Individuals are responsible for paying for their own care to the extent that they have the means to do so. Private Pay is a type of payment where the patient’s own resources pay for the care. A contract is signed between the person responsible for payment and the facility. Individuals (future residents) must pay for care with personal funds until money and assets (minus those excluded by law) are expended. Any money and assets of a spouse are also to be used to pay for care.
Unfortunately, the high cost of long-term care can quickly deplete the resources of the spouse/family of the long-term care resident. To protect your interests, it is highly recommended that you contact an estate planner and/or elder law attorney for a consultation. It will be well worth the expense. The sooner you do this the better since some states restrict the way you can protect your interests if you have immediate need of long-term care services. Remember that an elder law attorney will probably be more familiar with laws relating to "spend down" and protecting your assets.
Medicaid pays for medically necessary nursing home care for patients in skilled or intermediate care nursing homes. There are limits to available income and resources for the family requesting eligibility for Medicaid payment.
Families often find that they "spend down" their assets as they personally pay for care until they reach those financial limits. Medicaid is very strict on how those assets and resources may be spent or distributed before eligibility occurs. If spent or distributed improperly, eligibility for Medicaid may be denied.
Families should be aware that, if not planned for properly, the well spouse may become impoverished as private payment for care continues until they become eligible for Medicaid payment.
In North Carolina
To help you understand some of the rules related to "spending down" your assets and "spousal impoverishment" in North Carolina, the Division of Medical Assistance offers information on their website. The NC Division of Aging and Adult Services also offers information to help you understand this important topic.
Contact your local Area Agency on Aging to connect you to your state resource for understanding this important issue. If you want exposure to the basics, which may not be the same in your state, use the links above to read about the issue. Then you will know what to ask.
For more information about what is available after you "spend down" to Medicaid eligibility related to payment for long-term care, see the "Paying for Long-Term Care" section on Medicaid. Additional links are provided as is information on accessing personalized assistance.
After reviewing the information, consult with an attorney knowledgeable in elder law, if possible, to determine how you can protect your interests.
Should you feel that you cannot afford a consultation, contact your state Bar Association for a referral to an attorney who may be able to assist you at no cost.
Long-term care insurance can offer security to those who have planned ahead.
In North Carolina
Check with the NC SHIIP (Seniors Health Insurance Information Program) program for more private insurance information or call 1-800-443-9354 or 919-807-6900. Trained volunteers can answer your questions on traditional insurance, long-term care insurance, and insurance policies that cover what Medicare doesn't cover. This program is offered through the NC Department of Insurance. The NC Division of Aging and Adult Services provides information on long-term care insurance on their website as well.
There are also several websites that rate the financial strength of long-term care insurers. This is important because you want them to be in business and able to pay your claims should you ever need to file any.
- A.M Best - you type in the company's name on the homepage and it instantly gives you a rating.
- Standard & Poor's - requires you to register but still offers free information.
- Moody's Investors Service - click on "insurance" along the left side of the screen to get information on companies.
- Weiss Ratings Inc. - offers a free list of its strongest and weakest rated underwriters of long-term care insurance
Any insurance broker should be able to give you information on long-term care insurance as well. Remember, though, that they make their money by selling insurance policies.
A word of warning about long-term care insurance: be sure to do your homework before making a purchase. Investigate whether or not the purchase is the best choice for your financial situation. For some, regular investments may be a better option. Make sure any agreement addresses inflation, home care, your right to choose providers and facilities, caps on payments for various service, their right to change the original agreement, your right to add to the agreement, etc. Research the company carefully. If the company is not in business when you need the service, it will not do you any good.
For long-term care insurance:
Your state may offer tax credits for long-term care insurance.
Be sure to check with your accountant or with your state Department of Insurance or with the Internal Revenue Service (IRS) at 1-800-829-1040 to see if you can benefit from such a credit. Or, check with your State Health Insurance Information Program.
|Internal Revenue Service|
|Find My State Health Insurance Information Program|
|Long-Term Care Insurance Tax Credit for NC|
|State Health Insurance Information Program for NC|
|Find Other State Links|
For the cost of a long-term care
Current tax law also allows a family member to deduct the entire cost for residence in a long-term care facility subject to the limits on unreimbursed medical expenses. Tax law allows deduction of unreimbursed medical expenses in excess of 7.5%.
The cost of nursing home care is entirely deductible if the principle reason the person is admitted is to receive medical care (less 7.5% of total expenses).
Check with an accountant, your local Senior Health Insurance Information Program, the Internal Revenue Service (1-800-829-1040), or long-term care planner for the most current rules and for information on how to use this deduction. See links above.
For more information on tax credits:
Be sure and contact the regular health insurance company for the person needing care. Be informed about what is covered and what is not.
In North Carolina
Many people in NC have some type of managed care for health insurance. For more information on managed care and what it's all about, the NC Institute of Medicine offers the NC Consumer's Guide to Health Plan Selection. This online booklet offers a wealth of information about providers of health insurance in NC, how to choose a physician, what questions to ask, etc. Many state State Health Insurance Counseling and Assistance Programs offer this type of information.
In North Carolina, as part of the NC Patient's Bill of Rights and housed within the Consumer Protection Division of the Attorney General's Office, citizens have the Managed Care Patient Assistance Program to assist with health insurance issues. This program can offer advice about appeals, coverage, and explain individual policy benefits related to managed care. Contact them at 1-866-867-6272.
Many states offer the type of services listed above. Check with your State Health Insurance Information Program to find out.