FINANCIAL CONSIDERATIONS
How do I Pay for Care?
Funding sources for residential care are varied. While some only cover specific types of
care (like skilled nursing), others are less restrictive and may cover assisted living.
In addition, public funding sources like Medicaid set limits in terms of income and assets.
The overwhelming majority of community residents either supplements public funding with a
portion of their assets, or pays for the entirety of all costs of care with those assets.
Private sources (a private long-term care insurance policy, or the residents directly)
typically provide all the funding in non-skilled nursing communities. It is always a good
idea to use a professional (elder law attorneys or financial planners) when dealing with
the financing ramifications of long-term care. Below you will find some of the most commonly
used funding sources for assisted living.
Medicare
Medicare is a health insurance program for people 65 years of age and older, some people with
disabilities under the age of 65, and people with End-Stage Renal Disease (permanent kidney failure
requiring dialysis or a transplant). Medicare has two parts: Part A, hospital insurance, and Part B,
medical insurance. Part A helps pay for care in hospitals, skilled nursing communities, hospice care
and some home health care. Most people get Part A automatically when they turn age 65 if they paid
Medicare taxes while they were working. Part B helps pay for medically necessary doctors' services,
outpatient hospital care, and some other medical services that Part A does not cover. You must enroll
in this program and pay a monthly premium to receive benefits. To be covered for a nursing home stay
under Medicare, you must generally move from a qualifying hospital stay (at least three days) to a
Medicare certified skilled nursing community.
Medicaid
Medicaid is a state and federal program that will pay most nursing home costs for people with limited
income and assets. Who is eligible and what services are covered varies from state to state. Most often,
eligibility is based on your income and personal resources. Sometimes, you must spend down your
personal resources in order to qualify. However, with proper planning, there are legal and legitimate avenues
that allow you to protect certain assets you would otherwise have to spend down to qualify. You should
consult with a qualified elder law attorney or other elder financial planner about these options.
Medicaid will pay only for nursing home care provided in a community certified by the government to
provide service to Medicaid recipients.
Medicare Supplemental Insurance
Also referred to as Medigap, this is private insurance. It helps pay for gaps in Medicare coverage such
as deductibles and co-insurances. Most Medigap plans will help pay for skilled nursing care, but only
when that care is covered by Medicare.
Long-Term Care Insurance
Long-term care insurance is a private policy, and the benefits and costs of these plans vary widely.
Some policies may cover only nursing home care, and others may include coverage for a range of
services like assisted living. Long-term care insurance can be expensive, depending on your age and
health status when you buy the policy and how much coverage you want. The cost of care varies
widely from community to community and state to state. Make sure the policy you buy will cover the
costs of care where you plan to use it. Most long-term care insurance policies offer certain tax benefits.
If the policy is "tax qualified" or "TQ", you can include some or all of the premium as a medical
deduction on your federal income tax return, and you do not have to pay tax on payments from such a
policy.
Other Optionse
Managed Care Plans (HMOs) will sometimes pay for nursing communities, but will not help pay for
care unless the community has a contract with the plan. Some life insurance policies may be applied to
nursing care, but this varies widely from plan to plan.
Medicare Supplemental Insurance
Also referred to as Medigap, this is private insurance. It helps pay for gaps in Medicare coverage such
as deductibles and co-insurances. Most Medigap plans will help pay for skilled nursing care, but only
when that care is covered by Medicare.
