• The nation’s first publicly funded national long-term care insurance program, the Community Living Assistance Services and Supports (CLASS) Act;  
• A number of provisions aimed at ending Medicaid’s “institutional bias,” which forces elderly and disabled individuals in many states to move to nursing homes;
• Provisions that will help protect nursing home residents and other long-term care recipients from abuses, and give families of nursing home residents more information about the facilities their loved ones are living in or considering moving to. 

Community Living Assistance Services and Supports (CLASS) Act

The reasons for the CLASS Act, according to the U.S. Senate, are as follows:

• Long-term supports and services are not affordable or accessible for millions of Americans.
• An estimated 65 percent of those who are 65 today will spend some time at home in need of long-term care services, at an average cost of $18,000 per year.
• Five million people under age 65 living in the community have long-term care needs and over 70,000 workers with severe disabilities need daily assistance to maintain their jobs and their independence.
• One and a half million Americans are currently in nursing homes today. Roughly 9 million elderly Americans will need help with activities of daily living (ADLs) during the current year, and by 2030 that number will increase to 14 million.
• Many people who need long term services and supports rely on unpaid family and friends to provide that care, but ultimately are forced to impoverish themselves to qualify for Medicaid, which remains the primary payer for these services.

How the CLASS Act Works

• The CLASS Act will provide a lifetime cash benefit that offers people with disabilities some protection against the costs of paying for long term services and supports, and helps them remain in their homes and communities.
• CLASS is a voluntary, self-funded, insurance program with enrollment for people who are currently employed. Affordable premiums will be paid through payroll deductions if an individual’s employer decides to participate in the program. Participation by workers is entirely voluntary.
• Self-employed people or those whose employers do not offer the benefit will also be able to join the CLASS program through a government payment mechanism.
• Individuals qualify to receive benefits when they need help with certain activities of daily living, have paid premiums for five years, and have worked at least three of those five years.
• Once qualified, beneficiaries will receive a lifetime cash benefit based on the degree of impairment, which is expected to average roughly $75 per day.
• These benefits are intended to help maintain independence at home or in the community, and can be used to offset the costs of assistive living and nursing home care.

While helpful for some seniors, this benefit is fairly minimal for those of us living in the Northern Virgina area, as $75 per day won’t go very far.  In the Northern Virgina area, the average cost for home health ranges from around $18 – $22 per hour; for Assisted Living facilities from around $3,500 per month to $7,000 per month; and for Nursing Homes from around $6,000 per month to $10,000 per month.

Help for Medicare Recipients and Early Retirees

Of great interest to many seniors, the new health care law will eventually close the Medicare Part D coverage gap known as the “doughnut hole.” As most seniors know, the Medicare Part D prescription drug program covers medications up to $2,830 a year (in 2010), and then stops until the beneficiary’s out-of-pocket spending reaches $4,550 in the year, when coverage begins again. Many seniors fall into this “doughnut hole” around Labor Day, at which point they have to pay for the medications out of pocket through the end of the year.

The new law starts the process of closing the gap by providing a $250 rebate to Medicare beneficiaries who fall into the doughnut hole in 2010. Then, beginning in 2011 there will be a 50 percent discount on prescription drugs in the gap, and the gap will be closed completely by 2020, with beneficiaries covering only 25 percent of the cost of drugs up until they have spend so much on prescriptions that Medicare’s catastrophic coverage kicks in, at which point copayments drop to 5 percent.

Starting January 1, 2011, Medicare will provide free preventive care: no co-payments and no deductibles for preventive services such as glaucoma screening and diabetes self-management. Also, the legislation increases reimbursements to doctors who provide primary care, increasing access to these services for people with Medicare.

The law provides help for early retirees by creating a temporary re-insurance program that will help offset the costs of expensive health claims for employers that provide health benefits for retirees age 55-64. Scheduled to run from June 21, 2010 through January 1, 2014, the reinsurance program will pay 80 percent of eligible claim expenses incurred between $15,000 and $90,000.

The law calls for an increased Medicare premium for those individuals earning more than $200,000 a year and married couples whose income exceeds $250,000. The law also applies the Medicare payroll tax to net investment income for couples earning more than $250,000 a year or individuals earning more than $200,000 a year.

Most of the cost savings in the law are in the Medicare program, which has made many seniors fearful that their benefits will be cut. The cost-saving measures do not affect the basic Medicare benefits to which all enrollees are entitled, but they may affect those enrolled in private Medicare Advantage plans. Medicare has been paying insurers who offer these plans more than it spends on average for Medicare beneficiaries. The original idea of Medicare Advantage was to save money by paying them less, the idea being that private insurers could be more efficient than the federal government. The opposite turned out to be the case.

Health care reform will pay the private insurers less, meaning that some will choose not to continue their plans and others will curtail extra benefits they offer enrollees, such as reimbursement for gym membership or free eyeglasses. But the cuts will be gradual, with the largest not beginning until 2015. The law also offers bonuses to efficiently run Advantage plans.

Another provision in the law will cut Medicare payment to nursing homes by about $15 billion over the next decade. Although Medicare does not pay for long-term care in nursing homes, Medicare does, in certain limited situations, pay for short-term rehabilitation in nursing homes, and Medicare’s payment to nursing homes for such short-term rehabilitation has been significantly higher what Medicaid pays to nursing homes.

Beware of Scammers

The new law has also created opportunities for scam artists, some of whom are peddling bogus policies through 1-800 numbers and by going door to door, claiming there’s a limited open-enrollment period to buy health insurance, warns secretary of Health and Human Services Kathleen Sebelius. For more on the fraud alert, click here.  

For the full text of the Reconciliation Act of 2010, click here. 

More links:

Health Reform Implementation Timeline

Health Insurance Reform: A Guide for Seniors

Consumers Guide to Health Reform

Democratic Policy Committee Summary & Analysis of the two enactments

The Patient Protection and Affordable Care Act, Section by Section Analysis

Summary of The Health Care and Education Reconciliation Act

Here’s an article written about Evan’s seminar and about the income-only trust: http://tinyurl.com/l3qc7q.

This is the 2nd national teleseminar that Evan Farr has done for NBI on this topic. Evan has also done a similar national teleseminar for ALI-ABA (American Law Institute – American Bar Association), in connection with two recent scholarly publications for the legal profession published by ALI-ABA, with Evan Farr as the lead author, entitled Planning and Defending Asset Protection Trusts and Trusts for Senior Citizens.

If you’d like to attend a similar seminar for consumers, we still have openings for our 2 lunch seminars this week — on Tuesday and Thursday at noon. To register, please click the link to the right or call 703-691-1888 and speak to Jeannie.

For more information about the Income Only Trust, and about Evan Farr’s Living Trust Plus™ Asset Protection Trust (which is Evan’s highly-developed and perfected Income Only Trust, used by dozens of attorneys across the country), please visit http://www.livingtrustplus.com.

Every day, our firm helps clients protect significant assets through the use of the Living Trust Plus™ Asset Protection Trust and still qualify for Medicaid. Our Firm specializes in Asset Protection and Estate Planning for clients concerned about the devastating expenses of long-term care. To begin the process, please call us today at 703-691-1888.

The first essential document is a General Power of Attorney (POA) containing Asset Protection Powers. This document authorizes your “Agent” to act on your behalf and to sign your name to legal and financial documents. The Asset Protection powers contained therein enable your agent to do Medicaid Asset Protection if you have not already begun this process. The second essential document is an Advance Medical Directive (AMD) containing a Long-Term Care Directive. This document authorizes your “Medical Agent” to make decisions with respect to your medical care. Both the POA and AMD authorize your agents to intervene in the event that you are physically or mentally unable to do so. The third essential document is an Advance Care Plan that identifies and details your specific needs, desires and habits for your future caregiver so that you will receive long-term care uniquely tailored to you.

As explained in Part 2, a good Long-Term Care Plan will also typically a Living Trust – either a Revocable Living Trust (RLT) or an Irrevocable Income-Only Trust (IOT). If you become incapacitated, an RLT can provide management of your assets by your trustee similar to a POA. However, as was noted, an RLT does not protect your assets from the expenses of long-term care. An IOT, which will be discussed in detail in Part 4, is a tool that protects you not only from probate, as an RLT does, but also from the expenses of long-term care.

Part 3 will now discuss using long-term care insurance as part of a Long-Term Care Plan.

Virginia’s Qualified State Long-Term Care Insurance Partnership
Virginia’s Long-Term Care Insurance Partnership Program, which became effective on September 1, 2007, allows consumers to obtain Long-Term Care Insurance as part of a Long-Term Care Plan andas part of a Medicaid Asset Protection Plan. This program allows individuals obtaining Partnership-qualified policies to protect assets that otherwise might have to be paid to a nursing home prior to obtaining eligibility for Medicaid benefits. A Partnership-qualified policy enables policyholders to protect one dollar of personal assets for every dollar the policy pays out in benefits.

One of the main purposes of this Long-Term Care Insurance Partnership Program is to offer government-endorsed “Medicaid Asset Protection” to consumers who buy long-term care insurance, enabling these consumers to protect an additional dollar amount of personal assets while still remaining eligible to apply for Medicaid coverage of long-term care. The amount protected with a Partnership-qualified policy will be equal to the sum of all benefits paid under the Partnership-qualified policy when the applicant seeks to qualify for Medicaid. The total amount of assets that a policyholder may protect as a result of a Partnership-qualified policy is above and beyond the basic allowances that a client and a client’s spouse may keep under the basic rules of the Medicaid program.

Benefits of Partnership LTC Insurance
Long-term care insurance was, and is (especially in light of Virginia’s Long-Term Care Insurance Partnership Program), one of the best ways to provide for you future long-term care needs. With the baby boomers facing projected federal deficits, reductions in Medicaid spending, as well as rapidly rising health care costs, it is clear that alternative methods of financing long-term care support are critical. Long-term care insurance is preferred not just by consumers, but by the Commonwealth of Virginia and by the Federal Government because it is often the only option that can help keep clients out of the nursing home — by paying for home care. We’ve had many clients over the years who were forced to spend their final days in a facility simply because they ran out of money to pay for home health aides.

Elder Law Considerations
When shopping for a long-term care insurance policy, it is crucial to consider carefully the entire financial situation of both spouses and to consider the possible alternative of not purchasing long-term care insurance. Failure to consider these issues can result in purchasing too little coverage, which can actually be worse than purchasing no coverage at all.

For example, consider Joe and Linda, a married couple, facing Joe’s nursing home costs of $7,500 per month (a few hundred dollars lower than the average cost in Northern Virginia). Joe has $2,000 in monthly retirement income, as well as a long-term care insurance policy with a monthly benefit of $6,000 (based on a daily benefit of $200). Linda’s only income is Social Security of $700 per month. At first glance, the couple seems better off with the long-term care policy; they have an extra $6,000 per month, without which they could not afford the nursing home. They can pay for Joe’s nursing home and have an extra $500 per month to put towards Linda’s monthly expenses. Unfortunately, Linda’s regular expenses are approximately $2,400 per month, so with only $1,200 per month of income she is unable to make ends meet. Joe is not eligible for Medicaid assistance because his income (including the long-term care insurance benefit) is greater than the nursing home bill. In this example, Joe’s long-term care insurance policy does not provide enough of a benefit to allow Linda to have sufficient income to meet her needs. If Joe’s long-term care insurance policy provided a $7,500 monthly benefit ($250 per day instead of $150), all of Joe’s retirement income would be available for Linda’s monthly expenses, so Linda would still have enough income to live on.

If Joe and Linda had recognized this shortfall and decided to not purchase the long-term care insurance, or if they could not afford the increased premiums for the increased monthly benefit, they could instead use Medicaid assistance to help pay for Joe’s nursing home costs. Most of Joe’s $2,000 per month of income would normally be required to pay the nursing home expenses; Linda would keep her $700 per month. However, because Linda’s income is so low, the Medicaid rules would allow Linda to receive part of Joe’s income to help her with her monthly living expenses. Linda could receive a monthly maintenance needs allowance of up to $2,610, (including her income) which includes allowances for housing and utilities. Therefore, in this case, Joe and Linda would have the nursing home costs paid, and Linda would have $2,610 monthly for her support – more than enough for her regular needs.

The bottom line? Be sure to buy enough coverage, and be sure to buy it for the right spouse. It doesn’t make sense to pay insurance premiums and then be bankrupted by nursing home fees anyway because of insufficient coverage. As with other medical expenses, the inflation rate in nursing home fees is currently quite high. In 10 years, the cost of the nursing homes, at the current rate of inflation, will be about twice what it is today.

How Much Coverage Do You Need?
On average, someone age 65 today will need long-term care services for three years. Women need care for longer (on average 3.7 years) than do men (on average 2.2 years). Although twenty percent of today’s 65-year-olds will need care for more than five years, I don’t recommend anyone purchasing more than five years of long-term care insurance, because after moving to a nursing home, your family can commence the process of Medicaid Asset Protection so long as you have a good Long-Term Care Plan in place.

Purchasing Long-Term Care Insurance
Lifecare Financial Services, LLC is a Virginia insurance brokerage co-owned by Evan Farr and specializing in Medicaid-Friendly Long-Term Care Insurance (i.e., Partnership Qualified) and Medicaid-Friendly Annuities. Lifecare Financial is dedicated to assisting and supporting not just consumers, but also Elder Law and Trust & Estate attorneys with clients in Virginia who face the challenges of assisting their clients as they plan for long-term care.

Lifecare Financial offers a unique value proposition to referring attorneys and other professionals because it only works with the top financially rated companies for long-term care insurance and annuities. Referring professionals can be confident in knowing that the insurance products recommended by Lifecare Financial have been thoroughly vetted for financial strength, stability, and measurable experience in their relevant product line. For further information about Lifecare Financial, call 703-691-1888.

How Do I Know The LTC Insurance Company Won’t Go Bankrupt?
You don’t, and that’s why it’s important to deal only with top-rated companies. For your protection, it is the policy of Lifecare Financial Services, LLC to work only with insurance companies that have a Comdex Rating (a rating that combines the ratings from all of the top rating agencies) of at least 95%.

Conclusion
A good Long-Term Care Plan may or may not include long-term care insurance. As you make your decision, it is prudent to seek the advice of a Certified Elder Law Attorney. The Farr Law Firm can help guide you through the considerations of whether or not long-term care insurance makes sense for your Long-Term Care Plan.

In Part 1 of this series I mentioned that 60% of us will need long-term care at some point in our lives. When this statistic is put in perspective with the relatively low likelihood of making an automobile or homeowner’s claim, the risk that you or I will need long-term care at some point in the future is shocking. Yet, the majority of Americans are either unaware of these statistics or refuse to plan for the often catastrophic costs of long-term care. Part 1 of this series outlined the necessity to create a good Long-Term Care Plan in addition to, or as part of, your Estate Plan; Part 2 will now discuss the three most essential documents found in a good Long-Term Care Plan, as well as two additional documents that are often also part of a Long-Term Care Plan.

General Power of Attorney
A General Durable Power of Attorney (POA) containing Asset Protection Powers is the first essential document. Not all POA’s are created equal; it is crucial that this document be prepared by a knowledgeable and experienced Elder Law Attorney. One way to ensure the qualifications of your attorney is to look for one who is Certified as an Elder Law Attorney by the National Elder Law Foundation, the only organization accredited by the American Bar Association to certify lawyers in the specialty area of Elder Law. For a list of Certified Elder Law Attorneys, please visit http://www.nelf.org/findcela.asp.

A POA (always “durable” when used in connection with estate planning and long-term care planning) authorizes your “Agent,” sometimes called an “Attorney in Fact,” to act on your behalf and sign your name to legal and financial documents. It is an essential tool in the event that, due to age, illness, or injury, you are unable to carry on your legal and financial affairs. Asset Protection Powers written into the POA are essential in order for your Agent to protect your assets from the often-catastrophic expenses of long-term care. Attorneys who are not experienced Elder Law Attorneys often fail to put these essential Asset Protection Powers into the POA.

A properly-drafted POA is designed to avoid the need to go through a court-supervised conservatorship proceeding, which is a time consuming, expensive, and publicly embarrassing process whereby someone goes to court to have you declared incompetent and to be appointed as your Conservator. The Conservatorship process is often referred to as a type of “living probate” because the Conservator is subject to all the rules of the probate court, including the onerous requirement of filing annual accountings with the Court. State laws vary regarding the use and acceptance of a power of attorney.

An AMD (also called a Medical Power of Attorney or a Health Care Power of Attorney) authorizes another person (called your “Medical Agent”), to make decisions with respect to your medical care in the event that you are physically or mentally unable to do so. This document includes the type of provisions that used to be in what was commonly called a “Living Will,” allowing you to indicate your wishes concerning the use of artificial or extraordinary measures to prolong your life in the event of a terminal illness or injury. In the AMD you will also appoint a “Medical Agent” and give that person the power to consent to medical and health care decisions on your behalf with regard to providing, withholding, or withdrawing a specific medical treatment or course of treatment when you are incapable of making or communicating an informed decision on your own behalf. A comprehensive AMD will also allow you to indicate your wishes with regard to organ donation, disposition of bodily remains, and funeral arrangements.

A properly-drafted AMD is designed to avoid the need to go through a court-supervised guardianship proceeding, which is a time consuming, expensive, and publicly embarrassing process whereby someone goes to court to have you declared incompetent and to be appointed as your Guardian, typically at the same time they are requesting appointment as your Conservator.

In order to be easily accessible when needed, your AMD should be registered with an electronic archive service that can immediately fax the document to any desired destination. Some Elder Law Attorneys, including our firm, provide such registrations to clients at no charge.

As an example, Alice wrote in her Advance Care Plan that if Alzheimer’s disease or some other type of dementia inhibited her mental abilities to communicate or recognize her surroundings, she wished to be in a respectable facility and only asked that she be visited and brought chocolates. To her children this request seemed silly at the time, but when her mental capacities did diminish, the instructions were there. No one had to wonder if they should try to take care of Alice at home and how they would do it. Without guilt or question they placed her in a respectable facility that took care of her needs. All they had to do was make loving visits, and of course they brought chocolates.

Because of the importance of the Advance Care Plan, the Farr Law Firm provides one to all of our clients as part our comprehensive Long-Term Care Planning services. To learn more about the benefits of having an Advance Care Plan, please click here or visit our Web site at: www.farrlawfirm.com/advance-care-plan.htm

Living Trusts
A good Long-Term Care Plan will always include the three documents mentioned above, and will typically also include a Living Trust — either a Revocable Living Trust (RLT) or an Irrevocable Income-Only Trust (IOT).

An RLT generally provides for the creator of the trust to have full use of the trust income and principal for life. On the death of the creator, the assets may continue to be held in trust (or may be distributed) for the benefit of the named beneficiaries, such as the grantor’s children. Although the most important benefit of the RLT is to avoid probate, a well-drafted RLT also can help protect from incapacity and can therefore be an important part of a Long-Term Care Plan. Similar to a General Power of Attorney, an RLT can provide uninterrupted management of your assets by your trustee if you become incapacitated, sparing you and your family from having to go through the expense and complexities of a court-appointed conservatorship. It is important to note that an RLT does not protect your assets from the expenses of long-term care. On the contrary, the assets in an RLT must be spent, if necessary, in providing long-term care, even if that means spending down all of the assets in the RLT to provide such care. For more information on RLTs, please click here or visit our Web site at: www.farrlawfirm.com/revocable.html

 An IOT is a living trust that is designed to protect your assets from the expenses and difficulties of probate and also protect your assets during your lifetime from a multitude of other financial risks, including the threat of lawsuits, auto accidents, creditor attacks, extended hospitalization, and — most importantly – the catastrophic expenses associated with nursing home care. Part 4 of this series will explore the IOT in detail.

The Farr Law Firm specializes in long-term care planning and we would be happy to assist you in your preparations. Please visit us at www.virginiaelderlaw.com or call 703-691-1888.

As financially responsible adults, most of us are prepared for some unexpected disasters – we pay for health and property damage insurance, and many of us have taken some steps toward funding for our retirement. But very few of us have prepared for one of the most devastating of unexpected events – the need for long-term care. According to most estimates, more than 60% of us will need long-term care at some point in our lives. If you are a member of the “sandwich generation” – responsible for an older parent – the odds that either you or your aging parent will need such care are even higher, and the costs to your lifestyle, finances, and security can be catastrophic. Consider the following long-term care statistics:

- About 70% of Americans who live to age 65 will need long-term care at some time in their lives, over 40 percent in a nursing home.
- As of 2008, the national average cost of a private room in a nursing home was $212 per day or $77,380 per year, and the national average cost of a semi-private room was $191 per day or $69,715 per year.
- On average, someone age 65 today will need some long-term care services for three years. Women need care for longer (on average 3.7 years) than do men (on average 2.2 years). While about one-third of today’s 65-year-olds may never need long-term care services, 20 percent of them will need care for more than five years.
- Long-term care is not just needed by the elderly. A study by Unum, released in November, 2008, found that 46 percent of its group long-term care claimants were under the age of 65 at the time of disability.

Contrast the above long-term care statistics with statistics for automobile accident claims and homeowner’s insurance claims:

- Between 2005 and 2007, an average of only 7.2% of people per year filed an automobile insurance claim.
- Between 2002 and 2006, an average of only 6.15% of people per year filed a claim on their homeowner’s insurance.

The need for long-term care drastically alters or completely eliminates the four principal retirement dreams of elderly Americans:

1) Remaining independent in the home without intervention from others
2) Maintaining good health and receiving adequate health care
3) Having enough money for everyday needs
4) Not outliving assets and income

Unfortunately, the reality is that the majority of Americans make no plans for long-term care. Not only does this lack of planning affect older Americans, but it also often has an adverse effect on the older person’s family, with sacrifices made in time, money, and family lifestyles. The stresses of being a caregiver for an older parent often result in a deterioration of the caregiver’s own physical and emotional health. Because of changing demographics and improved health care, the current generation — more than ever — needs to actively plan for long-term care.

So what are basics of a good Long-Term Care Plan? First and foremost are two critical documents that need to be prepared by an experienced and knowledgeable Elder Law Attorney. These two essential documents are:

- A Financial Durable Power of Attorney containing Asset Protection Powers; and
- An Advance Medical Directive containing a Long-Term Care Directive.

The third essential document, which you can prepare on your own, is an Advance Care Plan.

Part 2 of this article will explain and explore these three critical documents to give you a greater understanding of the need for and importance of these vital long-term care planning instruments.

These essential legal documents, however, are only part of the requirements for a good Long-Term Care Plan. The other important component is a sound financial plan for how to pay for good long-term care. There are three primary ways to plan in advance for how to pay for long-term care: (1) build up your income and life savings in order to be able to self-fund your future care needs; (2) protect your assets by purchasing long-term care insurance; or (3) protect your assets by using an asset protection trust designed to legally protect your assets and allow you to qualify for Medicaid, the governmental program that pays for about 70% of people living in nursing homes. For some families, a fourth way to pay for long-term care is a type of Veteran’s pension benefit called “Aid & Attendance.”

Unfortunately, option 1 (building up your income and life savings to self-fund future care) is not feasible for most Americans, especially in these troubled economic times. Accordingly, Parts 3 through 5 of this series will explain and explore these three methods of paying for long-term care. Part 3 will focus primarily on using long-term care insurance to protect your assets; Part 4 will explore the use of a special type of asset protection trust to protect assets and gain early access to Medicaid; and Part 5 will explain the Veteran’s Aid & Attendance benefit.

There are many things that you can do now to begin to put together a good Long-Term Care Plan. The most important thing you can do is to act now! You may have limited resources in the future or health problems that will prevent you from taking care of the things you can easily take care of today. The Farr Law Firm specializes in long-term care planning and we would be happy to assist you in your preparations. Please visit us at www.virginiaelderlaw.com or call 703-691-1888.

Premiums for “qualified” long-term care policies are treated as an unreimbursed medical expense. These premiums — what the policyholder pays the insurance company to keep the policy in force — are deductible to the extent that they, along with other unreimbursed medical expenses (including “Medigap” insurance premiums), exceed 7.5 percent of the insured’s adjusted gross income. Long-term care insurance premiums are deductible for the taxpayer, his or her spouse and other dependents. If you are self-employed, the rules are a little different. You can take the amount of the premium as a deduction as long as you made a net profit — your medical expenses do not have to exceed 7.5 percent of your income.

However, there is a limit on how large a premium can be deducted, depending on the age of the taxpayer at the end of the year.  Following are the deductibility limits for 2008. Any premium amounts above these limits are not considered to be a medical expense. These numbers list first the attained age before the close of the taxable year and then the maximum deduction for that age range.

- 40 or less = $310
- 41-50 = $580
- 51-60 = $1,150
- 61-70 = $3,080
- 71 or more = $3,850

1) You avoid the risk of needing care that you will have to pay for out-of-pocket.
2) You avoid the risk of developing a condition that would make you uninsurable later.
3)You pay lower premiums now, rather than paying higher premiums later.

The sample table below shows, for a 44-year old male, the cost of waiting and buying Long-term care insurance later, assuming that premiums do not change and the applicant remains insurable. The Daily Benefit is increased 5% for each year of waiting, to cover the increased cost of care over time.

According to the report, the benefits of long-term care insurance include a greater choice of care settings and providers than under Medicaid and the potential to reduce Medicaid spending by states. However, despite the benefits, sales of long-term care policies have not been increasing in recent years.

The report identified several reasons for people’s reluctance to purchase long-term care insurance. One reason could be that long-term care insurance is perceived by many to be expensive. The average premium for a 65-year-old is $2,000 a year, though premiums for younger adults are much more affordable; as many as 76 percent of those aged 35-59 could afford coverage according to the report. Another reason policies aren’t more popular is the confusion over what Medicare covers. Many people incorrectly believe that Medicare will cover long-term care in a nursing home.

The report talks about the fact that the government is attempting to develop the market for long-term care insurance through the Long-Term Care Partnership Program, which I reported on in a recent  newsletter .  

To read the full report, click here .

For more information on long-term care insurance, click here.

One of the main purposes of this new Long-Term Care Insurance Partnership Program is to offer government-endorsed “Medicaid Asset Protection”  to consumers who buy long-term care insurance, enabling these consumers to protect personal assets and obtain eligibility for Medicaid coverage of Long-term care services. The amount of assets protected with a Partnership-qualified policy will be equal to the sum of all benefits paid under the Partnership-qualified policy prior to the time the applicant applies for Medicaid.  The total amount of assets that a policyholder may protect as a result of a Partnership-qualified policy is above and beyond the basic allowances that a client and a client’s spouse may keep under the Medicaid program.   

This new “Medicaid Asset Protection” program promoted by the federal and state governments represents a tremendous shift in policy by the government, away from the old philosophy that thought of Medicaid as a “welfare” program for people who were “impoverished” and toward the reality that individuals may be entitled to Medicaid even if they still own significant assets, provided that those assets have been properly and legally protected under the law – something that Elder Law Attorneys have been helping clients do for decades.  

This new program provides an additional method of Medicaid Asset Protection for Virginia residents.  However, in addition to protecting assets under the Long-Term Care Partnership program and the basic allowances that a client and a client’s spouse may keep under the Medicaid program, there are numerous other methods by which clients can protect significant assets and still qualify for Medicaid.

Click here for more information about Virginia’s new Partnerhsip Program and my answers to many Frequently Asked Questions.

- Walking
- Bathing 
- Dressing
- Using the bathroom
- Helping with incontinence
- Managing Pain
- Preventing unsafe behavior
- Preventing wandering
- Providing comfort and assurance
- Providing physical or occupational therapy
- Attending to medical needs
- Counseling
- Feeding
- Answering the phone
- Meeting doctors’ appointments
- Providing meals
- Maintaining the household
- Shopping and running errands
- Providing transportation 
- Administering medications
- Managing money
- Paying bills
- Doing the laundry
- Attending to personal hygiene
- Helping with personal grooming
- Writing letters or notes
- Making repairs to the home
- Maintaining a yard
- Removing snow

The need for long-term care help might be due to a terminal condition, disability, illness, injury, or infirmity due to advanced age. Estimates by experts are that at least 60% of all individuals will need extended help in one or more of the areas above during their lifetime.  

When the need for care lasts only for a few weeks or months, it is typicallyed called “short-term care” or “rehab care.”  Typical reasons for short-term care include:

- Rehabilitation from a hospital stay
- Recovery from illness
- Recovery from injury
- Recovery from surgery

True long-term care, meaning care needed indefinitely, or at least for many months or years, is typically needed due to the following conditions:

- Chronic medical conditions
- Chronic severe pain
- Permanent disabilities
- Dementia
- Ongoing need for help with activities of daily living
- Need for supervision

Long-term care services may be provided in any of the following settings:

- In the home of the recipient
- In the home of a family member or friend of the recipient
- At an adult day services location
- In an assisted living facility or adult foster home
- In a hospice facility
- In a nursing home

Custodial Care vs. Skilled Care
Custodial care and skilled care are terms used by the medical community and health care plans such as health insurance plans, Medicare, Medicaid, and the Veterans Administration. They are used primarily to differentiate care provided by medical specialists as opposed to care provided by aides, volunteers, family or friends. The use of these terms and their application is important in determining whether a health care plan will pay for services. Generally, skilled services are paid for by a health care plan and custodial services, not in conjunction with skilled care, are not covered. However, custodial services are almost always a part of a skilled service plan of care and, by being included, custodial services are paid by the health care plan as well.   

According to the American College of Medical Quality:

” Skilled care is the provision of services and supplies that can be given only by or under the supervision of skilled or licensed medical personnel. Skilled care is medically necessary when provided to improve the quality of health care of patients or to maintain or slow the decompensation of a patient’s condition, including palliative treatment. Skilled care is prescribed for settings that have the capability to deliver such services safely and effectively.  

Custodial care is the provision of services and supplies that can be given safely and reasonably by individuals who are neither skilled nor licensed medical personnel. The medical necessity and desired results of skilled care must be clearly documented by a written treatment plan approved by a physician. A patient may have skilled and custodial needs at the same time. In these circumstances, only those services and supplies provided in connection with the skilled care are to be considered as such. The treatment plan must include:  
- The applied therapies;
- The frequency of the treatment which is consistent with the therapeutic goals;
- The potential for a patient’s restoration within a predictable period of time, if applicable;
- The time frame in which the prescribing physician will review the case for the purpose of evaluating a patient’s status and before reassessing the medical necessity of ongoing treatment; or
- The maintenance, palliative relief, or the slowing of decompensation in a patient’s status, if applicable.
- Determinations of the medical necessity of skilled care must be based on the applicable standard of care.”

A skilled care provider can also provide services normally thought to be provided by custodial caregivers. Such things as help with activities of daily living and so-called instrumental activities of daily living are often furnished by skilled providers in the course of their treatment. Or a skilled care plan may call for services that can be delivered by a custodial caregiver but it would still be under the skilled plan of care for that individual. On the other hand people who deliver custodial services may from time to time perform those activities supposedly reserved for skilled providers. Such things as taking blood pressure, administering medicines, giving shots or changing wounds might be provided under certain circumstances by a custodial provider.  

The terms skilled and custodial do not refer to specific types of long-term care services but rather who delivers those services. Also the delivery of skilled services must be done under a written plan of care which often includes custodial care services.  

Does Medicare Cover Custodial Care?
Yes, but only for short-term care, not for long-term care. Medicare pays for custodial care in a nursing home, but only if the patient is in the nursing home in a skilled care setting for which it provides payment. Medicare will not pay for custodial care in the absence of a skilled care plan.  If you are enrolled in a traditional Medicare plan, and you’ve been in the hospital at least three days, and you are admitted directly from the hospital into a skilled nursing facility for rehabilitation or skilled nursing care, then Medicare may pay the full cost of the nursing home stay for the first 20 days, and may continue to pay part of the cost of the nursing home stay for the next 80 days — with a per day deductible that you must pay privately (although there are Medicare supplement insurance policies that sometimes cover that deductible).  

Medicare-covered Nursing Home Stay
A patient receiving skilled care in a nursing home from Medicare not only receives care from skilled providers such as nurses, therapists or doctors but also receives care from custodial providers such as aides or CNA’s. This care usually consists of help with bathing, dressing, walking, toileting, incontinence, feeding and medicating. Medicare does not exclude the custodial services but pays the entire bill because custodial care is a necessary part of the skilled care plan in a nursing home.  

Medicare-covered Home Care
Custodial care is always a part of a skilled care plan for home care. The patient receives skilled care from a nurse or therapist and custodial care from an aide for help with bathing, dressing, ambulating , toileting, incontinence, medicating and possibly feeding. Medicare pays for both types of services.  

Medicare-covered Hospice Care
The hospice team consists of a doctor, a nurse, a social worker, a therapist when needed, a counselor and an aide to provide custodial care. Help with activities of daily living is provided at home or in a Medicare approved hospice facility. Custodial care is always a part of a hospice plan of care and Medicare routinely pays for these services.  

Please note that there is no such thing as a custodial nursing home.  All nursing homes are by definition skilled care facilities because they have nurses who are skilled care providers.  Also be aware that not all states license intermediate care facilities which might provide less than 24 hour registered nursing care. “Skilled care patients” in nursing homes are referred to as such because they are receiving payment from Medicare or sometimes payment from private health insurance plans.  Practically all nursing home residents have medical needs but Medicare and other insurance plans will only pay for patients that have certain acute medical needs where recovery is anticipated.  Patients with chronic medical problems are typically not covered by Medicare but will be covered by Medicaid provided that all of the financial and medical eligibilty crieria for Medicaid are met.  

For more information about long-term care, nursing homes, qualifying for Medicaid, and other related topics, please click on the links below which will take you to the corresponding chapter in my book — The Virginia Nursing Home Survival Guide. You may also access all of these chapters from my Website under the “Resources” tab:  

chapter 1 – THE CAREGIVER’S ROLE
chapter 2 – WHAT IS A NURSING HOME?
chapter 3 – SELECTING A FACILITY
NURSING HOME EVALUATION TOOL
chapter 4 – MOVING YOUR LOVED ONE
chapter 5 – HOW TO PAY FOR NURSING HOME CARE
chapter 6 – MEDICAID PLANNING
chapter 7 – MEDICAID FAQs
chapter 8 – HOW TO GET THE BEST POSSIBLE CARE
chapter 9 – THE RIGHTS OF NURSING HOME RESIDENTS
chapter 10 – RECOGNIZING ABUSE & NEGLECT
chapter 11 – PROTECTION FROM ABUSE AND NEGLECT
chapter 12 – IF YOU SUSPECT ABUSE OR NEGLECT
chapter 13 – ESTATE PLANNING & POWERS OF ATTORNEY
chapter 14 – LEGAL ASSISTANCE
APPENDIX A: VIRGINIA NURSING HOMES BY REGION
APPENDIX B: VIRGINIA AND NATIONAL RESOURCES
APPENDIX C: AREA AGENCIES ON AGING
APPENDIX D: ELDER ABUSE RESOURCES
APPENDIX E: GERIATRICIANS
APPENDIX F: GERIATRIC CARE MANAGERS