Paying for care

The majority of older adults will need help in the last few years of their life. Very few are completely independent through to the very end. The average time of assistance is four to five years. At first the tasks involve things such as cooking, driving, housekeeping, and finances. Over time, more-intimate assistance will be required, such as bathing and dressing. Perhaps even incontinence care.

Families shoulder much of this responsibility. But there are also services available to help, such as in-home caregivers, assisted living, memory care, and nursing homes. The challenge is how to pay for them.

Most of the services will have to be paid for privately (out of pocket) rather than being paid for by Medicare, the federal government's health insurance program. Medicare is only for medically necessary services provided by medically trained professionals. Hour for hour, most of the care needs of aging adults do not require a medically certified individual, and thus must be paid for privately.

Funding for nonmedical supportive services may come from personal savings, equity on the house, or long-term care insurance. Qualifying veterans may be eligible for Aid and Attendance benefits. Sometimes local grants may be available that enable families to be paid to provide care, or for nonprofits to provide care at low or no cost.?

Medicare

Medicare is a federal government program that covers doctors, labs, prescriptions, and hospital stays. It will cover home healthcare, with visits by a nurse or physical therapist to homebound patients with a short-term need, perhaps following a surgery such as a hip replacement. Home health is for people who are likely to recover or at least regain functioning. Hospice is a service for the terminally ill. It provides weekly visits from a nurse to manage pain and other symptoms, as well as someone to give the patient a bath two or three times a week.

Medicare will also cover limited stays in a skilled nursing facility, again usually after a hospitalization (a stroke, for instance, or a bypass operation).

If your loved one has original Medicare, there is usually a deductible each year and copayments, although supplemental insurance (sometimes called "Medigap") can be purchased to cover them. Some people elect to enroll in Medicare Advantage programs that simplify billing. Instead of a supplemental insurance and a full choice of providers, they pay just one premium and agree to go only to the doctors and other medical service practitioners who are part of the plan's network.

A nonmedical caregiver in the home, or the cost of assisted living or memory care, is not a covered benefit.

Medicaid

This is a program for low-income individuals that is funded jointly by the federal government and the state. Each state has particular rules about what is and isn't covered. Generally, you can think of Medicaid as the supplemental insurance provided by the government. But some states let Medicaid subsidize the types of care not usually covered by Medicare. They include caregivers in the home or nonmedical care provided in a group setting, such as assisted living or memory care. Talk with an Aging Life Care Manager? to learn more about options in the state where your loved one lives.

Only people with very little cash can qualify. It might be tempting to get rid of assets to qualify for Medicaid, but it's not that simple. The government will go back and check the past thirty to sixty months to look for large transfers, such as ownership of the house or checks written to family members. This could disqualify your relative from the Medicaid program.

A house can be kept so that a spouse does not have to become impoverished and evicted from the home. But as soon as both the patient and the spouse pass away or move to nursing homes, the government require that the house be sold to repay the taxpayers for the expenses incurred by Medicaid.

The laws are extremely complicated and vary by state. There are attorneys who specialize in what's called a "Medicaid spend down." If you think Medicaid is a program you will need to rely upon, start talking with an attorney immediately. This requires substantial long-term planning and a deep understanding of what the estate will ultimately owe the government.?

Community programs

Some nonprofits or local government agencies offer assisted living or memory care services. More likely, however, are ones that offer small slices of eldercare support. For instance:

• Meals on Wheels. A single meal delivered each day to homebound individuals
• Congregate dining. Subsidized lunches offered at senior centers for nutrition and social support
• Transportation programs. Volunteer drivers or "paratransit" minivans that offer door-to-door rides to doctor visits or grocery shopping
• Adult day centers. Structured daytime activities are provided for people with dementia so their family caregivers can get some time off

There may be eligibility requirements for these services, or a sliding-fee scale.

Veteran benefits

If the person you care for served in the armed forces during combat years, they may be eligible for services provided by Veterans Affairs (VA). They can range from doctor visits and hospital care, to nursing homes and memory care. Qualifying veterans can receive monthly stipends to help pay for home care if they meet the requirements for the Aid and Attendance program.?

Long-term care insurance

According to AARP, half of the people over age sixty-five will need to pay for supportive care for a period of two years or less. Some will need more.

Understanding that these services are not covered by Medicare, insurance companies have developed policies for "long-term care" (LTC). Your loved one would need to have purchased it themselves (unless it was a benefit of their employer) and to have kept up with monthly premiums. (More recently, these policies are sold as a hybrid of LTC insurance and life insurance.)

There are very strict rules about activating the policy. If you think your relative is going to need help soon, read the fine print.

• What type of care is covered? In-home caregivers? Assisted living? Memory care? Nursing homes?
• Is there a "benefit trigger"? Often you will need a letter from a doctor confirming that assistance is needed, and specifically what types of assistance: Meals, bathing, walking, using the toilet. If your loved one has Alzheimer's and can no longer live alone safely, the doctor needs to conduct a test and use the results to describe the degree of cognitive impairment.
• Is there an "elimination period"? You may need to pay for the first few months out of pocket. This is why you want to check on the policy early. Perhaps your relative needs help only one day a week (or you need the respite!). Get started early so you are paying when the need is low and will have completed the elimination period by the time the need is greater (and more expensive).
• What is the cap on the benefit? Sometimes this is expressed in terms of how many dollars the policy will cover before it expires. Sometimes it's expressed in the number of years of service it will cover. You want to get started early enough to get maximum benefit. At the same time, if the person you care for has a long-term disease (Parkinson's, Alzheimer's), you don't want to start so early that they outlive the term of the insurance and you have no coverage during the most intensive need for support.

If your loved one has LTC insurance or a hybrid policy, check with the broker to learn more about the particular benefits, trigger, cap, and elimination period.?

Reverse mortgage

In many families, the home is the greatest asset. But your loved one may not want to sell and move to finance care. There is a funding mechanism called a "reverse mortgage" that allows the person you care for to extract cash from their house yet remain living in it for the rest of their lives.

The concept is that a qualified lender will advance funds to your relative based on the value of the house. This may be a monthly check or a lump sum. Your relative will owe interest on the money drawn down. Upon leaving the house (by death or by moving to a facility), the loan must be repaid. Typically, this involves selling the house.

This is a very complicated arrangement and definitely requires careful consideration. Questions to clarify include the following:

• What are the origination fees? As with any mortgage, there is a percentage charged just to set up the loan. Compared to a regular mortgage, the fees for a reverse mortgage are quite steep. Be sure to shop around. You may be forced to borrow this extra amount (and then pay interest on it).
• How are taxes and insurance handled? Does the mortgage holder cover this or will you be forced to borrow the money and pay interest on it?
• How will maintenance on the house be handled? Who decides what gets done? Who pays?
• What about a surviving spouse? Do they have to leave once the primary borrower dies or moves out, for instance, to a nursing home?
• What about the heirs? The loan will have to be paid back when the primary borrower dies or moves out of the house. That may mean the house has to be sold. Is there a desire to keep it in the family? If so, how will the loan be repaid?

Because there are so many complex details to consider, it's best to consult a reverse mortgage counselor who has been approved by the U.S. Department of Housing and Urban Development. Their services are free or low cost. Call 1-800-569-4287 to find out more.

Wondering how to pay for care? Contact the experts in aging:

LionHeart Eldercare & Consulting

703-677-8319