Taking Care of Mom and Dad: The Myths that Color Many Decisions

Half-truths and myths about LTC and its financing persist. These include:

• the belief that your parents will never need LTC services;
• the belief that home care costs less than nursing home care (if your parents are really sick, it can cost more);
• the fear that all nursing homes are terrible;
• the myth of no difference in quality among nursing homes;
• the hope that retirement income, savings and real estate assets will be adequate to cover LTC costs;
• the misconception that Medicare and Medicare Supplementary (Medigap) insurance are significant LTC payers;

Few people understand that Medicare coverage covers only two percent of LTC services and, more importantly, uncovered LTC costs often exceed the costs of acute medical care.

• the hope that the government will pay for LTC, through Medicaid or creation of some new comprehensive program (it's unlikely that any new government program will be created in the near future due to the huge cost associated with any meaningful government program); and
• the myth that private LTC insurance is not affordable and the related assumption that, since it is so expensive, any policy with a reasonable price tag has no real value.

One thing's true: The longer your parents wait to purchase a long-term care policy, the more expensive the coverage and greater the chance that a pre-existing condition will disqualify them for coverage or reduce their potential benefits.

The primary methods people use to cover the costs associated with nursing home confinement include: personal income and assets; gifts and financial support from family; some local government or social service programs; Medicaid; Medicare; and long-term care insurance.

The skilled nursing care provided by Medicare and Medicare supplements is extremely limited. Medicare pays less than 5 percent of the annual nursing home expenses in the United States. To be eligible, a person must be admitted to a nursing home within 30 days of a hospital stay that lasted at least three days; coverage for skilled nursing care is limited to 100 days per calendar year -- and there is a copayment per day after the first 20 days.

Medicaid, the low-income medical assistance plan run by the states, pays nursing-home bills, but only after your parent has depleted most of his or her assets. Many times, a person is admitted to a nursing home because he or she needs custodial care, in which case Medicare pays nothing. All of the person's financial resources are drained -- and nursing homes are very good at locating and liquidating assets -- and then, when he or she is destitute, Medicaid coverage kicks in.

Medicaid eligibility varies by state, so check with your parents' state's requirements to learn more. You can contact the Medicare Fiscal Intermediary and the State Health Insurance Assistance Program in their state. You can search for the relevant contact information by logging onto www.medicare.gov and searching for places in their state.