Saturday, July 15, 2006

Long Term Care Insurance vs. Medicare vs. Medicaid

Think Medicare and Medicaid will take care of all of your long term care insurance needs? Think again.

Medicare will NOT cover services considered to be long term care services such as custodial care. If you have the idea that Medicare will take care of all of your long term care insurance needs then you need to read the following:

Medicare is a Federal health insurance program generally covering people who are age 65 or older and some disabled persons. Medicare will cover the first 100 days of care in a nursing home if:

1) you are receiving skilled care, and 2) you have a qualifying hospital stay of at least 3 days and enter the nursing home within 30 days of that hospital discharge. There are also some deductibles and copays (meaning you have to pay part of the cost). Medicare also covers limited home visits for skilled care.

It's very important to realize a few things about long term care versus Medicare's coverage:

most long term care is not skilled care,

most long term care does not take place in a nursing home,

most nursing home stays do not immediately follow a hospital stay,

most people who require care in their home usually need more or different types of care than Medicare covers, and most people won't start Medicare coverage until age 65.

So don't count on Medicare to cover your long term care needs.

What about Medicaid?

Medicaid is set up by individual states, and subsidized by the feds, to act as a safety net for the poor and impoverished. Medicaid covers long term care services and might cover you if you meet your state's poverty criteria and receive care that meets your state's guidelines. Usually this means expending all but $2,000 of your assets and savings (except for perhaps your house and your car). It also means receiving care from a limited number of state-approved caregivers (mostly institutions like nursing homes) that are willing to accept Medicaid's payments.

In other words, if you have any money saved up (like retirement plans, 401k's, etc) you have to cash it all in and spend it on your long term care insurance needs before you can apply for Medicaid. It also means that you do not have choices in who provides the long term care to you.

With Medicaid, you are forced to receive services from a Medicaid provider, often these providers, although well meaning, are the bottom of the barrel providers. Medicaid does not reimburse very well at all for services provided by healthcare organizations. This means that those who do accept Medicaid as payment are often understaffed because they cannot afford to pay their staff what their competitors do.

If you take out long term care insurance you do not have to deplete your assets in order to receive needed care, and you will have choices as to who provides your care. If you do not have long term care insurance then you are taking a big risk.

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