 Personal Finance PowerPoint Presentation, Medicaid versus Long Term Care Insurance. Prepare to get financially fit by practicing personal finance. Insurance is part of our long term risk mitigation strategy where we follow the adage of measure twice, cut once, put in a formal process in place, looking something like setting the goals, develop a plan to reach them, put the plan in action, review the results, repeat the process periodically. Most of this information can be found at Investopedia, Medicaid versus Long Term Care Insurance comparing the differences which you can find online. Take a look at the references, resources, continue your research from there. This is by Janet Errowood, updated December 3rd, 2021. In prior presentations, we've been looking at insurance in general, moving to the medical insurance, and now we're looking at the long term care. So it's useful to think about insurance in general, types of insurance that are classical, kinds of insurance, property insurance, life insurance, liability insurance, insuring against some event in the future. We're hoping doesn't happen, likelihood being low, but if did, it would be financially devastating such as dying prematurely, having our house burned down, or being sued for millions of dollars. When we look at the medical insurance, it's a little bit different because we still have that big component that could happen. We get an illness that's financially devastated. We want to insure against, but we also have that kind of things that we expect to happen that are expanded, the insurance is kind of expanded to cover those kind of things. We're now looking at the long term care, which would mean that we get to the point where we need like more assistance on a day to day type of basis, which can be quite expensive. And that's one of the things that, again, we might say, well, maybe it's kind of more like the classical insurance, where we hope that it doesn't happen that we don't need that kind of assistance, but if it was, it would be financially devastating to some degrees. We would want some kind of insurance for it, and or you might think of it as fairly likely, right? It's more likely that it's going to happen if, as we get older, as we get to some point in time, then say, you know, us being sued, which we hope doesn't happen, or the house burning down, or something like that. So we just want to keep those mind frames in terms of what insurance is in general as we apply them to different types of insurance here. So we have the Medicaid versus the long term care insurance and overview. The most commonly utilized and misunderstood aspect of Medicaid is its long term care benefits. So we don't want to get Medicaid confused with Medicare. So we're talking about Medicaid and the long term benefits related to it. Medicaid is not synonymous with long term care insurance, but many people plan to rely on it are unaware of this. So many people might be thinking the long term care possibly be dependent on the Medicaid, and therefore they're thinking of Medicare as synonymous, Medicaid as synonymous with the long term care. As a result, they find themselves without the care they really need or desire before you quote plan in quote to have Medicaid cover your long term care needs. It is important to understand its coverage and how it differs from long term care insurance. So we can kind of compare long term care insurance versus the Medicaid, which the Medicaid is going to be kind of a program that's a government kind of program. It does have like income and thresholds to be able to qualify for it, typically for people that are under an income threshold or asset level threshold, as opposed to insurance, other types of insurance that you might be purchasing. So Medicaid, Medicaid is a multi part program designed to provide a variety of medical and custodial services to those who cannot afford it. Medicaid long term care is a great benefit for those who don't have much savings or retirement income and need services beyond what their families can provide. Some individuals however deliberately decide not to buy long term care insurance and rely on Medicaid instead. There is an entire legal specialty focused on helping older Americans bankrupt themselves to qualify for Medicaid benefits. Now this is something that you would think would not be what you would want to be in. You don't typically want to be in the area where you're saying, I don't qualify for Medicaid, but I need Medicaid. Therefore I got to get my assets level and my income level below a certain threshold to qualify for the benefit program. Sometimes if you're in that situation and you got to do what you got to do, then that is where it's at. But you would like to, if you have a longer term threshold to plan, do not be in the situation where you're trying to actually lower your asset levels to qualify for the Medicaid program. So those are the things you want to kind of measure the pros and the cons when you can if possible. Unfortunately, many people find out too late that Medicaid does not offer what they desire. The kinds of choices, benefits and coverage options provided by long term care insurance. You might have obviously more options if you're paying for the long term care by buying your own insurance rather than through the Medicaid, which is designed generally for people whose income are below a certain threshold and therefore you would expect it would be more of less different choices that you might have under that kind of program. So Medicaid benefits and requirements, unlike Medicare, which is largely a federal program, Medicaid is primarily state run resulting in varying degrees and types of long term care coverage. Generally speaking, for qualifying people, Medicaid covers custodial care in a nursing home in all states. Custodial care is for when you can't perform some or all of the activities of daily living, ADL, without assistance. That's like eating, bathing, getting dressed, toileting, mobility, continents. So obviously these kind of things, we take them for granted that we can do them every day. If we don't have that capacity, that's going to be quite expensive to help to do those day to day types of things. Medicaid generally requires you to be unable to perform at least two of these six ADLs independently, much like long term care insurance policies. So if you qualify for Medicaid by meeting the ADL requirement and your state's income and asset requirements, you can probably use Medicaid to pay the entire cost of care in a nursing home, long term care insurance. So long term care insurance usually covers all or part of nursing home care, home health care, and personal or adult day care for individuals age 65 or older or with a chronic condition that needs constant care. It is private insurance available to anyone who can afford to pay for it and offers more flexibility and options than Medicaid, which you would expect because this is the one you're paying for, as opposed to the public program, which you would think would be more of a one size fits all kind of thing in general. So and because you pay for it, there is no income and asset limit. Key differences. Medicaid does have a few benefits not offered by most long term care plans. The following chart summarizes some of the key differences between these two ways of funding long term care needs. So we've got the Medicaid versus the long term care, the coverage benefits. You got the nursing home stay. It says usually and usually under both options coverage from the first day in a nursing home. Usually the Medicaid has that many policies have waiting periods for the long term care coverage for as long as needed in a nursing home, usually for the Medicaid, rarely too expensive for the long term care coverage in any nursing home. Many places do not accept Medicaid. And then for the long term care, usually you have possibly more flexibility there coverage for in home care, not in many states available available option for the long term care and then coverage for adult daycare, rarely available option possibly for the long term care, which might have some more flexibility there coverage for assisted living facilities, not in most states available option possibly for the insurance coverage for respite care, rarely for the Medicaid available option for the insurance access to all services at a nursing home. Often no access to private or spousal rooms shopping trips and personal care items family must pay for these things. Usually access to private or spousal rooms trips personal care and whatever else the policy benefits cover ability to stay in one place. You can move you can be moved if a facility stops accepting Medicaid patients or because become too full. Yes, as long as the patient is open for the insurance, plus you can change facilities at will if because you have more options for your insurance. Nursing home stays so both long term care insurance and Medicaid provide nursing home coverage. Some long term care policies cover other types of care in addition to or in lieu of nursing home care in many states nursing home stays for non skilled custodial care are all that Medicaid covers. This means if you are covered by Medicaid staying staying at your own home is not always an option even though care given at home is less expensive. And often what you really what you really need and want. So you got less options with the Medicaid possibly for the home care. So compared to this inflexibility of Medicaid long term care insurance can be a great advantage. Not all nursing homes accept Medicaid patients. If the facility doesn't take certain types of state or federal funding it might have it might not have to take Medicaid patients. So your facility of choice may not be available to you. Medicaid also doesn't cover the fun things in life trips to museums shopping centers or other non medical forms of care. It may not cover a private room or allow you to have your spouse as a roommate. There may even be a special a special Medicaid wing or floor in the facility. Medicaid does pay for for your stay in a facility for as long as you need the care long. So we got long term care insurance on the other hand does only if you choose a benefit level high enough to cover a lifetime of costs. So in other words when you're picking your own insurance you know you if you're trying to say I want the lifetime covered it would be dependent on how much you're paying basically for the insurance. So the Medicaid also covers your costs for day for day one. Well long term care insurance does so only at a very high cost imposing an elimination period in home care. Aside from nursing home care in home care is one of the preferred ways to receive long term care. Much of the care people need is custodial in nature and can be given in a home setting. So if you and your spouse like most people would prefer to stay in your home for as long as possible long term care insurance is the way to go. So if you want to be in the home typically you got more flexibility with the long term care. Why because it allows you to choose this type of care. Also if you own a home think twice before using Medicaid for receiving any form of care. So in other words if you own the home and you're thinking about the Medicaid option the Medicaid is going to use some kind of asset test. So if you're living if you move out of the home now the home is possibly could be thought of as an asset that could be quite you know high asset which could disqualify you possibly from the Medicaid. So if you receive care and your spouse remains in your home depending on your state's rules your heirs may be forced to reimburse the costs of your care from the sale of your home when the community spouse the one who stayed in the home dies. So assisted living and continuing care facilities sometimes before you need nursing home care you need more assistance than you can get at home or maybe you just want to live in a retirement oriented facility. So if you need some level of help assisted living facilities can provide a room or apartment and offer certain levels of assistance for a price of course. You can get house housekeeping help meal preparation and much more continuing care takes assisted living a step further in both directions. You can generally get an independent living apartment in which the main benefits are food housekeeping and the knowledge that help is new is nearby if needed. The facility will also have an assisted living section that offers more help with ADLs and finally an onsite nursing home. So there may also be a memory unit a memory unit for those with Alzheimer's or other types of dementia. This means that no matter what happens to you you don't have to leave the facility though you have to move to a different wing of it. This is a much easier transition than having to find a nursing home and move out of assisted living if you need more care than is offered where you are. It can also be useful to couples where one spouse needs more care than the other one. Again if assisted living or continued care facilities appeal to you long term care insurance is what you'll need. Adult daycare often an older person's family chooses to provide much of the needed care but cannot be home in the daytime due to work obligations. So adult daycare can also solve this problem. This community based care is often provided by churches and community centers. The premise is simple drop the person off in the morning and pick them up in the late afternoon or early evening. Adult daycare can also offer a respite to caregivers who need time for themselves when carrying full time for a family member. So we've got the long term care policies offer the option to cover this care while Medicaid does not in most states. So which long term care services does Medicaid covered long term care that Medicaid covers includes nursing home services including custodial care long term care services at home which includes visits visiting nurses and personal care services adult daycare and assisted living such as laundry and cleaning. What is the look back rule for Medicaid long term care. So each state rules differ however in general the look back rule refers to assessing all of the individuals finances going back five years 60 months that is from the date of their application to determine eligibility for long term Medicaid benefits. So now they're going to this is kind of the requirements because again it's for people who are lower on the income and asset level typically. So if any of the financial transactions in the past five years violate rules according to the Medicaid administration agency the individual can be penalized. So now this is where all these strategies kind of come in to try to get people to qualify for the Medicaid right because now you're going to think OK well what if I give the money away. What if I put the money in a trust. What if I do this and that with my money you know then you know will that be a violation to the to the look back period will I qualify. And of course all that kind of stuff can get quite complex and if something would be nice if you had a significant amount of assets and wealth to not have to deal with if you could have if you were able to get other options by planning early on it possibly. So is it spelled Medicaid or Medicaid. The correct spelling of the term is Medicaid Medicaid is a federal and state program that seeks to help individuals of limited means with health care. What's the bottom line. Thinking long and hard before before accounting on Medicaid for long term care. So in other words it's it's you know obviously a lot of people are going to need this help as the medical profession gets better. We tend to live longer as we live longer. Something's going to happen. We're probably something's going to give way. We're probably going to need some care. And you might think well I'm just going to depend on the state for the care or the country for the care with the Medicaid with the benefit program but there are significant restrictions to that in terms of qualifying for it. And in terms of the benefits that you would be getting from it. So it might be worthwhile then to be thinking about long term care options the earlier the better possibly to kind of plan that that out so that you have more options later on as always hasty decisions especially when they relate to something as important as your health can come back to fight you. You just might not get what you had expected.