When we talk to clients about long term care, the majority tell us they want to stay in their home, a trend that is happening all across the United States. With home health care becoming the dominant preference, we want to go over what home health care means and how to plan for it. The most important thing is that you have a plan for long term care, if it includes home health care or not, not only for you but for your family, so they are not thrust into a crisis when you need help the most.
Long Term Care: Home Health Care
Is home health care covered by Medicare?
This is the most common question we get from clients when we are discussing long term care and the answer is simply no, it is not. Medicare does not cover long term care services. Medicare covers acute care, which is a short term treatment leading to improving, meaning the patient is going to get better. Some treatments such as physical therapy, occupational therapy, and respiratory therapy will fall under this acute care and be covered by Medicare even when you are receiving long term care services.
Activities of Daily Living
Activities of Daily Living, or ADLs, are basic tasks that most people are able to perform without assistance. These activities include bathing, dressing, easting, transferring, toileting, and continence. Once you cannot perform 2 or more out of the 6 Activities of Daily Living, you will qualify for long term care services. ADLs are essential to an independent life.
There are also IADLs or Instrumental Activities of Daily Living (sometimes referred to as incidental benefits for insurance policies). These benefits include services such as shopping, yard work, transportation to the doctor, and housekeeping that are not considered necessary for unassisted living but having them performed will greatly improve quality of life. Most insurance policies will include payments for these activities if you have already qualified by not being able to perform at least 2 ADLs. You cannot just have your house cleaned and paid for by the insurance company when you are considered capable of doing it on your own.
Cost of Home Health Care
Currently, the average cost of professional agency care in the United States is $23/hour or $144/day. This care is needed to help with ADLs or supervision due to cognitive impairment, such as Alzheimer’s. To compare, the average daily cost in the United States for an assisted living facility is $133. Home health care can be more expensive than a facility, because it is a choice. It takes money to buy this choice, as well as preplanning, including looking at insurance options.
Home Health Care Example
One of our clients, George, a 63-year-old retired CPA, was just diagnosed with ALS. ALS is a disease which progresses quickly and eventually the symptoms of the disease are going to be more than Trish, his wife, and their children can handle, especially if Trish does not want to end up like the large majority of spouses who end up getting sick themselves taking care of a sick spouse.
We wanted to give George and Trish an option to be able to pay for some help in their home once they needed it. Due to George already being diagnosed with ALS when they came to us, he could not qualify for any traditional policies that we could offer him. Instead, we found a solution where he was able to pre-pay for 3,000 hours of custodial care in his home, which had no health questions and no age limit. Just to give you an idea, George is paying around $2,000 a year for these prepaid hours and this specific home health care plan does offer a household discount as well. It is important to know that this is technically not insurance.
George was also able to qualify for an insurance policy which pays for skilled care at home for a year. The only health question this policy asked was if George was receiving care currently, even from family members, which he was not. The age limit for this policy is 85. This policy pays as an indemnity. If you use the service, you get the full benefit. If you do not use this money for care services, you are able to pocket it and use it for whatever you want. For George, this will be future care.
We also wanted to make sure that Trish was taken care of, and since she is pretty healthy, we were able to sell her a traditional long term care insurance policy which will cover home health care.