Paying for Long-Term Care – Part I (Medicare)
The Greatest Financial Risk for Seniors:
Paying for Long-Term Care – Part I (Medicare)
For all but very wealthy (or very poor) Americans, the greatest financial risk that seniors in this country face is the ruinously high cost of long-term nursing care. This is especially true in Pennsylvania, where the average cost of a nursing home (for 2018) is over $120,000 a year (and the cost in northwest Pennsylvania ranges from a low of about $80,000 to more than $140,000 a year). As a result, for someone unfortunate enough to develop a chronic illness (Alzheimer’s disease, Parkinson’s disease, COPD, ALS, etc.), that person can see an entire lifetime of savings disappear in just a few years if he or she needs nursing-home care.
Because our country, unlike many other developed countries in the world, does not have a system of universal health care (that is, one that provides health care and financial protection to all its citizens), there are only a few ways to pay for nursing-home care other than spending down much of your life savings (if you are married with modest savings), most of your life savings (if you are married with more substantial savings), or all of your life savings (if you are single).
This month’s article, Part I of a multi-part series on paying for long-term care, will cover Medicare, with articles over the next few months covering other sources of payment: long-term care insurance; the VA “Aid and Attendance” pension; and, lastly, the biggest payor of long-term nursing care, Medicaid.
MEDICARE
Medicare is a very important social insurance program in this country for providing health care to seniors and people with disabilities. However, Medicare was designed as an “acute” (that is, short-term) care model; as evidenced by the above statistics, it was not designed to cover “chronic” (that is, long-term) care. This article will focus on the three questions our clients ask most often concerning Medicare:
- When will Medicare pay for my nursing home care?
- How much will Medicare pay?
- And, finally, how long will Medicare pay?[1]
When will Medicare pay my for my nursing home care? There are two basic requirements before Medicare will pay for any part of your nursing-home care:
- Prior Hospital Stay: First of all, Medicare will not pay for any nursing-home care unless you were first admitted to a hospital, spent at least three nights there, and then entered the nursing home within 30 days after being discharged from the hospital. (So, for example, if someone at home with dementia declines to the point that he or she can no longer get adequate care at home and goes directly to a nursing home, Medicare will not pay anything for that person’s nursing home care.)
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Note: A problem for seniors that has arisen in recent years has been a trend among hospitals to accept patients on an “observational status” basis only. Even though such patients may stay at the hospital for a week or more, because they were never formally “admitted” they do not qualify for Medicare if they are discharged to a nursing home. |
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It is therefore important to confirm whenever you or your spouse or parent will be staying overnight in a hospital that this stay is based on a hospital “admission” and not just “observational status.” |
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Skilled Care: Second, Medicare will only pay if the nursing-home resident needs “skilled” care. For Medicare purposes, “skilled care” basically means two things:
- Type of care: Your doctor must have ordered the services you need; they must be such that require the skills of a licensed professional (such as a doctor; registered nurse, physical, occupational or speech therapist); and your care is furnished by, or under the supervision, of one of these skilled professionals.
- Frequency of care: You require these services on a daily basis (which, for therapy, means five days a week).
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In my experience, a nearly universal misunderstanding concerning Medicare in virtually every nursing home is that in order to meet the “skilled care” requirement, you must be showing improvement from the treatment you are getting. For example, it is very common for nursing home residents whose care is being covered by Medicare to be told after a week or two that Medicare will stop paying because they are no longer improving from their therapy (often using such phrases as “they have plateaued,” or that they “no longer have any restorative potential”). |
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But this is WRONG. “Improvement” is NOT the Medicare requirement. Rather, as long as the care is needed to maintain the resident’s condition – that is, needed to keep the resident’s condition from declining – it is “skilled care” for which Medicare will pay. (See Part II of this series about a class-action law-suit against CMS, the federal Medicare agency, resulting in a settlement agreement that makes this distinction clear.) |
How much will Medicare pay towards my nursing home bill? This can be broken down into three separate time periods:
- First 20 days: Medicare will pay the full cost of your covered services for the first 20 days of your “benefit period” (see below), which means pretty much everything: a semi-private room, meals, skilled nursing care (including physical, occupation and speech therapy), medications, medical supplies and equipment, etc. (Charges not covered by Medicare might include such things as telephone charges or laundry fees.)
- Days 21 – 100: You will be responsible for a daily co-pay amount (in 2017 this was $164.50 a day or $5,004 a month) and Medicare will pay the rest.
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Note: Many seniors we work with have a private Medicare Supplement policy (also called a “Medigap” policy) that covers this daily co-pay for days 21 through 100. Such policies are classified according to the benefits offered, beginning with “A” (those with the lowest cost but the fewest benefits) through “L”. The policy must be “C” or higher in order to cover the nursing-home co-pay amount. |
- Beyond 100 days: Nothing.
How long will Medicare pay any part of my nursing home bill?
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Benefit Period: Medicare uses a period of time called a “benefit period” to determine how many days it will pay. You can get up to 100 days of nursing-home coverage in a benefit period.
- Note: The 100 days is the maximum benefit period Medicare will pay in a nursing home. Contrary to what many clients think, there is no automatic 100 days of Medicare coverage in a nursing home. You still need to be getting “skilled care” in order for Medicare to pay, and few of our clients get a full 100 days of coverage.
- Your benefit period ends when you have not received skilled care for at least 60 days in a row. While there is no limit to the number of benefit periods you can have, a new benefit period for nursing-home care will not begin until you have another 3-day hospital stay and meet the skilled care requirement.
Part II of this series will cover a federal class-action lawsuit against CMS (the federal agency in charge of Medicare and Medicaid) that resulted in a settlement agreement in 2013 that clarifies (at least on paper) an important Medicare benefit for seniors in nursing home – but unfortunately one that continues to be ignored in practice.
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The content herein is for general informational purposes only and does not constitute legal advice. For specific questions you should consult a qualified elder law attorney.
Note: Contrary to what almost everyone believes, if you or a family member has been admitted to a nursing home, it is NOT too late to protect assets. The Medicaid laws give seniors the option to protect a significant portion of their life savings, even when facing an immediate crisis, with no advance planning. However, “time works against you” when planning for long-term care; every day of delay in a crisis can result in $200 to $300 or more of irretrievable loss, so it is important that families who have a spouse, parent or other loved one needing long-term nursing care contact a knowledgeable and experienced elder law attorney for advice as soon as possible.
Kemp Scales is now retired, but elder-law attorney Schellart Los continues to serve clients throughout western Pennsylvania from offices in Erie and Titusville. She can be reached toll-free at (888) 827-2788 or by e-mail at schelly@losscaleselderlaw.com. The Law Offices of Schellart Joyce, LLC has an Internet presence at www.losscaleselderlaw.com.
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Other requirements are that the senior have Medicare Part A (hospital insurance) and have days left in his or her benefit period, and that the nursing home is certified by and participates in the Medicare program. ↑
