long term by liaoqinmei


									Financing Health Care

          For the Elderly

n   Health care costs
    continue to escalate
n   Technology is keeping
    people alive longer,
    these advances raise
    the cost of health care

n   The number of elderly
    is increasing
n   Most people use
    medical services
    toward the end of their
    lives, which affects the
    overall expenditures in
    health care

n   As a society we tend
    to believe that we
    should try and save a
    life at almost any cost

n   The elder use a large
    portion of our health care
    dollars. Most of this
    money is spent on long-
    term care.
n   This chapter focuses on
    long-term care, Medicare
    & Medicaid programs as
    these are the programs
    most used by the older

Financing Options ?
n   Cost of extended long-term care is high.
n   Cost of nursing home care for one resident
    is between $3000 and $5000 a month.
n   The cost can dwindle an individual’s life
    savings in a matter of months.
n   Even though we are seeing people are
    healthier longer- elders may live in an
    unhealthy state longer than in the past.
Funding Ratio – Long Term Care

n   Public Sector            n   Private Sector =
    Programs= 60% of             40% of long-
    long-term care               term care
    expenses                     expenses
     – Medicare,                  – Insurance
       Medicaid, VA                 vendors, and
       Administration, and          individual
       state programs               savings

        Proper Legal Authority
        and Long-Term Care
n   Does the individual
    require care? If so, do
    family members have
    access to funds to pay
    for the care?
n   Is the elderly person
    incompetent? If so,
    who makes the
    decisions on their

n   Usually a surviving spouse or child assumes the
    the primary role as guardian.
n   When families are close in proximity they share
    responsibilities. 20% of Americans change
    residences each year, which can create
    disagreements among siblings concerning the care
    of their parent.
    When there is not consensus among family
    members, the disagreement could turn costly in
    probate court.
Probate courts are state courts
n   If preplanning has not been done, protection of the
    individual must go through the probate court
n   Probate courts are set up to deal with issues such
    as wills, trusts, probates
n   Guardianship = the care of the person’s self under
    the probate court
n   Conservatorship = protection of a person’s money
    and assets

Pre-arrangements Preferable
n   Definitions:
n   Financial power of attorney = document
    regarding financial decision making.
n   Financial power of attorney must be notarized and
    is revocable.
n   Fiduciary = a person legally bound to put the
    interests of the person for whom he/she is acting
    ahead of his/her own in making decisions

n   Advance directives or
    medical power of attorney
    = individual appointed to
    make medical decisions
    for a person who is no
    longer able to
n   Also provides the
    authority to place the
    individual into different
    institutional settings
    (hospital, nursing home,

Advance Directives
n   Generally known as living
    will provision.
n   Health care professionals
    need to be aware of this
    for DNR orders.
n   A living will can exist
    without a medical power
    of attorney.
n   Important :A living will is
    a statement of intent only.

Living Will
n   Expresses the individual’s desire that he/she not
    be kept alive solely by artificial or extraordinary
n   “IS” intended to be the primary instructions
    directing the person’s attending physician.
n   The living will alone is usually not sufficient to
    direct the termination of life support or for
    insurance of a do not resuscitate order.

n   Financing Health Care

Public Sector Financing: 60%

n   The majority of long-term care expenses for
    elders are funded through the public sector.
n   Three primary federal programs:
    –   Medicare, Medicaid, Veterans Administration
    –   The state contributes about 30-50% of costs
        under the Medicaid program.

n   Enacted in 1966
n   Is a federal health insurance program,
    usually for persons 65 years of age and
n   Medicare provides two plans:
    –   Part A: hospital coverage
    –   Part B: supplement; primarily for physician
        visits and outpatient care

Medicare and long-term care
n   Very limited benefits:
    –   will pay up to 100 days in a skilled nursing
        facility, but must be hospitalized 3 days prior to
        the 100 days
    –   full cost for the first 20 days
    –   days 21-100, the patient must pay a co-payment
    –   in 1997 this amount was $95.00 a day

When do Medicare benefits stop?
n   When the person reaches a
    point where the extended
    medical services are no
    longer helping their
n   Medicare will only pay if
    requirements are met,and
    if the patient is making
    progress to measurable
    goals: If the patient status
    changes from skilled care
    to custodial care-
    Medicare no longer pays
n   For most individuals, the
    need for care still exits.
n   Most elderly believe that
    Medicare will pay for their
    long-term care, or that
    Part B will kick in. Part B
    supplements the basic
    plan, but does not extend

 Initially enacted in 1969 as part of President
 Johnson’s “War on Poverty”.

 Medicaid program pays health care costs for
 individuals with low incomes and limited assets.

 Pays the largest portion of ongoing long-term

 Nursing home residents qualifying for Medicaid is
 about 80%.
n   In the 1970”s the program was extended to
    include nursing home cost coverage for the
    poor, (primarily elderly people).
n   In the 1980’s legislation expanded the long-
    term Medicaid coverage from poor elderly
    individuals to include middle-class elders
    with limited assets.

n   This is the reason that the majority of
    Medicaid moneys is spent on long-term care
    for the elderly.
n   The original Medicaid rules for eligibility
    for long-term care coverage allowed an
    individual to retain only $2000.00 in assets.
n   A couple together was allowed to retain
    $3000.00 .

n   Then legislation created the concept of
    community spouse resource allowance
    (CSRA). Non-institutionalized spouse was
    allowed enough assets to continue to
    conduct his/her life independently.

n   In 1997 that amount was $79,020.00
    (think of difference from $3,000.00)

Medicaid law
Is a combination of federal and state law.
n There are two primary criteria for eligibility for
   long-term care benefits:
    –   medical eligibility and financial need.

n   Medical eligibility = determined by physician
n   Financial need = specific rules regarding exempt
    assets (may vary from state to state).

Several assets are exempt for
Medicaid eligibility:
n   Homestead & Personal
n   Prepaid funeral &
    burial expenses
n   The value of a vehicle
n   Liquid assets of $2000
    for a single person or
    $79,020 for a couple.

State Programs
n   The state pays a small part
    of long-term services.
n   Many states are
    developing programs to
    assist elderly individuals
    in remaining in their
    homes and communities.
n   Keeping a frail, but
    competent person in their
    home is far less expensive
    than institutionalizing or
    them in a nursing home.

Veterans Administration Benefits

n   Veterans’ benefits are federal entitlement benefits
    by the Federal Department of Veterans Affairs.
n   Requirements for benefits = active duty service in
    the armed forces with no dishonorable discharge.
n   Benefits may include: hospital, nursing home,
    home health care, outpatient treatment, home
    health services and community residential care.

n   To qualify: must have a service-connected
    condition, a non-service-connected
    disability with the inability to pay for care,
    or a disability that incurred or aggravated in
    the line of duty and led to discharge from
    the armed forces.

Private Sector Funding: 40%
n   There are two primary sources:
    –   individual payments (one third of all expenses)
    –   long-term care insurance (5% of all expenses)
    –   One of the initial choices individuals and
        families are faced with is whether or not to set
        up a formal or informal plan. In many states
        there are geriatric care managers available for
        consultation regarding the various aspects of
        long-term facilities.

Sources of Funds
n   Assets accumulated by the individual:
    savings acct, checking acct, certificates of
    deposit, credit unions, mutual funds, money
    market acct, insurance policies, annuity
    contract, retirement acct, IRA’s.
n   It is advisable to ask the individual whether
    or not anyone owes them money, review
    their real estate and personal property(to
    include vehicles).
Long-Term Care Insurance
n   A product that pays for long-term care
    expenses when benefits under Medicare and
    Medicaid are terminated.
n   Benefits : it’s portable from state to state,
    allows care while preserving a portion of
    their assets, provides time for the individual
    to receive needed services while taking the
    time to make appropriate arrangements.

Long-term care insurance will pay
benefits for 2,3,5 yrs or lifetime-
n   Policies are designed
    to pay a certain daily
    benefit. Usually that
    figure should be
    pegged to the average
    cost of nursing home
    care in the individual’s

Cost Containment – How?
 –   For the next century
     might include:
      n   national health care
          benefit plan for all
      n   continuing with
          managed care
      n   rationing health care
          based on need, age, or
          other defining factors
      n   furthering the idea of
          health promotion

n   Rationing of health care
    may be argued due to the
    fact that the elderly are a
    homogeneous group by
    almost all standards
    except chronological age.
n   Health promotion will
    provide the best chance
    for improving health while
    keeping costs manageable,
    if made an essential way
    of life rather than just a
    nice idea.

n   Medicare, Medicaid, and
    Veterans Administration
n   Long-term care is the
    largest single expenditure,
    primarily for the elderly.
n   Preplanning can avoid
    costs and disagreements.
n   We can now see how
    important it is for our
    country to make rational
    decisions about the use of
    health care dollars.


n   If the elderly are
    involved in these
    difficult choices, they
    can ensure fairness &
    dignity for themselves
    & for future


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