The Alzheimer's Digest: How to Pay for In-Home Elderly Health Care in California

Sunday, May 19, 2013

How to Pay for In-Home Elderly Health Care in California

Paying for some kinds of elderly health care is a challenge. Medicare provides fairly comprehensive coverage for acute health problems for patients over 65, but it provides only limited benefits for nursing, custodial and in-home care except in specific circumstances. To pay for in-home care, seniors must rely on a combination of Medicaid, private coverage, savings and investments and long-term care insurance.

Suggestions

Contact Medicare. Medicare does provide some home care services, provided you meet certain eligibility criteria. Your doctor must certify that you cannot leave your home without help, that leaving home requires an effort that is "considerable and taxing," or that your condition prohibits you from leaving your home. Additionally, your doctor must verify that you need at least one of these services: skilled nursing care on an intermittent basis, physical therapy, speech and language therapy, or occupational therapy. You can qualify if you need skilled care fewer than seven days each week or for less than eight hours per day over a period of three weeks. Medicare does not normally cover unskilled care.
Purchase long-term care insurance. Long-term care policies generally pay a minimum daily benefit for custodial care, including both skilled and unskilled care. Normally, you can qualify when you lose the ability to perform two or more activities of daily living, such as toileting, feeding, dressing or eating, without assistance. Many long-term care policies provide at least some home care benefits.
Use your own savings. If Medicare does not cover the needed service, and you do not have long-term care coverage, you may need to spend your own savings to provide the care. This can be a difficult decision, as this money is frequently needed for income to provide for basic living expenses as well. However, you will generally need to spend down almost all of your liquid assets to qualify for Medicaid.
Enter a reverse mortgage. This is a contract whereby an investment company provides you with a sum of money or an income, using your home as collateral. You may continue living in your home. The loan becomes payable at your death, or when you are no longer living in the home. You can either pay back the loan with cash, perhaps from a life insurance contract after you pass on, or the reverse mortgage company takes over ownership of the house. The reverse mortgage may help generate enough income to pay for needed home health services.
Cash out life insurance policies. If you have permanent life insurance with a cash surrender value and you no longer need the life insurance, you may be able to borrow against the policy, surrender the policy for the cash surrender value, or execute a 1035 exchange into an annuity and have the annuity pay out enough income to help pay for home health care. There are tax consequences to surrendering a life insurance policy: If you surrender the policy and the cash value is greater than the sum of your contributions, or basis, you may have to pay capital gains taxes on the difference.
Contact the In-Home Supportive Service Program. The IHSS program is a home health care program provided by the state of California, under the auspices of Medicaid. California provides some personal care services under the Personal Care Services Program. A county social worker will visit you to make the eligibility determination. To qualify, you must not have personal assets in excess of $2,000, or $3,000 if you are married. To apply, contact your county government.