medicaid and long term care insurance

Medicaid and Long Term Care Insurance

Medicaid and long term care insurance both provide coverage for those who need advanced care. Typically, you would utilize one of these when you need help with daily tasks like dressing, bathing, eating, or using the bathroom. However, there are many misconceptions about both. In this article, we will go over the differences between Medicaid and long term care insurance, what they cover, and help you determine what choice is right for you.

What is Long Term Care?

Before we discuss Medicaid and long term care insurance, we must set out what long term care is. Long term care is when you begin to need assistance with Activities of Daily Living (ADLs). There are six main ADLs:

  • Bathing
  • Dressing
  • Toileting
  • Transferring
  • Continence

There are several ways to receive long term care. Many rely on their families to assist them. But if the care needed is extensive there is also nursing homes, in-home care, assisted living facilities, and adult day care. Health insurance, disability insurance, and Medicare do not provide coverage for these services. That is where Medicaid or long term care insurance come in.

Medicaid Basics

Medicaid is a government program that was created to provide medical care for people who cannot afford it. It is run by each state, so coverage will differ depending on where you live. Medicaid also provides long term care services for low-income individuals. What type of long term care you can receive and how you can qualify will depend on which state you live in.

Long Term Care Insurance Basics

Long term care insurance is an insurance policy that will help to cover the costs of long term care. What exactly is covered varies from policy to policy. But the policies are very customizable, so you can find one that fits your needs. Much like health insurance, it will cover most of the cost, but you may still be responsible for some out of pocket expenses.

Coverage

The type of long term care services provided differs greatly between Medicaid and long term care insurance. Typically, Medicaid only covers nursing home care. Coverage will usually start from your first day there and continue as long as you need it. But it will not cover a private room or any nursing home you want. You will only be able to go to a home that is contracted with your states’ Medicaid program.

On the other hand, long term care insurance can cover several different types of long term care. It usually covers nursing home care, but coverage will not start on the first day. With long term care insurance, there is usually a set time period you must stay in a nursing home before coverage starts. Additionally, long term care insurance will only cover a nursing home stay for a period of time that will be set out in your policy. However, long term care insurance provides coverage for long term care services people generally prefer over nursing homes. This includes in-home care, adult day care, and assisted living facilities.

Making a Choice

Depending on your income, the choice between Medicaid and long term care insurance may not be yours to make. If you have low income and assets, the cost of long term care insurance may be out of your reach. In this case, Medicaid would cover your long term care services.

There are individuals who purposely spend down their assets to qualify for Medicaid. This should be approached very carefully. The rules on qualifying for Medicaid are very strict and you do not want to put yourself in a rough place just to qualify. If you have sufficient income you may want to consider long term care insurance. It will provide you with more flexibility regarding your care choices and it will allow you to leave funds behind for your spouse and children.

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