WHAT IS LONG TERM CARE?

Long term care refers to the kind of day-in, day-out help that you could need if you ever have a chronic illness or disability that lasts a long time and you are unable to care for yourself. You may never need lengthy care in a nursing home (which most people think is the only kind of long term care) but its possible that someday you may need help at home with daily activities such as dressing, bathing or walking.

To meet a range of long term care needs, there are many kinds of long term care services in addition to the care associated with lengthy stays in a nursing home or health care you may need at home. Other services include: adult day care, respite care (which helps family members cope with caring for older persons at home); care given in senior citizens or congregate housing; aide or chore services; and friendly visiting services.

Some or all of these services may be available where you live now or plan to retire. However, this guide deals mainly with two kinds of long term care covered by long term care insurance policies that are currently available; nursing home and home health care.

This guide will also help you gage whether long tern care insurance policies can help you meet future expenses related to chronic illness or disability. To make this guide easier to understand, technical terms are bold or italicized the first time they appear in the text and are defined in the glossary at the end of this document. Most of these terms are also defined the first time they appear.

MEDICARE AND LONG-TERM CARE

The fact is that neither Medicare nor most private Medicare supplement insurance (or the health insurance you have through your employer) will pay for most long term care expenses.

Medicare supplement insurance (Medigap) is private insurance that is designed to help cover some of the gaps in Medicare coverage - but usually not long term care. Some retirees are covered by their group health plan which complements Medicare, but these plans generally do not cover long term care either.

Although you may have Medicare as well as other health insurance, you will probably be covered for expenses related to a limited amount of skilled nursing care. Skilled nursing care refers to the kind of daily nursing and rehabilitative care that can be performed by, or under the supervision of skilled medical personnel. The care received must also be based on a doctor's orders.

This means you will not be covered if you need the kind of extended, intermediate or custodial care associated with long tern nursing home stays or if you need prolonged home health care on a daily basis.

Intermediate care refers to occasional nursing and rehabilitative care that must be based on a doctor's orders and can only be performed by, or under the supervision of skilled medical personnel. Custodial care is care that primarily for the purpose of meeting personal needs such as help in walking, bathing, dressing, eating or taking medicine. It can usually be provided without professional medical skills or training.

Home health care may include care received at home such as part time skilled nursing care, speech therapy, part time services of home health aides or help from homemakers or choreworkers.

WILL YOU NEED LONG-TERM CARE?

By the year 1990, about 7.7 million Americans over the age 65 will likely need some form of long term care.

But those 85 or over are the most at risk for needing long term care services. In fact, statistics show that, at any given time, 22 percent of those age 85 or older are in a nursing home. This compares to about 1 percent for those age 65 to 74 and about 7 percent for those age 75 to 84.

At the same time it is estimated that 2 of 5 people age 65 or older risk entering a nursing home at some time in their lives, More that half of those will need to stay 90 days or fewer; yet about 40 percent will need to stay on average 2.5 years. Only a small number stay over five years.

HOW EXPENSIVE IS LONG-TERM CARE?

Long term care can be very expensive. In 1986, a year in a nursing home cost an average of $20,000. to $30,000. (the cost often depending on the area in which the home is located) or about $2000. per month. At the most expensive homes, the annual cost could be as much as $50,000.

WHO PAYS FOR IT?

In 1985, over half of nursing home care alone were paid out-of-pocket by individuals or families. Medicare paid for less than two percent of the nation's $35 billion annual nursing home bill and private insurance paid even less.

In fact, Medicare will only pay for:

Skilled nursing care up to 100 days per calendar year. You must have been in a hospital for at least 3 days and enter the nursing home within 30 days after hospital discharge. A physician must show that your admission is necessary.

Part time skilled home health care (but only if you are home bound, a physician certifies the care is necessary and provides a treatment plan and the agency is Medicare participating). This is a very limited benefit and does not cover services you may need on a daily basis over an extended period of time.

The other primary payer of nursing home care expenses (over 42%) is Medicaid, the government program that is meant to provide help with medical expenses to the poor. To qualify for Medicaid, you (or your family) either must already be "poor" or literally impoverish yourself - "spending down" virtually all of your assets (except your house). That happens to about one half of the people who enter nursing homes as "private pay" patients. A recent study showed that those who pay for nursing home care out of their own pockets are often impoverished within six months to a year. They must then turn to Medicaid (public assistance) to pay part or all of their expenses.

For those over the age of 60, expenses for some home care services are available under the Federal Older Americans Act on a limited basis, such as Meals on Wheels, homemaker and home health care aides. If you need such services, contact the local Area Agency on Aging listed in the phone book for more information about them.

DO YOU NEED PRIVATE INSURANCE TO COVER LONG-TERM CARE?

Not everyone does. Low-income people who are eligible for Medicaid generally do not need additional insurance. Medicaid pays almost all costs including long term nursing care. Contact your regional office of the Department of Human Services to find out if you qualify and what the benefits are.

WHAT KIND OF INSURANCE IS AVAILABLE?

Almost all available policies today are "indemnity" [policies, meaning they pay a set amount (usually a certain dollar figure per day) for care in a nursing home or for home health care. No policy provides blanket coverage for all expenses and most policies on the market today do not automatically adjust for inflation. This means a policy's benefits are not necessarily tied to future increase in the costs of long term care. A daily benefit level which seems adequate today may be inadequate if you receive care many years for now.

WHAT IS THE DIFFERENCE BETWEEN "LONG-TERM CARE" INSURANCE AND "NURSING HOME CARE" INSURANCE?

These two tptypesf policy are sisimilarbut under Maine insurance regulations, Long-Term Care policies must cover custodial care and home health care services, while Nursing Home Care policies may not.

ARE THE PREMIUMS PAID FOR "LONG-TERM CARE" AND "NURSING HOME CARE" INSURANCE TAX DEDUCTIBLE?

The tax deduction for premiums applies only to long-term care policies certified by the Superintendent of Insurance.

WHAT KIND OF CARE IS PROVIDED?

Long-Term care and Nursing Home Care policies may pay for skilled, intermediate or custodial care in a nursing home. Each policy may define these levels of care differently and the definitions are no the same as Medicare's.

Policies generally pay only for expenses in facilities that:

Are licensed by the state; and
Meet the policy's definition of skilled, intermediate or custodial care.

This is why it's very important for you to find out the inkindsf nursing homes in the area which you live or plan to receive care before you buy a policy. Check the nursing homes in your area to make sure they fit policy definitions. If they don't, you may not be eligible for benefits.

Also, all Long-Term Care policies and some Nursing Home Care policies cover home health care services such as skilled or non-skilled nursing care, and homemaker and home health aides.

WHAT KINDS OF LIMITS ARE THERE?

All policies contain limitations and exclusions in addition to those discussed in the last three sections, such as daily benefit limits and limits on the types of care and the types of facilities covered. Others you should study before making purchase are:

Elimination or Deductible Periods... These periods are defined as the number of days you must be confined in a fafacilityr the number of home care visits you must have received before the policy benefits begin.

Duration of Benefits...These vary from policy to policy and vary by type of facility within a policy. The limit is usually stated in terms of the maximum number of years that the bebenefitsill be paid in a nursing home or the maximum number of home health care visits covered.

Preexisting Conditions...When you apply for Long-Term Care or Nursing Home Care insurance, you may be asked questions about the previous and current state of your health. This is because an insurance company generally requires that a certain period of time pass before the policy pays for care related to a health problem you may have had when you applied. Such health problems are called preexisting conditions. At this time, most cocompaniesse a six-month preexisting condition limitation period. In some cases, you may be denied coverage because of your health status.

Eligibility...After a certain age, you may be unable to buy a policy. Each company sets its own age limit - usually around the age of 79.

Exclusions...POlices may not pay for long-term care related to mental or nervous conditions, alcoholism, or certain other health conditions and situations. However, Alzheimers's diseases, and other organic disorders, leading causes of nursing home admissions, are covered.

HOW MUCH DOES A POLICY COST?

Costs vary widely by company, by age and by the level of benefits. The cost of most policies varies according to your age when you bought the policy. The cost is much lower at age 60 than at age 75. Even thought premiums may change, the costs for most policies will always be based on your age when you first bought the policy. However, the cost of some policies increases as you get older regardless of when you bought the policy. It is important to know which type you have.

A policy with very limited benefits will usually cost less than one with extensive benefits, but not nenecessarilyIt pays to shop around. Compare both benefits and cost. A comparison chart is available from:

Maine Bureau of Insurance
State House Station 34
Augusta, ME 04333
Tel: (207) 582-8707
or
Maine Committee on Aging
State House Station 127
Augusta, ME 04333
Tel: 1-800-452-1912

HITS ON SHOPPING FOR PRIVATE HEALTH INSURANCE

SHOP CAREFULLY BEFORE YOU BUY...policies differ widely as to coverage and cost, and companies differ as to service. Contact different companies and compare the policies carefully before you buy.

DON'T BUY MORE POLICIES THAN YOU NEED...duplicate coverage is costly and not neccessary. A single comprehensive policy is better than several policies with overlapping or duplicate coverages

BEWARE OF REPLACING EXEXISTINGOVERAGE...be suspicious of a suggestion that you give up your policy and buy a replacement. Often the new policy will impose waiting periods or will have exexclusionsr waiting periods for preexisting conditions your current policy covers. On the other hand, don't keep inadequate policies simply because you have had them a long time. You don't get credit with a company just because you've paid many years for a policy.

KNOW WITH WHOM YOU'RE DEALING...a company must meet certain qualifications to do business in your state. This is for your protection. agents must also be licensed by your state and must carry proof of licensing showing their name and the company they represent. If the agent cannot show such proof, do not buy from that person. A business card is not a license.

KEEP AGENTS' AND/OR COMPANIES' NAMES, ADDRESSES, AND TELEPHONE NUMBERS...write down the agents' and/or companies' names, addresses and telephone numbers, or ask for a business card.

TAKE YOUR TIME...do not let a short-term enrollment period high pressure you. Professional salespeople will not rush you. If you ask a question whether a program is worthy, ask the salesperson to explain it to a friend or relative whose judgement you respect. Allow yourself time to think through your decision.

LONG-TERM CARE GLOSSARY

The following definition of commonly used long-term care terms may differ somewhat from those found in long-term care policies you may consider. In many cases, they also differ from those definitions Medicare and Medicaid use:

SKILLED NURSING CARE is daily nursing and rerehabilitativeare that can be performed only by, or under the supervision of, skilled medical personnel. The care received must be based on a doctor's orders.

INTERMEDIATE CARE is daily nursing and rehabilitative care that can be performed only by, or under the supervision of, skilled medical personnel. The care received must be based on a doctor's orders.

CUSTODIAL CARE is care that is primarily for the purpose of meeting personal needs such as help in walking, bathing, dressing, eating, or taking medicine. It can be provided by someone without professional medical skills or training, but must be based on a doctor's orders.

HOME HEALTH CARE may include care received at home such as part-time skilled nursing care, speech therapy, physical or occupational therapy, part-time services of home health aides or help from homemakers or choreworkers.

SKILLED NURSING FACILITY is one licensed by the state and one that may be certified by Medicare and/or Medicaid to prprovidekilled nursing care. It may also provide intermediate or custodial care.

INTERMEDIATE CARE FACILITY is one that is licensed by the state and one that may be certified by Medicaid to provide intermediate cacareIt may also provide custodial care. It can provide Medicare or Medicaid-covered skilled nursing care only if it has been certified to do either one.

MEDICAID is the joint state and federal program that states have adopted to provide payment for health care services to those with lower incomes or with very high medical bills. It does provide benefits for custodial and home health care, once income and assets have been "spent down" to eligibility levels.

MEDICARE is the federal program that is designed to provide those over age 65, some disabled persons and those with end-state renal disease with help in paying for hospital and medical expenses. It does not provide benefits for long-term care.

MEDICARE SUPPLEMENT INSURANCE (Medigap) is private insurance that supplements or fills in many of the gaps in Medicare coverage. It generally does not provide benefits for long-term care.