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Planning is key to extended care
MISSISSIPPI STATE -- Making advance arrangements for extended health care is one of the more important things a person can do to make the twilight years easier.
Money matters tend to dominate these decisions. Many patients either don't have enough assets to pay for extended care, or don't want to see a lifetime's savings evaporate rather than be passed on to family. Nursing homes in Mississippi currently charge about $100 a day.
Jan Lukens, Extension consumer management specialist at Mississippi State University's Coastal Research and Extension Center in Biloxi, said planning for extended care raises issues of family, comfort, convenience and money.
"Where you live will dictate a lot of the cost," Lukens said. "There are so many choices these days about where to live and the type of facilities available."
Many facilities today offer the various types of care within the same complex. A resident can move into a retirement-style apartment, transfer to an assisted living arrangement and then move into a nursing home without leaving the facility.
While there are options for nearly any kind of extended care desired, paying for them can cause problems. One of the best ways to finance extended care is through long-term care insurance. While these policies have been around for some time, Lukens said policies available in recent years are better, offering a wide variety of coverage options from insurers who have earned a reputation for their ability to pay.
"Long-term care insurance policies are very complicated and there is not a lot of uniformity among them," Lukens said. "There is an advantage to this inconsistency as consumers have lots of choice and flexibility as they shop."
Consumers 40 and older who are in reasonably good health can buy long-term care insurance. People in good health can buy a new policy in their 70s, but policies are very expensive at this age. Most advisors recommend people consider buying this type of insurance in their late 50s to early 60s when the coverage is more affordable.
Lukens warned against assuming Medicare or health insurance will pay for long-term care.
"Most care in a nursing home is considered custodial care for daily living needs, and this is not paid by health insurance and typically not paid by Medicare," Lukens said. "Medicare has some very limited benefits and shouldn't be looked at as a long-term care policy."
Medicaid is designed for people who are poor or who will be poor very soon after going into a nursing home. Medicaid places severe limitations on the resources a person can have and still qualify for the assistance. Some families transfer assets away from an elderly relative to qualify them for Medicaid, but Lukens said federal legislation governs this activity.
"Those who are facing depletion of assets due to nursing home costs often lament they will have nothing to leave to children and grandchildren," Lukens said. "If a family member wants to give particular assets to family members, they should consult with financial advisers and the local Medicaid office to find out about the time limits for the transfer of assets."
Lukens said assets transferred just before a patient goes on Medicaid will be considered as the patient's assets. Outright gifts usually have a three-year look-back period and trusts a five-year period. Any assets transferred within these periods will disqualify the individual for benefits for a period of time proportionate to the value transferred.
"Do your planning beforehand, deciding on what assets you're giving, how you're giving them and how long you might have to wait before you are eligible for Medicaid," Lukens said.
Nearly one half of nursing home stays are for three months or less, and only about 10 percent last five years or longer. Patients with substantial assets may decide to take on the financial risk and self-insure, paying for their own care.
Low income patients usually have just a few assets to use before they are eligible for Medicaid. Long-term care insurance often is not a realistic option for these patients, as the cost of premiums would simply drain their few resources even faster.
Long-term care insurance is a feasible option for many middle-income individuals. While assets of a few hundred thousand dollars may pay for one person's nursing home care, it may not leave the spouse with enough money to live comfortably. Long-term care policies also can protect the patients' assets so they can pass on an inheritance to their heirs.
There are other choices and decisions for families well in advance of nursing home confinement. Some of these include making the senior a dependent of surviving family members, paying a family member to serve as caregiver, and using some assets to help grandchildren go to college or children to meet their expenses.
"There are many decision points in this process, and the more you think ahead, the better able you are to plan for good, long-term results rather than just fix problems when the come up," Lukens said. "Always consult with a financial advisor and the appropriate governmental agencies before making these decisions."