Ask the Medicare Specialist
QUESTION:
From John: I understand that my original Medicare and Supplement only pay for Skilled Nursing, not assisted living or other nursing home services. Will my original Medicare still be the best option when/if I reach the point of needing such supportive services? Or do some of the Advantage Plans offer more comprehensive coverage for nursing care and/or assisted living? I do not qualify for long-term care insurance and don’t know that it would be a good investment even if I did. Is there anything I need to do now to make provisions for a time when I may need assistance besides trying to save as much as possible?
ANSWER:
Unfortunately, neither type of Medicare plan, Advantage or Supplement covers long term nursing home or in-home care due to the high costs, which I will go over shortly. Skilled Nursing, which is different than long term care, is covered by both types of plans for 100 days. I would describe Skilled Nursing as “inpatient rehab.” It’s a facility people go to stay after a long hospitalization, stroke, bad accident, etc., with the goal of nursing one back to health so they can return home, stay independent, dress, feed, and bathe themselves. If any of those activities cannot be performed, a nursing home or in-home care is probably in order if immediate family are unable to take on the role of caregiver(s).
People do need to prepare for the possibility they may need either type of long-term care. With the costs for these services soaring, for many, that simply might not be possible. The average cost for a nursing home in Pennsylvania, according to seniorliving.org, is between $9,000 and $10,000 per month. According to payingforseniorcare.com, home health aides cost, on average, $21/hour. If only 40 hours/week were necessary, that would be $3,600 per month. If round the clock care were called for, it would come to just under $9,000. We are talking over $100,000 a year! If one were to live five years in either situation, $500,000 would be needed to cover the bills. And this is based on today’s costs. We have no idea what they might be in 10 years. In addition, chances are, much of our savings, 401K, investments and such might be drained by the time nursing or long-term care would be necessary. In my opinion, long term care insurance isn’t the answer either. First of all, for it to be at all affordable, it has to be purchased in one’s 40’s or early 50’s. I’ve counseled many clients who purchased it at that age and came to me for advice on whether it was worth keeping or not. In every occasion but one, it wasn’t. That’s because when it was purchased 20 or 30 years ago, most people bought policies that covered $100/ day in a nursing home, the cost at the time. That’s $6,000 to $7,000 short of what the cost is in 2020. At age 75 or 80, $150-$200/month is an average premium for these policies. What’s the point? All people are doing by keeping them is postponing going broke. I’d rather folks enjoy that $200 month now, while they can, instead of paying it to an insurance company for a policy that’s almost useless. Let me explain.
You see, here’s how the system works. You pay the nursing home in full until every penny you’ve saved or invested is gone. When that happens, if you own a home, it gets signed over to the nursing facility or home care agency to cover the bill at the time of death. In addition, you would also go on Medicaid and the company providing care gets your entire Social Security check minus $40 or $50. It’s a sad scenario indeed, working hard all your life to save money with hopes of leaving something for your kids, only for it to be drained in this fashion.
So, how do we prepare? Barring saving $500,000 and putting it in an account only be used for long term care, I’m not sure there is a way to fully prepare. What I would advise everyone in their 60’s to do is go see a good Elder Attorney who may be able to help protect some of your assets. I’ve sat with one of the most qualified in the city and was surprised what can be done to ensure all one’s wealth isn’t evaporated. However, these steps need to be taken well before services are needed. From what I understand, options become more limited the longer one waits.
I’m going to have a very well thought of Fayette County attorney, Timothy Witt, as a guest on my podcast to discuss some of these issues as well as the importance of having both of a Power of Attorney, a will, and a living will. You can catch the replay on our website or Facebook page.
If you have any questions or comments regarding today’s column, you can direct them to me via phone, or email, aaron@getyourbestplan.com.
If you would like to make an appointment for a no cost Medicare consultation contact any of our three office locations.