Families Must Plan Ahead for Long Term Care

Guest Editorial by David Espeland, CEO, Fallon Medical Complex

   As we all make our journey through life, it seems like our parents, grandparents, and other dependent loved ones will be there with us for the rest of our lives.  After all, they have been there through thick and thin, lending support and carrying on with their own lives like there is no end.

  Granted, most family members are watching for signs that their loved ones can still make it on their own. They wonder if someday they may need some type of long term care, whether it is in their own home, an assisted living home, or nursing home. They keep watching for signs, but they generally stop there.

   It seems that many family members are not aware of their loved one’s financial situation. Most often with the elderly, their house is paid off and they are living from Social Security check to Social Security check. It’s easy to see why family members can be lulled into a false sense of financial security.

  One day, typically without warning, their loved one may need to find an immediate living situation that includes a certain level of medical or personal care. It’s at this point that most people begin to wonder what it will cost and how they will pay for it. Family members need to start thinking about this issue long before they reach this point. The cost of medical and/or personal care in any setting is going to create “sticker shock” for a person who has to pay out-of-pocket, so it’s best to know what to expect.

   There are a limited number of ways that a person can pay for long term care: private pay (out-of-pocket), long term care insurance, or Medicaid.  Medicaid is always the last to pay after a person has exhausted all other means of payment. And just because a person doesn’t currently have any income or assets doesn’t mean that they will automatically qualify for Medicaid. Medicaid is comprised of multiple programs, each addressing very specific needs. Most people are familiar with basic Medicaid, which provides health insurance coverage (and which will soon be expanded by the Montana Legislature). One might also hear about SLMB Medicaid (so-called Medicaid Lite), Community Medicaid, Medicaid Waiver, or Nursing Facility Medicaid, among many others. All of these programs are administered individually by the Montana Department of Public Health and Human Services (DPHHS) with the common goal of providing medical and personal care for people who have no financial resources to pay for care on their own.

  Aside from this common goal, each program has its own eligibility requirements and application process. Generally, a person can assume that qualifying for one Medicaid program will expedite their qualification for another.  For instance, a person may qualify for Community Medicaid while receiving home care, which should ease the transition into Medicaid Waiver if they enter an assisted living center or Nursing Facility Medicaid if they enter a nursing home, but that is not always the case.  Family members should expect a waiting period during which time their loved one is being evaluated for eligibility. In the past, some long term care facilities have carried the cost of care during this waiting period, but the trend is changing. Not every applicant qualifies and not every Medicaid program covers the cost of care up to the very day that the loved one started receiving it.

  That is, DPHHS is typically very diligent about determining whether an individual truly deserves to be covered under Medicaid.  They require a five year “look-back period,” during which time they scrutinize how a person may have spent down their income and assets.  This determination may take up to six months to finalize. If a person’s money was spent on legitimate purposes (as defined by DPHHS), they could qualify within two months.  But if money was freely gifted to family members, as an example, DPHHS may require the applicant to wait five years after the transfer date before qualifying for Medicaid. DPHHS has spent a lot of time and money during the past few years revamping their application programs in an effort to create a faster turn-around time for Medicaid determinations. But their speed is largely dictated by the quality of the information that they are given. If they receive incomplete information or they find hidden or forgotten sources of income or assets, it may take quite a bit of time to get it all ironed out. So what happens if a loved one is admitted in good faith to a long term care facility and is given care for up to six months without payment, just to find out in the end that they didn’t qualify (or that they won’t be covered for the full six months)?  This is a very real dilemma facing virtually every long-term facility in Montana.

Many Montana nursing homes are currently waiting for eligibility determinations on a number of its residents, with outstanding bills in the hundreds of thousands of dollars, but they should consider themselves lucky.  One facility in western Montana recently disclosed that they had over $1 million in unpaid care on the books while waiting for Medicaid determinations.

  Most admission agreements for long term care facilities require payment up front, since the facility will be expending resources and paying its bills while waiting for eligibility notification. Even though the agreement is a legal contract, many facilities haven’t enforced it in the past while waiting in good faith for news of Medicaid eligibility, but at some point, enough is enough, and facilities are beginning to ask for a stronger assurance that they will be paid. For this reason, it’s in the best interest of families and loved ones to have a discussion about long term care well in advance of needing it. It’s important to review finances and determine how to fund the full cost of the care or at least fill the gap until Medicaid eligibility has been determined. This will most likely mean having to save a certain amount of money to be used while transitioning a loved one into a new care setting until Medicaid can be secured. Alternatively, a long term care insurance policy can be used for this purpose.  However, financial advisers recommend purchasing such a policy at the earliest possible age to keep premiums at an affordable level.

  All in all, many people plan for inevitabilities in life by buying vehicle insurance, homeowners insurance, or life insurance. But very few people plan for having to receive long term care, especially in a facility. They leave much of it up to chance and expect to deal with it when the time comes.

  However, long term care facilities are businesses that need to pay their bills, too. So they are beginning to ask for money up-front, with the expectation that it will be refunded if Medicaid pays.  Planning ahead will ease the transition into a new care setting and reduce a certain amount of the stress that inevitably occurs in these types of situations. But similar to many things in life, ignoring it won’t make it go away.


One thought on “Families Must Plan Ahead for Long Term Care

  1. The best time to consider getting long term care insurance is long before you need it. It is important that you apply when you are still in good health to avoid the risk that a future illness or condition will prevent you from obtaining coverage later. Also, premiums are directly related to age. This means the younger people are when they apply for coverage, the lower their premium.

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