting as an alternative to a nursing home. Additionally, the senior must be eligible for Medi-Cal with a zero share of cost.

Skilled Nursing Facility

A skilled nursing facility, also called a nursing home or convalescent home, is a residential facility that provides on-site 24-hour medical care. Skilled nursing care is a higher level of medical care than an assisted living home that must be provided by trained individuals, such as registered nurses and physical, speech, and occupational therapists. These services can be necessary over the short-term for rehabilitation from an illness or injury, or they may be required over the long term for patients who need care on a frequent or around-the-clock basis due to a chronic medical condition. Skilled nursing services may include wound care, intravenous therapy, injections, physical therapy, and monitoring of vital signs and medical equipment. The average costs of skilled nursing care in California is $8,515 per month.

Medicare is the payor of first resort for payment of skilled nursing care. Medicare Part A will pay 100% of the first 20 days of nursing home costs, so long as you first have a minimum three-day in-patient hospital stay. Then for day 21 – 100, Medicare Part A will pay for the nursing home care, but you will pay a coinsurance of $167.50 per day. Then, for days 101 onward, you would pay 100% of the skilled nursing care.  See the table below for further explanation.

Days 0 – 20: Medicare pays 100% and You pay $0

Days 21 – 100: Medicare pays for part of nursing home care and You pay $167.50 per day

Day 100 onward: Medicare pays $0 and You pay 100%

Medi-Cal, also known as Medicaid, works together with Medicare to provide payment for nursing home costs. As discussed above, Medicare has limited coverage of skilled nursing facility services and will not cover you at all if you do not meet certain criteria. If you do not meet Medicare’s requirements for the skilled nursing facility benefit or you have reached your Medicare’s limit of skilled care, Medi-Cal may pay for this care. To qualify for Medi-Cal, you will need to meet financial guidelines in addition to meeting functional eligibility guidelines.

We can draft and fund a Medi-Cal Asset Protection Trust (MAPT) that retains the income from the assets to the senior and then names someone else as the trustee, usually an adult child. The assets are unavailable to you and not counted as assets for Medi-Cal purposes and is not subject to a Medi-Cal recovery lien at your passing. The trustee can buy or sell assets and manage the trust, and the senior can retain some control over the trust by reserving the right to change the trustee. The MAPT is flexible and the client’s lifestyle is not generally affected since they receive the income from the trust as well as their pension and Social Security check.

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