In the state of Texas, long term care can be quite expensive, ranging from $900 to $3,000 per month for care in an assisted living facility, and from $150 to $200 per day for care in a nursing home. How can one cope with such high costs?
Federal programs such as Medicaid and Medicare do pick up some of the costs of long term care; however, both programs require that certain conditions first be met. Regarding Medicaid, this is a state and federal assistance program that covers long term care costs for low income individuals. In order to qualify, most people will need to first pay for long term care out-of-pocket until their assets have dwindled to no more than several thousand dollars. At that point, Medicaid eligibility usually begins.
Medicare is a health insurance program typically used by individuals who are 65 years of age and older, or individuals who are under 65 and have a qualifying disability such as Alzheimer’s Disease. Medicare can pay for a variety of long term care programs, including skilled care in a nursing home, assisted living care, or skilled nursing care in the individuals’ home.
Should an individual not qualify for either Medicaid or Medicare, the cost of long term care will need to be covered either out-of-pocket, through a long term care insurance policy, or possibly via an alternative insurance policy.
Many individuals assume that their current insurance covers long term and/or skilled nursing care. However, unless this is expressly stated in the policy, most insurance carriers do not provide such coverage. This lack has left many individuals either bereft of much needed long term(and especially skilled nursing) care in their advanced years, or resigned to spending almost all of their hard-earned money in order to qualify for Medicaid coverage.
To address this issue, the state of Texas initiated the Long Term Care Partnership Program. This program, which is a partnership between private insurers and the state, provides Texans with incentives for purchasing long term care insurance policies. One of these incentives include an asset disregard benefit, which means that every dollar that the long term care policy pays out to the assisted living facility or nursing home is then disregarded by Medicaid when determining coverage eligibility. In other words, an individual will not need to “spend down” his or her personal assets in order to qualify for Medicaid.
Another incentive is inflation protection, which permits the long term care policy to pay for long term care even as its costs increase. Inflation protection is based on the age of the policy holder. For someone who is under 61 years of age, he or she is required to purchase 5% compound annual inflation protection. From age 61 to 76, some form of inflation protection must be purchased, although it no longer needs to be annual. After age 76, most insurers will offer free inflation protection, so the individual no longer needs to purchase or retain such coverage.
The third incentive is tax deduction, meaning that an individual who is paying for a long term care policy premium may be able to deduct part of the cost of the policy from his or her income taxes as a medical expense. In addition, any policy benefits that are paid out are not taxed as income.
The bottom line, when considering long term care in the state of Texas, is to look into the state’s Long Term Care Partnership Program. This program provides several useful benefits to those who purchase long term care insurance policies. Most importantly, such insurance covers the majority of costs associated with long term care, especially skilled nursing care.