TITLE: Outline of Medical
Assistance
SOURCE: Troy & Associates
DATE POSTED: 7/1/02
I. Definition of long term care
A. The kind of care people need when they are unable to
care for themselves due to prolonged illness, disability or frailty. It can
range from simple help with activities of daily living at home to highly
skilled nursing care in a nursing home.
B. Activities of daily living: Eating, bathing, dressing, toileting, and
transferring
C. Skilled care v. Custodial care
1. Skilled care = Care requiring the skills of a
professional or technical person
2. Custodial care = Care limited to provision of room and board and of
assistance in the activities of daily living. Could involve assistance while
still residing at home.
II. Advantages of planning ahead
A. Involves person receiving care as much as possible
B. Allows more time to carefully consider alternatives
C. Avoids conservatorship and guardianship (emergency situations)
III. Determining type of care
A. Two questions must be addressed:
1. Kind of care is based upon:
a. Assessment of physical health
(ability to engage in activities of daily living), mental health, social and
religious needs
b. Physician's prognosis for improvement or deterioration, and how long
services may be needed
c. Needs identified in a discharge plan from a hospital or other medical
facility
d. Ability to engage in activities such as shopping, yard and household
maintenance, laundry and transportation
e. Availability of care by family members and others
2. Services and resources which are available;
a. Area agency on aging is a good place to start
b. Administrative matters
(1) Background checks of potential caregivers
(2) Training and licensing of caregivers
(3) Payroll and tax reporting
(a) An agency will take care of these matters
(b) If home health aides are hired privately, the family must take care of
these matters.
c. Income and financial resources will affect your
choice of services
d. Availability of home care services
(1) Three levels of home health care
(a) Home health aide
(i) May administer medications (not
through injection), transfer, feed assist with exercise, bathing and feeding,
and do basic housekeeping
(ii) Must be supervised by a registered nurse
(b) Home care aide
(i) May prepared modified diets, give medication and exercise reminders, assist with dressing and grooming if patient is ambulatory and has no serious or infectious illness, can do basic housekeeping
(c) Home management aide
(i) May perform housekeeping, meal preparation and shopping
e. Availability of community based services
f. Skilled Nursing Home
(1) An institution which is primarily engaged in providing skilled nursing care and rehabilitation services for injured, sick or disabled persons, and
(a) is not providing primarily for the care and
treatment of mental illness
(b) that provides health-related care and services on a regular basis to
individuals who, because of their mental or physical condition, require care
and services above the level of room and board
g. Resource Locators: see directory at end of outline
IV. Medicaid and Medicare
A. Undergoing changes at both federal and state level
B. Medicaid (Known as Medical Assistance in Minnesota)
1. Medical Assistance law, rules and
regulations change frequently, especially dollar amount minimums and maximums.
To find out more about eligibility or transferring assets, contact the county
human services once or the legal services once, or an elder law or estate
planning attorney
2. Federal government sets general boundaries within which the program is
administered, with oversight by the Minnesota Department of Human Services
3. If eligible, Medical Assistance will cover most medically necessary
services, including some home and community based services
4. Your monthly income will be applied to the cost of your nursing home care
a. If in a nursing home, you keep $72
(as of January 1, 2003) of your monthly income for your personal needs
b. All income above the $72 is paid to the nursing home unless:
(1) You pay health insurance and/or
Medicare premiums
(2) You are a veteran or surviving spouse of a veteran and get a special
veteran's pension
(3) You get certain SSI benefits while in the nursing home
(4) You have to pay a guardian or conservator
(5) You have a dependent family member at home that is entitled to more income
(6)You are employed and get a special personal allowance deducted from your
income
5. Your spouse or dependent family members will be able to keep some of your income if:
a. Your spouse is not living in a
nursing home or receiving long term care services and has a monthly income of
less than $2,267 as of January 1, 2003.
b. Your spouse can also get some share of your income-producing assets
if, even with his or her share of your income, your spouse's income is still
not up to $2,267 level as of January 1, 2003. If your spouse has shelter costs, he
or she may be able to keep more.
6. Your spouse will not have to
give any of his or her income for your nursing homecare
7. The following assets are excluded and are not counted by Medical
Assistance:
a. Household and personal goods,
including pets, furniture, jewelry, appliances and other tools and equipment
used in the home with no limit in value
b. Burial space (a plot or mausoleum) and burial space items (vault, casket,
grave marker, etc.) for each eligible person and member of that person's
immediate family. Costs for grave opening and closing also are not counted.
c. Funeral services which may be funded by any combination of the following
four options: accounts, life insurance, annuities or trusts. Each one of these
options has a different set of rules. You should discuss these options and
their dollar limits with your attorney or a funeral director. (You must be sure
to distinguish between "b" and "c" above.)
d. A motor vehicle
e. A personal allowance of not more than $3,000 in available assets, such as
cash.
8. Keeping your homestead and receiving/remaining on Medical Assistance
a. You will not have to sell your homestead if:
(1) You return to your homestead within
6 months, or
(2) You intend to return to your homestead and a doctor says that it may be
possible for you to return (unless a doctor states in a letter that it is
unlikely that you can return home due to disabilities and/or lack of financial
resources) and you can show that the cost of home care is less than the cost of
nursing home care and can be met through Medical Assistance or other sources,
or
(3) Your homestead is the residence of your:
(a) Spouse
(b) Child under age 21, or child of any age who is blind or permanently and
totally disabled
(c) Sibling who owns equity in the home and lived with you for at least one
year just before you entered the nursing home
(d) child or grandchild of any age who lived with you for at least 2 years
before you entered the nursing home and who gave you verifiable care that made
it possible for you to stay at home. Verifiable care must include a physician's
statement of need.
b. If you choose to transfer your homestead:
(1) If you apply for Medical Assistance within 36 months of the transfer (60 months if the transfer was into or out of a revocable trust) the transfer will be reviewed by the local agency to determine whether you received fair market value for the transfer. The transfer will not affect your eligibility if:
(a) The transfer was to your spouse,
child under 21, or your child of any age who is blind or permanently and totally
disabled
(b) The homestead was transferred to a sibling who has equity interest in the
home and has lived in the home for at least one year prior to your entering the
nursing home
(c) The transfer was to your child or grandchild who was living in your home
for a period of at least two years just before your nursing home admission, and
allowed you to stay in your home by providing verifiable care.
(d) You show the local agency that you intended to dispose of your homestead at
fair market value
(2) If the transfer does not meet any of the criteria above, you will be denied Medical Assistance, but there may be a penalty period before Medical Assistance begins paying your nursing home or home health care costs.
(a) The penalty period will be
determined by dividing the amount given away for less than fair market value by
an amount known as the "statewide average payment for Skilled Nursing
Facilities" ($3,702 as of July 1, 2003) in
effect on the date that you apply for Medical Assistance
(b) Generally speaking, if you give away no more than $500 to any combination
of your family, friends, charities, religious organizations, or the like, there
will be no penalty period.
C. Medicare
1. Eligibility: must:
a. Be at least 65 years old, or have
been disabled for at least 2 years; and
b. Be eligible for Social Security benefits, or Federal Railroad Retirement
benefits
2. To have Medicare pay for nursing home care, must satisfy five conditions:
a. Your medical condition meets skilled nursing or skilled rehabilitation services level
(1) Skilled nursing = care that can only
be performed by, or under the supervision of, licensed nursing staff
(2) Skilled rehabilitation services = therapies performed by, or under the
supervision of, a licensed therapist
(3) Both must be ordered by a physician
b. You must have been in a hospital for
at least 3 consecutive days, not counting day of discharge, prior to admission
to skilled nursing facility
c. You were admitted to a skilled facility within 30 days after discharge from
a hospital
d. Your care in the skilled nursing facility is for a condition that was
treated in the hospital. Medicare may also pay for other conditions that arise
during your nursing home stay
e. A medical professional certifies that you need skilled nursing or skilled
rehabilitation services on a daily basis
3. Medicare A - covers hospital, some
nursing home and some home care costs
4. Medicare B - pays for physician's services, durable medical goods, ambulance
services and other medical costs
5. If you are eligible, Medicare pays:
a. The entire daily cost of your stay
for the 1st through the 20th day
b. From the 21st through the 100th day, you are responsible for a daily payment
of $101.50 during the year 2002.
D. Medigap Medicare Supplemental Insurance Policies)
1. Private insurance companies sell
health insurance policies to cover some of the gaps in Medicare coverage
2. Generally do not include coverage for long term care services beyond the
co-payments associated with Medicare's 100 or less days of long term coverage
V. Long term care insurance
A. Can furnish valuable protection
against the potentially high cost of long term care, but is not for everyone.
B. Health: The better your health, the easier it will be to find coverage.
People in poor health (Current heart disease, pulmonary disease, cancer or any
other advanced disease) are rarely accepted for coverage, and should question
any attempt to sell them coverage.
C. Age: The older a person is, the more expensive the premiums will be and the
less likely a company will be to issue coverage. The prime market age range is
55 to 79. Within this age range, you will have many companies and policies to
choose from. Very few companies will sell to people who are older than 84.
D. Annual income
1. Long term care insurance should only be purchased if premiums can be paid from current income. You need to consider not only your ability to pay premiums now, but also in the future
a. Ideally, you should not spend more than 5 to 6% of
your income on premiums
b. Your top priority should be to fund your own retirement
2. Usually individuals with incomes of $50,000 and up are candidates
E. Cash value of assets excluding a primary residence
1. $20,000 - $50,000 - individuals in this category with
adequate income to pay premiums may benefit from buying long term insurance
2. Less than $20,000 - May pay out over several years as much in premiums as
the asset value being protected
3. $50,000 and up ($100,000 for couples) - Individuals in this category may
want to use long term care insurance to save their estate for the benefit of
their heirs. If there are no heirs, it may be wise to consider using assets to
pay for long term care rather than buying insurance to protect them.
F. Dependents and heirs
1. Married - A spouse may be able to provide care in the
home
2. Men - are more often out-lived by their spouses and are less likely to go to
a nursing home
3. Women - live longer than men, and therefore, are more likely to be left
alone and more likely to experience declining health
G. What to look for when buying a policy
1. Avoid buying a policy that requires a hospital stay
before you can collect benefits
2. Daily benefit
a. The amount that you want to receive
daily for nursing home and home care coverage
b. Benefits can vary widely among policies - research daily benefits carefully
before purchasing a policy
3. Benefit period
a. Payments will continue for the period that you choose
b. Typically from two to five years, but in many cases for a lifetime
c. Consider tying length of policy to Medical Assistance look-back period
4. Elimination period
a. The deductible period during which you must pay for
care out of pocket before benefits kick in
b. The longer that you are willing to wait for benefits to be paid, the lower
your premiums
5. Compare policies
a. Choose a company with a history of
refining and updating policies
b. Look for a financially solid insurer
c. Do not buy a policy based on price alone
H. If you have additional questions relating to long term care insurance, contact the Minnesota Department of Commerce at (651)296-2488 or 1-800-657-3602. The department has information on licensing, complaints, benefits and deductibles offered by insurers.
VI. Alternative methods for financing long term care
A. Savings
B. Home equity
1. Sell house outright or convert your home equity and
use the proceeds to finance your long term care expenses
2. Apply for home equity loan
C. Reverse Mortgages
1. If senior wants to remain at home
2. Usually near or after exhaustion of liquid assets
3. Allows senior to tap the equity in the homestead without having to make
immediate payments to the lender
4. It is a loan whereby the principal residence serves as the loan collateral
but payments are made from the lender to the borrower
5. The homeowner retains title to the property and receives
a. A steady, or periodic stream of income and/or
b. A line of credit
c. A combination of these
6. Loan repayment begins
a. When the borrower sells the property, or
b. When borrower dies, or moves out of the house for more than one year, or
c. When the borrower's spouse leaves the house
7. The amount financed depends on
a. Appraised value of the property
b. County in which the property is located
c. Age of borrower
8. Costs associated with reverse mortgages
a. Appraisal costs
b. Closing costs
c. Borrower continues to pay the real estate taxes and insurance
9. Generally reverse mortgages will not affect eligibility for Social Security and Medicare
a. Borrowers may also remain eligible for Medical
Assistance, General Assistance, food stamps and federal or state low interest
loans or grants
b. Individuals who receive Medical Assistance or who are contemplating applying
for it, or any other governmental programs, should consult with an attorney
knowledgeable about Medical Assistance and government program laws before
applying for a reverse mortgage
10. A senior considering applying for a reverse mortgage must receive counseling from the Senior Housing, Inc. before entering into a reverse mortgage agreement.
D. Viatical Settlements
1. Allows the owner (usually the insured) of a life
insurance policy or an insured under a group life insurance policy to sell his
or her life insurance policy and receive a percentage of the death
benefits while still alive.
2. Typically, the insured (viator) enters into a contract with a licensed
viatical settlement provider.
a. Before entering into the contract, the viator's licensed physician must provide a written statement that the viator is of sound mind and under no constraint or under influence.
3. The provider will require an assignment, transfer,
sale, devise, or bequest of the death benefit or ownership in exchange for a
cash payment or other type of compensation to the viator
4. If the viator does not or cannot locate a provider directly, a viatical
settlement broker may be hired to locate a provider
5. Seniors should consult with an attorney knowledgeable about Medical
Assistance and their tax advisor before applying for viatical settlement
a. Proceeds not taxable
b. Individuals who receive Medical Assistance or who are contemplating applying
for it, or any other governmental programs, should consult with an attorney
knowledgeable about Medical Assistance and government program laws before
applying for a viatical settlement
6. The viatical provider or broker must not offer to pay a finder's fee, commission or other compensation to a viator's physician, attorney, accountant, or other person providing medical, legal or financial planning services to the viator or to any other person acting as an agent of the viator with respect to the viatical settlement.
7. The Minnesota Legislature has established standards to ensure that viators receive a reasonable return for viaticating their insurance policies. As of 1998, the minimum percentages of face value less outstanding loans received by a viator are as follows:
a. Life expectancy of less than 6
months = minimum of 80% of face value less outstanding loans received by
viator.
b. Life expectancy of at least 6 months but less than 12 months = 70%
c. Life expectancy of at least 12 months but less than 18 months = 65%
d. Life expectancy of at least 18 months but less than 24 months = 60%
e. Life expectancy of 24 months or more = 50%
8. The percentage may be reduced by 5 per cent for viaticating a policy written by an insurer rated lower than the highest four categories by A M. Best, or a comparable rating by another rating agency.
E. Accelerated benefits
1. Accelerated benefits provision in a life insurance
policy allows access to benefits while the insured is still alive.
2. Different from a viatical settlement
Directory*
Arranging for Care/Resource Locators
Seniors and families who are in need of a road map for locating services in their area should contact one or more of the following:
Minnesota Board on Aging
(651) 296-2770 or (800) 882-6262
Senior Linkage Line (800) 333-2433
(General Information & Referrals)
Minnesota Senior Federation (651) 641-8961 or (651) 642-1398
(General Information) (800) 365-8765
Minnesota Department of Health (651) 215-8701
(Nursing Home & Hospital Licensing & Certification)
Minnesota Department of Human Services (651) 296-3971
(Adult Day Care Facility Licensing)
Care Providers of Minnesota (612) 854-2844 or (800) 462-0024
(Nursing Home, Assisted Living & Long-Term Care Information)
Area Agency on Aging (651) 641-8612 or (800) 333-2433
(Nursing Home & Assisted Living Information)
Minnesota State Bar Association (800) 292-4152
(Statewide Attorney Referral Programs---except for counties listed below)
Dakota County Bar Association (952) 431-3200
Hennepin County Bar Association (612) 339-8777
Ramsey County Bar Association (651) 224-1775
(Metro Attorney Referral Program)
Minnesota Department of Veterans Affairs (651) 297-4932
(Benefits Information)
Minnesota Department of Commerce (651) 296-2488 or (800) 657-3602
(Voice)
(651) 296-2860 or (800) 627-3529 (TTY)
(Long Term Care Insurance Information)
Alzheimer's Association
(612) 830-0512 or (800) 232-0851
(Alzheimer's Information)
Minnesota Relay Service (800) 627-3529 (Voice and TTY)
(Telephone services for the deaf and hearing impaired for all state agencies)
*This is a sample listing. Other resources may be found in local/community telephone directories.
03/17/2000
If you would like to discuss any of the issues raised in this summary