Another concern to many who are worried about their own extended care needs are the rules and regulations surrounding long term care programs offered by Federal and State agencies and how they can limit your control over decision making.  As the saying goes “for every benefit the government gives there is an associated catch that goes along with it”.
LTCA US CapitolThis means you have limited control of your care options. Having a well thought out long term care insurance plan has allowed many families to avoid loss of control when faced with dealing with Government Agencies.

Generally, Medicare provides little in the form of benefits for Long Term Care expenses.  Long term care benefits from Medicare are only available following a 3-day minimum, medically necessary, inpatient, hospital stay and are limited to the first 20 days in a nursing home only.  No at home care is covered.  After 20 days, Medicare pays for the excess costs over a certain dollar amount ($144.50 in 2012) which you must pay.  After 100 days, Medicare pays nothing.

Medicaid is a welfare assistance program for low-income individuals. It is the largest payer of long-term care expenses in the country.  Medicaid is a Federal-State welfare program in which you must “spend down” all your assets to poverty levels in order to receive benefits.  For example, in North Carolina long term care benefits from Medicaid cover expenses only in qualified nursing homes.  In general, depending on your state, the nursing home resident can keep only up to $2,000 to $3,000 worth of assets and is allowed to have $35 per month in income. The community spouse (the person who is not confined to the nursing home) can have protected assets equal to one-half of the couple’s countable assets up to the maximum of $113,640, which is indexed annually. This maximum can vary by state.  Your choice of facilities is usually limited, meaning you may not be able to choose the one you want, where you want and when you want it.  From a quality of care prospective, Medicaid pays benefits only to providers who accept Medicaid which reimburses at the lowest rate of any third-party payers. What’s more, you will likely share the room with someone you might never have associated with in your former life who now become your companions for the rest of it.  Whereas, if you have a long term care insurance plan with adequate facility benefits, these dollars can be used at a facility of your choice.

For years, many people were able to qualify for Medicaid simply by transferring assets to family members.  This is no longer the case. Effective with the Deficit Reduction Act (DRA) of 2005, a 5-Year look-back provision now applies to transfers of every type of asset.  The look-back used to be five years for transfers only involving trusts, and three years for all other transfers. Now, Medicaid will be checking your finances a full five years from the date you apply to Medicare.  This change was a major setback if you were considering implementing a Medicaid planning strategy for trying to qualify as “poor on paper.”  This means that many of you could see most of your hard earned savings and assets quickly depleted should you no longer be able to care for yourself.  This can be a substantial blow to the dreams and desires to provide an inheritance to your children or grandchildren.

The American Recovery and Reinvestment Act of 2009 (ARRA), increased federal funding for Medicaid to the states through June 30, 2011. Still, Medicaid is facing nearly insurmountable financial problems. The new Obama Care Plan increases Medicaid enrollment with a minor amount of funding from the federal government to get it going. But this no more than a band-aid on a long-term problem that needs strong fiscal solutions.  In September of 2011, the department of Health and Human Services cancelled a provision of the Obama Care Plan called the Community Living and Assistance Services and Support, or CLASS for short. This was the Federal Government’s attempt at providing a long term care insurance plan for all US citizens.  It was determined that it did not meet the three basic criteria of being financially stable, voluntary based and self-financed through additional tax revenue.  Considering the benefits of owning a viable long term care insurance plan should be among the first steps in developing a strategy in maintaining control over your own care needs.