Recently, Vice President Kamala Harris proposed a plan to have Medicare cover in-home care. Her proposal is still in its early stages, and comes in the midst of a presidential campaign, so it may be too early to examine how it would work, if it comes to pass. However, this may be a good time to explore the issue of in-home care as it currently stands.
The long-term care crisis
Studies have found that if an American reaches age 65, there is a nearly 70% chance that they will need some form of long-term care at some point in the remainder of their life. By “long-term,” this means years. For men, it’s over two years and for women it’s nearly four years.
In some cases, this means the person will need to stay in a nursing home. However, many people would rather stay in their own homes and receive care there.
Either one of these options is exceedingly expensive. If the person has private long-term care insurance, this can help. Many people rely on government programs to help with long-term care, but these have important limitations.
Medicare and Medicaid
Medicare and Medicaid are two large healthcare programs administered by the federal government. Medicare is meant for people 65 or older. Medicaid is meant for people of limited means, of all ages. The two systems have different eligibility requirements, and they do not cover all the same services.
For the purposes of this discussion, the main difference in coverage is that Medicaid can cover long-term care — including in-home care — while Medicare’s coverage of long-term and in-home care is much more limited. Generally, Medicare doesn’t cover full-time in-home care, and cuts off after only 21 days.
Benefits planning
This limitation of Medicare presents a problem for millions of older Americans who are eligible for Medicare but not for Medicaid.
Because Medicaid was designed for people with limited resources, the program’s eligibility requirements are based on an applicant’s income and finances. If an applicant has more than a specified amount in income or savings, they are ineligible.
As a result, many people end up spending their life savings before they can be eligible for Medicaid. This means they have nothing to leave to their loved ones after they die. It’s a terrible situation that leads to emotional anguish and financial distress for many families.
One way to avoid this terrible problem is through careful estate planning — particularly with a practice known as benefits planning or Medicaid planning. When done properly, an individual or couple can maintain eligibility for Medicaid by putting their assets in a trust. This can keep their income and resources low enough to make them eligible for Medicaid while also preserving assets to pass on to their loved ones.
Perhaps one day, Medicare will cover in-home care and other long-term care needs. That would certainly make things easier for millions of families. In the mean time, it’s important for people to think about benefits planning when they plan their estates.