06 May Medicaid vs Long Term Care Insurance
It’s a known fact that the longer you live, the older you get. And more people are living longer today than at any time in the past. As a result, it is projected that most Americans over 65 will need some type of long-term health care. At Phelps LaClair in Mesa, Chandler, and Phoenix, our estate planning experience and expertise includes helping many families plan financially for the funding of long-term health care. There are two main avenues of paying for long-term health care: Medicaid and Long-Term Care Insurance. We have described both in previous blog posts that you can access by clicking on these two links: here and here. In this present post, let’s look at the differences in coverage and benefits of Medicaid vs long-term care insurance.
Both Medicaid and Long-Term Care Insurance cover costs involved with nursing home stays, but there are significant differences in the extent of coverage for both. Medicaid will usually cover the costs of nursing home stays from the first day until as long as the nursing home care is needed. Long-Term Care Insurance rarely extends coverage from the first day because it is prohibitively expensive and not tax-qualified. For the same reasons, there is also usually a fixed amount of time during which a Long-Term Care Insurance policy will cover nursing home costs. Long-Term Care Insurance will usually extend coverage to any nursing home; however, many facilities will not accept Medicaid.
There are differences in nursing home services that Medicaid and Long-Term Care Insurance will cover. Long-Term Care Insurance usually pays for private and spousal rooms, so if that is a primary concern, Long-Term Care Insurance is the way to go. Medicaid does not cover either of these options. Long-Term Care Insurance usually has policy benefits that cover day trips away from the facility and some personal care items. With Medicaid, these things are out-of-pocket expenses for the family.
If a nursing home facility becomes too full or stops accepting Medicaid patients, the patient can be moved to a different facility. A Long-Term Care Insurance policy enables the patient to stay in place as long as the facility is open. If the patient desires, they can choose to be moved to a different nursing home at any time. With Medicaid, this usually is not possible.
In-home, assisted living, and daycare
Because Medicaid is a state-run program, what is permitted as a benefit in Arizona may not be allowed in California. In most states, Medicaid will not cover in-home care expenses. If the patient wants to stay at home and hire a private nurse, they will pay the cost out-of-pocket. In Arizona, Medicaid will pay for these services for those who meet the eligibility requirements. In-home care is an option available on Long-Term Care Insurance policies.
The same is true for assisted living facilities: with Long-Term Care Insurance, it is an available option; with Medicaid, most states will not cover the costs. In Arizona, Medicaid will pay for medical expenses, but not room and board.
Long-Term Care Insurance covers the expenses of day care and hospice care as an available option. Arizona is one of the few states in which Medicaid will also cover these costs.
It is important to remember that Medicaid has a “look back” period for eligibility of 5 years. Assets still in the possession of a Medicaid candidate during this time will count as part of their income, which may affect eligibility.
At Phelps LaClair, we have navigated the sometimes murky waters of Medicaid and Long-Term Care Insurance with great success. In comparing Medicaid vs Long-Term Care Insurance, we know there is not a “fits-all” solution. We can custom design a long-term care plan within your estate plan that will protect you and your assets for the eventuality of long-term health care needs, as well as enabling you to leave an inheritance for your loved ones. Come and see us for help with all your estate planning needs, including being ready for the incredible costs of future long-term health care needs for you and your spouse. Time waits for no man . . .