“Long-term care” refers to medical caregiving services provided as a result of disability, cognitive dysfunction or chronic illness that generally can be grouped into two broad categories:
Skilled nursing care refers to intensive daily nursing care administered within a skilled nursing facility, under the supervision of licensed medical personnel and in accordance with a doctor’s orders.
Custodial care refers to assistance with “activities of daily living”—called ADLs—such as getting in and out of bed, bathing, using a restroom, dressing, moving about, eating, and continence. Custodial services are performed under a doctor’s certification, but the care isn’t necessarily provided by licensed medical personnel. Custodial care may be provided in a nursing home, assisted living facility, or the patient’s home.
The federal government’s Medicare health insurance program— generally for persons age 65 and over or disabled doesn’t pay for custodial care. Medicare will pay only for skilled nursing care, subject to several limitations.
Custodial care may be covered by Medicaid, a welfare health program funded jointly by federal and state governments and administered by the states within federal guidelines. Medicaid eligibility and covered services vary by state. A person qualifies for Medicaid by meeting low income and asset levels established by each state. Recent changes in federal law have made it very difficult for middle-income Americans to “spend down” or give away assets to qualify for Medicaid.
Long-term care insurance is privately purchased insurance. It covers the costs of skilled nursing and custodial care for persons who are chronically ill, disabled, or suffering severe cognitive dysfunction.
Long-term care policies typically pay a flat daily benefit amount for each day in a benefit period. The policyholder may select the amount during the application process based on local nursing care costs. Policies must offer inflation protection, be issued on a guaranteed renewable basis, and meet certain other requirements to be tax-qualified.
“Guaranteed renewable” means the insurance company can’t cancel the policy if premiums are paid when they’re due.