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Guide to Choosing a Nursing Home (Part V)

Health Care Financing Administration (HCFA) has published a booklet entitled "How to Choose a Nursing Home."

Table of Contents

Making the Selection

Patment Considerations

For most people, finding ways to finance nursing home care is a major concern. There are four basic ways in which nursing home costs may be financed:

    • Personal Resources — About one-half of all nursing facility residents pay for costs out of personal resources. When many people enter a nursing home, they first pay for their care out of their own income and savings. Because of the high cost of such care, however, some people deplete their resources and apply for Medicaid.
    • Private Insurance — Some Medicare supplementary insurance policies, often referred to as "Medigap" insurance, also can provide a source of payment for nursing homes. There is also private, long-term care insurance available.
    • Medicaid — State and federal coverage is available to eligible low income individuals who need care at least above the level of room and board. The nursing home must be Medicaid-certified.
    • Medicare — Under some limited circumstances, Medicare hospital insurance (Part A) will pay for a fixed period of skilled nursing home care. The nursing home must be Medicare-certified.

Many health maintenance organizations (HMOs) and other coordinated care plans participate in the Medicare and Medicaid programs. These health care plans often cover certain benefits in addition to those required by Medicare and Medicaid and are experienced in "coordinating" a member's health care. Some HMOs may also offer more medical or supportive services others may not require a hospital stay before approving a nursing home admission.

What Do Medicare and Medicaid Pay For?

Medicare pays for at least some of nursing home costs for up to 100 days per benefit period for those who meet coverage requirements and require care in a skilled nursing facility (SNF). The first through the 20th day carry no deductible or coinsurance amounts for the resident however, the 21st through the 100th days carry a coinsurance amount. This amount is calculated each year and is equal to one-eighth of the annual hospital deductible. For example, in 1993 the coinsurance amount is $84.50 per day.

Medicare only pays for care in SNFs following a hospital stay of at least three days and when individuals require daily skilled nursing or skilled rehabilitation (physical therapy, speech therapy or occupational therapy) services that must be performed or supervised by professionals.

Many nursing homes have both Medicare and non- Medicare parts. Medicare law does not permit payment for residents in non- Medicare parts of the facility, even if the care needed meets the medical standards for coverage. Therefore, in order for Medicare to pay, the resident must be placed in the section of the nursing home that is certified under Medicare.

To help you avoid such problems, however, SNFs generally work closely with hospital discharge planners and social workers to ensure that only individuals requiring skilled services are admitted to skilled parts of the nursing home. If the SNF determines that the person does not meet skilled standards and then admits the resident to a skilled part, it must provide the individual with a Notice of Non Coverage. Nursing homes are required to give residents the Notice of Non Coverage at time of admission, or any time after admission, when skilled services are no longer required.

You may appeal the nursing home's decision for non- coverage. You should not be charged for services until you receive a formal decision on your appeal from Medicare. However, if as a result of the appeal, it is determined that Medicare will not cover your stay, you are liable for the cost of care since the start of your nursing home stay.

When you visit a nursing home, if you are eligible for Medicare coverage, ask to see a copy of the facility's Notice of Non-Coverage. Ask some of the residents in the facility if they have had difficulties or misunderstandings with the facility over payments and whether problems were satisfactorily and quickly resolved.

Medicaid Eligibility

Medicaid pays nursing home expenses for individuals who meet income and resource eligibility requirements. Medicaid can pay for nursing facility care that ranges from skilled nursing care to care that is above the level of room and board, but less intensive than "skilled" care.

It is important to contact the local State Medicaid Agency for eligibility and program information as early in the placement process as possible. Financial guidelines vary from State to State and can be somewhat restrictive, but remember that eligibility is retroactive to the date of application.

Moreover, if either spouse transfers resources, such as real estate or bank accounts, for less than fair market value within 30 months before a spouse goes into a nursing home, this could affect the extent to which the Medicaid program would pay for the cost of care for the spouse in the nursing home and for certain community services.

Recent changes in Medicaid law the "spousal impoverishment" provisions provide some protection for a certain amount of income and resources for a spouse still living at home when the other partner needs nursing home placement.

Long-Term Care Financing and Insurance

Given the increasing likelihood of older Americans having to use long-term care services at some point in their lives, an important part of planning ahead is preparing for your financial future. This is important because most home care and about half of nursing home costs are paid directly by consumers and their families.

There are a variety of financing mechanisms for long-term care services, including continuing care retirement communities and private long-term care insurance.

Medicare supplemental insurance (Medigap) policies generally cover very little long-term care at home or in a nursing home, usually covering only deductibles, coinsurance, and long hospital stays. Medicaid covers nursing home care and some community care benefits such as home health care or adult day care. Coverage varies by State and is generally limited to people with low income and assets.

One option that you might wish to consider is purchasing long-term care insurance. This type of insurance policy covers nursing home care and increasingly includes home care coverage as well.

Because costs for long-term care policies can vary widely, even for similar policies, shopping and price comparison is important. Counseling services may help you select a policy most appropriate to your needs.

People purchase long-term care insurance for several reasons. If you are deciding whether and when to buy long-term care insurance, you should consider the following questions:

    • Will your income cover long-term care expenses, along with other ongoing expenses?
    • If you purchase such insurance, can you pay for the deductible period and coinsurance?
    • Can you pay the premiums now? Can you pay if the premiums rise?
    • Will you be able to pay the premiums if your spouse dies?
    • Will you be able to pay for upgrading benefits to meet inflation?
    • Would you become eligible for Medicaid if you had large medical bills, or entered a nursing home where average yearly costs run almost $30,000? Before signing a long-term care insurance policy, you should also ask if you have a period during which to cancel the policy and receive a refund for the first premium. As you shop around:
        • Be sure that the policy does not base coverage on medical necessity, or require prior hospitalization before entering a nursing home, or prior nursing home stays for home health care.
        • Be sure that the insurer can cancel your policy only for reason of nonpayment of premiums.
        • Make certain you have realistic inflation protection.
        • Check the length of time that preexisting conditions are excluded.
        • Check for permanent exclusions on certain conditions, such as Alzheimer's disease.

Finally, if you decide to purchase long-term care insurance, do some checking into the reputation and financial stability of the company offering the insurance. Your state health insurance commissioner and consumer affairs offices should be helpful in identifying reliable companies.

Reviewing the Contract

Before an individual is admitted to a nursing home, the resident, or the person sponsoring the resident, will have to sign a contract. Before you sign any contract with a nursing home, stop, and carefully review the document. Remember: the admissions contract is a legally binding document that spells out the conditions under which the resident is accepted.

A comprehensive contract should:

    • State your rights and obligations as a resident of the facility, including safe guards for residents' rights and grievance procedures
    • Specify how much money you must pay each day or month to live in the nursing home
    • Detail the prices for items not included in the basic monthly or daily charge
    • State the facility s policy on holding a bed if you temporarily leave the home for reasons such as hospitalization or vacation and
    • State whether the facility is Medicaid and/or Medicare certified. If so, and if you desire, the facility must accept Medicaid payments when your own funds run out, or accept Medic repayments if you qualify for Medicare coverage. Private pay admissions contracts are illegal and cannot be enforced.

Remember: discrimination against Medicaid recipients is illegal.

Additional Tips Before Signing a Contract

    • Ask the nursing home for a copy of a contract. In this way, you will he able to review the document at your own pace, get additional advice from a variety of outside sources, and compile a list of questions that you might have about provisions in the contract.
    • Have the nursing home administrator, the home's social worker, or the local ombudsman answer your questions.
    • Because the admissions contract is a legally binding document, you should talk to a lawyer, if possible, on terms of the contract.
    • Remember that you can change terms of the contract. But if you make changes, each of them must be initialed by both you and the nursing home representative.
    • Be sure that the contract is complete and correct before you sign it. There should be no blank spaces.

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Mimi Wahlfeldt
Good Samaritan Society Fort Collins Village
508 W. Trilby Road
Fort Collins, CO 80525

Housing : Skilled Nursing

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