Financing nursing home care

Paying for nursing home care presents a major concern for most people. Residents may use one or more of these means to pay for nursing home care:

Personal funds

Most individuals enter a nursing home as private pay residents, using a combination of resources to pay their expenses. Many residents eventually "spend down" their resources and meet the requirements for Medicaid to pay for care.

Some nursing homes require payment upon admission. If a resident pays for nursing home care with personal funds and depletes their resources, they may then qualify for Medicaid. In such cases, the state of Texas reimburses the nursing home for up to three months prior to approval for Medicaid. The nursing home then refunds personal payments according to specific time limits.

Medicaid

Medicaid is a joint federal and state program. The Texas Medicaid program is a unique combination of federally-mandated minimum coverage and state-determined optional coverage that help pay for medical care and supportive services for eligible individuals based on income and resources.

The Texas Health and Human Services Commission (HHSC) is the designated state Medicaid agency in Texas, and other state agencies administer specific Medicaid programs.

DADS Regulatory Services licenses all nursing facilities and assisted living facilities and certifies those who want Medicaid and/or Medicare reimbursement.

The DADS Long Term Care Quality Reporting System (QRS) offers information to help evaluate the quality of long term care services in nursing homes and assisted living facilities across the state.

Medicaid may pay all or part of nursing home costs for eligible clients through the Medicaid Nursing Facility Program; however, clients contribute toward their care, based on income and other considerations.

The local AAA benefits counselor staff can help complete Medicaid applications.

Medicare

Medicare is a federal health insurance program for people 65 years of age or older and certain individuals with disabilities. It only pays a percentage of health care costs. The federal Centers for Medicare & Medicaid Services (CMS) administer this program.

Basic information on Medicare topics, as listed below, is available on the CMS site.

In you need skilled nursing home care, Medicare pays for episodes of acute illness for limited time periods. It does not pay for custodial care, such as helping with activities of daily living. For more information about Medicare coverage of skilled care, get Medicare's Skilled Nursing Home Care booklet online.

The Texas Department of Insurance has Medicare Supplement Insurance Handbook & Rate Guide on their website.

For chronic long-term care, Medicaid tends to be the primary payer. For acute medical care, Medicare tends to be the primary payer.

Medigap insurance

Many companies sell Medicare supplemental insurance — a private insurance, not a public benefit. Often called "Medigap" or "MedSup," this insurance is designed to fill in the "gaps" in Medicare coverage. It is standardized and regulated by federal laws and state rules.

In 1992, federal law and state rules began limiting insurance companies to 10 standardized packages of Medigap benefits. The Centers for Medicaid and Medicare Services has a Medigap Compare feature on their website. If you bought a Medigap policy prior to 1992, you may choose to keep your existing policy. You do not have to switch to one of the 10 standardized plans.

Evaluate policies on benefits that help fill gaps in coverage of deductibles, medical bills above the approved Medicare amount, and medical expenses not covered by Medicare.

Before you buy a Medigap policy, consider these other options. If you are part of an employee group plan, a member of a Medicare HMO, or on Medicaid, you don't need Medicare Supplement Insurance.

Contact the Centers for Medicare & Medicaid Services for information about Medicare and about Medigap insurance.

Long-term care insurance

Long-term care insurance is sold by private insurance companies to cover costs of care in a nursing home, your home, or adult day care. It helps protect assets against the potentially catastrophic cost of extended long-term care.

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Updated: September 25, 2014