Your Aging Parent is Ill - Now What?

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If your dad is suddenly hospitalized, who would your mom turn to for help? You? If so, do you understand Medicare, Medicaid, and long-term care policies? The more you know, the less stressful it will be for everyone.

Medicare: So Many Options

Medicare is the federal system of health insurance that covers people age 65 and older and people with disabilities. There are several "parts" to Medicare and each plays a different role.

  • Medicare Part A. Part A covers inpatient hospitalization, skilled nursing facilities, hospice services, and some home health care. For each benefit period, Medicare pays all covered costs except the Part A deductible ($1,316 in 2017) during the first 60 days. It also pays coinsurance amounts for hospital stays in excess of 61 days and up to150 days.  The “benefit period” begins the day the patient enters a hospital or skilled nursing facility and ends when he/she has not received hospital or skilled care for 60 consecutive days. After one benefit period ends, the next period begins once the patient re-enters a hospital or skilled nursing facility. The inpatient hospital deductible must be paid for each benefit period. There is no limit to the number of benefit periods.
  • Medicare Part B. Part B covers two types of services: 1) medically necessary services or supplies needed to diagnose or treat a medical condition, and 2) preventive services.  It also covers ambulance services, outpatient care, durable medical equipment and mental health-related needs and care. In 2017, the deductible for Part B coverage is $183 per year. After the deductible is met, the patient is responsible for 20 percent of the cost of Medicare-approved services.
  • Medicare Part D. Part D is an optional, non-subsidized insurance plan for prescription drugs offered by Medicare. For a Medicare eligible person with significant prescription drug requirements, Part D may help lower the cost.  Insurance companies and other Medicare-approved private companies administer Part D drug plans.
  • Medicare Supplemental Insurance. A supplemental plan is a private policy which pays for medical costs not provided via Medicare Parts A and B. There are different offerings of these policies ranging from basic to more generous benefits.

Medicaid: When You Outlive Your Resources

Medicaid is the state welfare program that provides financial support for individuals who do not have the resources to meet their living needs. If an individual is in a nursing home and has exhausted all resources to pay for his/her care, then the Medicaid program will initiate financial assistance. When applying for Medicaid, a couple will need to complete a resource assessment tool stating their assets and income. For Medicaid purposes, a married couple’s assets are considered jointly owned, regardless of how the assets are titled.

  • Assets. The community spouse is the husband or wife of a Medicaid applicant who is not receiving custodial care in a medical institution or nursing facility. The community spouse is allowed to keep a maximum of half of the couple’s countable assets up to a total of $120,900 (2017) or at least a minimum of $24,180 (2017). The spouse entering the nursing home is allowed to keep $2,000 of the countable assets.
  • Income. The community spouse is allowed to keep all of his/her own income (wages, Social Security, etc.) and half of any income earned from jointly owned assets.  The spouse entering a nursing home must contribute all of his/her own income towards the cost of the nursing home plus half of the income earned from jointly owned assets.

Long-term Care Insurance: A More Comprehensive Option

Long-term care insurance is used to pay for custodial care in a facility or at home.  If your parents own a policy, the need for Medicaid can be avoided or at least delayed.  The benefits of the policy are triggered when the insured is unable to perform three of the six activities of daily living, i.e. bathing, continence, dressing, eating, toileting, and transferring. Some policies provide for multiple care levels such as in-home care, adult day care, assisted living, or nursing home.

Other key provisions of long-term coverage to understand include the benefit amount, the benefit period, elimination period, inflation protection, and if the coverage provides asset protection for Medicaid spend-down through the Indiana Partnership Program.

Summary

Assisting your parents during an illness and helping them navigate the health care system can be stressful and painful. The more you know about health-care insurance basics the more time you can spend providing your parents with the emotional support and hand-holding they’ll need at that time.

Meredith Carbrey, CFP, is a Senior Wealth Advisor with Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website or email Meredith.

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