Personal  Asset Advisors

407-593-2386

Private Pay

40% of the cost of long-term care comes from private (non-governmental) sources.  This total can be divided into three major categories:

1.  Direct Pay, Out-of-Pocket

2.  Long-Term Care Insurance

3.  Long-Term Care Riders on Life Insurance Policies and Annuity Agreements

Medicaid

Medicaid is an insurance program for low income individuals sponsored jointly by the state and the federal government.  One component of it covers nursing home costs for low-income individuals, and this provision covers 40% of all long-term care payments and 50% of all long-term patient-days in nursing homes.


In Florida, Medicaid eligibility for long-term nursing home care is based on the assets and income of the Medicaid applicant, as well as the assets and income of the Medicaid applicant's spouse.  Medicaid eligibility criteria for nursing home long-term care are complex and change frequently.  An improperly filed application may result in denial of benefits.


Medicaid Income Requirements:  The Medicaid applicant's gross monthly income cannot exceed $2,163 (effective Jan. 1, 2014).  If the applicant's income exceeds that level, a qualified income trust, composed solely of the applicant's income, must be established in order to qualify for eligibility.


Medicaid Asset Requirements:

   Medicaid Applicant:  The Medicaid applicant cannot own countable assets in excess of $2,000 in addition to exempt and countable assets.

  Medicaid Applicant's Well Spouse ("Community Spouse"):  The Medicaid applicant's well spouse may retain up to $117,240 (effective Jan. 1, 2014) in assets plus exempt, non-available and income-producing assets.


Medicaid Look-Back and Penalty Period for Transfers:  Under certain circumstances, the Medicaid applicant and/or spouse may transfer assets to others to help establish Medicaid eligibility.  All transfers made by the applicant or the applicant's spouse on or subsequent to January 1, 2010, whether from an individual or to an individual or from a trust or to a trust, have a five-year look-back period. 


An example:  Diane transfers $60,000 to her son in February 2010 and $30,000 to her daughter in March 2010.  She then applies for Medicaid in January 2014, at which point she meets all eligibility requirements except for the uncompensated transfers.  The penalty period begins to run at that point.  Medicaid would deem her ineligible for benefits for the next 13 months ($90,000 divided by $7638 per-month exemption = 11.8 months, which is rounded up to 12 months).  She will be eligible for Medicaid benefits, assuming she still meets all other criteria, in February 2015.


Qualifying for Medicaid in a difficult and complex process and for most middle income individuals and families, requires the assistance of a trained and qualified Elder Law Attorney.  We can recommend such attorneys to families and individuals who wish to pursue this approach to paying for long-term care.


Medicare Nursing Home Benefits

Many people confuse Medicare and Medicaid when it comes to nursing home benefits.  Medicare is a federal-government sponsored insurance program for those over 65 years of age, whereas Medicaid is an insurance program for low income individuals of all ages jointly sponsored by the state and the federal government.


Most government-paid nursing home benefits fall within the Medicaid program, not the Medicare program.  As outlined above, qualifying for Medicaid long-term care benefits is not a simple process for most middle income individuals and families.


Any nursing home benefits under Medicare are short-term and strictly limited in scope.  That's because Medicare only pays for nursing home stays when they follow hospitalization for the same condition.  Medicare only pays for skilled nursing home care and the average benefit period under medicare is only 30 days in length.  In effect, Medicare pays for nursing home care in lieu of hospitalization or as an extension of hospitalization.  Thus, no one should consider Medicare as a potential provider of long-term care benefits. 

1.  Direct Pay, Out-of-Pocket

This method is simple, but expensive.  If you need assisted care or nursing home care, you write a monthly check to the nursing home.  Annual care costs about $90,000, which is $7500 per month.


Most middle income families cannot afford to pay these charges for very long, as a result they look for alternative forms of payment.


2.  Long-Term Care Insurance

One alternative payment method is the purchase of long-term care insurance.  Approximately 5% of care is paid this way.  Unfortunately, the early promise of this possible solution to this vexing problem has not panned out.  Early policies were full of gaps in coverage or companies often cancelled policies just as customers began to need care.  Today, policies are expensive and unfortunately if you don't use the policy to pay for your care, you simply lose the money you paid for the policy.


3.  Long-Term Care Riders on Life Insurance Policies and Annuity Agreements

An excellent solution has been developed in the last decade to help middle income families pay for nursing home care, assisted living care, or stay-at-home care, which is certain long-term care riders to insurance company annuity contracts or life insurance policies.


Many of these arrangements allow customers to draw up to 300% of their investment in the contract to pay for long-term care in a nursing home, assisted living center, or at home.  Even with that excellent benefit available, if the customer doesn't need long-term care, they or their heirs can recover all of their investment, plus a competitive interest rate over the life of the contract. 


For example, a  $100,000 investment in an arrangement with a long-term care rider can provide $300,000 worth of long-term care benefits if the customer needs care in a nursing home, assisted living facility, or at home.  On the other hand, if the customer doesn't need care, they and their heirs will recover all of their initial investment plus a fair rate of interest on their money.  It's kind of like having your cake and eating it too. 

How Will You Pay For It?


Florida nursing homes serve an increasingly diverse patient base and provide a greater variety of acute care, rehabilitative services, and convalescent services that cannot be delivered elsewhere. 


Key Facts

  There are 682 nursing homes in Florida, representing 83,229 beds. 

  The estimated number of residents is 72,000 (roughly 85% occupancy at any given time).

  There are 3,042 licensed Assisted Living Facilities in Florida, representing 85,000 beds.

  The median annual cost of care for a semi-private room in a nursing home is $87,600.

  The median annual cost of care for a private room in a nursing home is $91,615.

  The median annual cost for care for a private room in an assisted living facility is $36,000.

  The two largest sources of long-term care payments are Private Pay and Medicaid, with each paying approximately 40% of the total cost.

     Note:  Medicaid’s 40% of payments cover 50% of total patient-days of long-term care, suggesting that Medicaid patients may be receiving a

     below-average quality of care.

HOW WILL YOU
PAY FOR
LONG TERM CARE?



Long Term Care is the 800 pound gorilla of retirement planning.  It is the single issue most likely to wreck your retirement and sink your financial ship.  72% of us will need it before retirement is over, but only about 10% of us have even explored our options. The cost of long term care MUST be addressed but seldom is.  It's a disaster waiting to happen.