Payment Options for Nursing Home Care
Authored By: Legal Hotline for Older Iowans
Nursing home care is generally paid through Medicare, private pay, long-term care insurance or Medicaid (also known as Title 19). This resource will discuss Medicare, private pay and long-term care insurance. For information on Medicaid as a payment option, click here or contact the Legal Hotline for Older Iowans at 800-992-8161.
Medicare pays for very little nursing home care. Medicare covers up to 100 days of skilled nursing care in a single benefit period. Skilled care is for those who need intensive, 24 hour a day care and supervision by skilled health care providers, including registered nurses and rehabilitation specialists. This care must follow at least three days of covered hospitalization. After the 20th day of skilled care, patients must make a $157.50 daily co-payment. Some Medicare Supplemental policies will pay that co-payment amount. Read your policy carefully to find out. After the 100th day, Medicare will no longer pay for skilled nursing care. Because of these restrictions, Medicare is only an option for short-term care under very limited circumstances.
Long-term care is privately paid when an individual pays the entire cost of nursing home care with their own assets and income. While the cost can vary greatly, the current statewide average cost of nursing home care in Iowa is over $5,833 a month. Many people private pay until they qualify for Medicaid.
Long-Term Care Insurance.
Increasing numbers of people purchase long-term care (LTC) insurance to meet all or part of the cost of nursing home care. LTC insurance lets you use your income and assets for other purposes. Whether you should or can buy LTC insurance will depend largely on how you balance the following factors:
- Objectives. Valid objectives for buying a policy include protecting resources for a spouse or other dependents, leaving an inheritance, avoiding Medicaid and having more choice where you receive your care.
- Risk Factors. Women usually outlive their spouses and are at higher risk of needing nursing home care. Women, in fact, make up roughly 90% of current nursing home residents. Persons with a family history of Alzheimer?s or other degenerative disease are also at higher risk.
- Age and Health. Your age and health will influence your ability to obtain and pay for LTC insurance. The older you are and the poorer your health, the more difficult to obtain coverage at an acceptable cost.
- Availability of Others to Provide Care. If you have a spouse or other family members willing and able to provide care over an extended period of time, you are less likely to need LTC insurance.
- Income and Assets. If buying LTC insurance would make it difficult to pay your other expenses, then you probably should not purchase insurance. A rule of thumb is that you should not pay more than 7% of your income on premiums. Also, ask if buying LTC insurance makes sense in your specific financial situation. If you have assets that produce enough income to pay for a nursing home, you may not need insurance to protect or preserve your assets. If you have only a small amount of assets, you will probably qualify for Medicaid in a short amount of time, and the cost of insurance may exceed the value of your assets. If you are married, there are special rules to preserve assets if only one spouse needs Medicaid for nursing home payment. If you have or expect to have a fairly significant amount of assets ($100,000 or more) but not enough income to pay for nursing home care, you may wish to consider buying LTC insurance.
Whether to consider LTC insurance should be based on a careful weighing of the above factors. If you decide LTC insurance may be right for you, there are a number of other important issues to consider in actually choosing a specific policy. For example:
- Is the insurance company financially strong with a history of good service?
- What types of services are covered? Does it cover services in your home or an assisted living facility, adult day care, respite services?
- Will the policy pay enough for the geographic area in which you are likely to receive care?
- How much insurance do you need? You should look at the total cost of care less what you can afford to pay.
- Are benefits adjusted for inflation?
- Is a hospital stay required?
- How long do benefits last?
- How long do you have to wait before benefits begin?
- Is the policy "tax-qualified"? This determines whether the premium may be deductible under federal and Iowa tax law.
Compare policies of two or more companies before making a decision. You can get free advice about long-term care insurance from a Senior Health Insurance Information Program (SHIIP) counselor at 800-351-4664.