Using Insurance to Pay for Long-term Healthcare
Veterans, just like many other Americans, may feel apprehension thinking about how they will pay for health care as they age, especially if they were to get seriously ill or need assistance performing activities of daily living (ADLs). Once you have retired, you must seriously consider your cost of living, and how it may be affected by your health condition and your preferences for how you would like to spend your senior years. You may need to supplement your income, especially if you find yourself needing skilled, long-term care.
The good news is that your Veterans Affairs (VA) benefits provide many long-term care services based on your diagnosed needs. Services provided include adult day health care, skilled home health care, and respite care. Additionally, the VA offers Nursing Home and Residential Settings benefits that may help pay for part or all of your stay in approved facilities, if you meet certain eligibility criteria involving your service connected status, level of disability, and income. To be considered for these VA-based long-term health services, you must have enrolled in VA health care, have served in the military, and have been discharged for any reason other than dishonorable.
Long Term Care Insurance
Private long-term care insurance can also be used to pay for long-term care services and settings for a pre-set number of years (after which time you become responsible for the costs of your care). Typically, insurance providers have a range eligibility standards you must meet to become covered; unfortunately, if you already live in a nursing home or assisted living facility, or already need help with ADLs, then you probably will not qualify for a long term care policy. Premiums are also based in part on your age at the time of enrollment, so policies become more expensive as you get older. Many people use private long term care insurance to pay part of the costs for long term care services or the setting they prefer, such as an assisted living facility, or an in-home caregiver. While you must pay monthly premiums, it can save you quite a bit when dealing with medical bills.
Medicare and Medicaid
Medicare is the federal health insurance system for people 65 years or older, for people under 65 with certain disabilities, or anyone with End Stage Renal Disease. Original Medicare will pay for services in an approved Skilled Nursing Facility as well as some home health services. Medicare Advantage Plans are required to provide the same benefits, however, they may charge different copays and have different eligibility standards.
Through Medicare, you can receive care in a certified skilled nursing facility for a limited number of days (up to 100 days using Original Medicare) if your doctor decides that you require skilled care after a hospital stay . If the only type of help you need is with certain ADLs such as dressing or bathing, Medicare will not pay for the full stay at a facility, but may pay for a portion based on what help you need.
If your doctor decides that you are homebound, then you may be eligible for home health services under hospital insurance (Part A) and medical coverage (Part B). Covered services may include:
- Intermittent skilled nursing care
- Rehabilitation (physical/occupational therapy/speech therapy)
- Assistance with activities of daily living
- Medical supplies/equipment to use at home
Medicaid is the joint federal/state insurance program that helps people with low incomes pay for their medical costs. This may include help with Medicare premiums, copays, and deductibles. Medicaid can also pay for some services not covered by Medicare. Specific eligibility criteria will vary by state.
If you have life insurance, you may be able to use a portion of it to help pay for your long-term care. There are stipulations and details will vary depending on your policy, but it is an option worth exploring if you are in need of funds. Keep in mind that these options affect the total amount that will be paid to your beneficiaries after your death, and in some cases, the money you make from these options may be taxed. Check with your insurance provider on these possibilities:
- Combination (Life/Long-Term Care) Products: Some insurance companies are actually selling product that combine benefits of long term health care with the benefits for life insurance. Long-term care benefits are usually paid in a percentage of the life insurance amount.
- Accelerated Death Benefits (ADBs): Some insurance policies allow you to collect a tax-free advance on your life insurance payout under certain conditions (like being diagnosed with a terminal illness, needing long-term care services for an extended amount of time, or needing ongoing assistance with ADLs).
- Life settlements and Viatical settlements: These options allow you to sell your life insurance to third party companies to raise funds immediately. Life settlements typically only have an age requirement, which viatical settlements require a terminally ill diagnosis.
Remember that it is always a good idea to talk to a finance director, or to your on own local VA benefits officer.
Written By Megan Hammons