In the 21st century, longevity is something you must consider. We are living longer than even before. Diseases and accidents that surely would have killed us 20 years ago, are now, easily survivable. Women survive their husbands by an average of seven years, with a life expectancy of 86 and according to the IRS, men are expected to live to 84. One in four 65 year olds will live to age 90 and one in 10 will live to 95. Within this current environment, 70% percent of Baby Boomers will need some level of long term care insurance. Medicare may help in the very short term, but for true long-term care, you are on the hook for the full cost.
“Medicare Part A (Hospital Insurance) may cover care in a certified skilled nursing facility (SNF) if it’s medically necessary for you to have skilled nursing care (like changing sterile dressings). However, most nursing home care is custodial care, like help with bathing or dressing. Medicare doesn’t cover custodial care if that’s the only care you need.” (https://www.medicare.gov/coverage/nursing-home-care.html; accessed 4-28-2017)
Medicare-covered services include, but aren’t limited to:
- Semi-private room (a room you share with other patients)
- Skilled nursing care
- Physical and occupational therapy*
- Speech-language pathology services*
- Medical social services
- Medical supplies and equipment used in the facility
- Ambulance transportation (when other transportation endangers health) to the nearest supplier of needed services that aren’t available at the SNF
- Dietary counseling
*Medicare covers these services if they’re needed to meet your health goal.
If you’re in a SNF, there may be situations where you need to be readmitted to the hospital. If this happens, there’s no guarantee that a bed will be available for you at the same SNF if you need more skilled care after your hospital stay. Ask the SNF if it will hold a bed for you if you must go back to the hospital. Also, ask if there’s a cost to hold the bed for you.
People with Medicare are covered if they meet all of these conditions:
- You have Part A and have days left in your benefit period.
- You have a qualifying hospital stay.
- Your doctor has decided that you need daily skilled care given by, or under the direct supervision of, skilled nursing or therapy staff. If you’re in the SNF for skilled rehabilitation services only, your care is considered daily care even if these therapy services are offered just 5 or 6 days a week, as long as you need and get the therapy services each day they’re offered.
- You get these skilled services in a SNF that’s certified by Medicare.
- You need these skilled services for a medical condition that was either:
- A hospital-related medical condition.
- A condition that started while you were getting care in the skilled nursing facility for a hospital-related medical condition.Remember, any days you spend in a hospital as an outpatient (before you’re formally admitted as an inpatient based on the doctor’s order) aren’t counted as inpatient days. An inpatient stay begins on the day you’re formally admitted to a hospital with a doctor’s order. That’s your first inpatient day. The day of discharge doesn’t count as an inpatient day.You pay:
- Your costs in Original Medicare
- Your doctor may order observation services to help decide whether you need to be admitted to the hospital as an inpatient or can be discharged. During the time you’re getting observation services in the hospital, you’re considered an outpatient—you can’t count this time towards the 3-day inpatient hospital stay needed for Medicare to cover your SNF stay. Find out if you’re an inpatient or an outpatient.
- Days 1–20: $0 for each benefit period.
- Days 21–100: $164.50 coinsurance per day of each benefit period.
- Days 101 and beyond: all costs.
- If your break in skilled care lasts more than 30 days, you need a new 3-day hospital stay to qualify for additional SNF care. The new hospital stay doesn’t need to be for the same condition that you were treated for during your previous stay.
- If your break in skilled care lasts for at least 60 days in a row, this ends your current benefit period and renews your SNF benefits. This means that the maximum coverage available would be up to 100 days of SNF benefits. (https://www.medicare.gov/coverage/skilled-nursing-facility-care.html accessed 4-28-2017)
The average nursing home stay is three years with a price tag of $180,000. These costs are rising at a rate far greater than inflation and require specific planning focus. The last thing you want is to deplete your assets and end up on your state’s Medicaid rolls. You have three options for using other people’s money to fund your long term care (LTC):
- LTC Insurance – expensive, hard to qualify, risk of losing premium if the benefits are unused.
- Life insurance with LTC rider – expensive, easier to qualify, no premium risk due to death benefit, no inflation protection.
- Asset Based – much less expensive, easy to qualify, no premium risk due to rate of return on the underlying investment.
It is also important to discuss this matter with your spouse and children. When asked, most Boomers state that they are sure their children will help take care of them; however, none wish to be a burden. Whatever your thoughts on the matter, you will want to meet with your advisor to complete a thorough needs assessment.