Individuals who are age 65 or older and receiving social security are automatically enrolled in Medicare Part A, which is premium free and covers hospital and skilled-nursing costs and hospice care. Individuals may also enroll in Medicare Part B, which has a premium, and covers physician, medical lab and ambulance costs. Individuals who can still obtain private insurance through their employment will often postpone enrollment in Medicare Part B.

After individuals enroll in Medicare Part B, they have six months to select a Medigap policy (Medicare supplemental insurance). The open enrollment period to select a Medigap policy begins on the first day of the month when the individual is 65 and is enrolled in Medicare Part B.

During the 6 month open enrollment period an insurance company cannot use medical underwriting. This means that the insurance company cannot do any of the following because of a preexisting health condition:

1.      Refuse to sell a Medigap policy.

2.      Charge more for a Medigap policy that it would charge someone without a preexisting condition.

3.      Make the individual wait for coverage to begin.

In some situations, individuals who have selected a Medicare Advantage plan under Medicare Part C may still be able to subsequently go back to Medicare Parts A and B and obtain a Medigap policy without medical underwriting.

If individuals do not select a Medigap policy during the open enrollment period, and they sign up on a later date, or if they change their Medigap policy, they will be subject to medical underwriting and will likely pay a higher premium for their supplemental insurance.

Medigap policies fill the gaps not covered by Medicare Parts A and B. Medigap policies are based on 10 standardized benefit packages developed by the National Association of Insurance Commissioners (NAIC). The current Medigap policies are the following: A, B, C, D, F, G, K, L, M, and N.

Some Medigap policies cover skilled-nursing facility costs and others do not. After a three-day hospital stay, Medicare Part A will pay all the costs of a skilled-nursing facility for the first 20 days; however, from day 20 through day 100, the patient is responsible for a daily co-payment.  (In 2012 the co-payment was $144.50 per day.) If an individual has a Medigap policy that covers skilled-nursing facility costs, the copayment will be paid by the supplemental insurance. Individuals who do not have a Medigap policy that covers skilled-nursing costs, are surprised when they get a large bill from the facility.

Insurance companies do not have to offer every Medigap policy.  Each company decides which policies it wants to offer, and the premiums it will charge.  The premium offered by different insurance companies for the same policy may vary.

Consumers need to enroll in a Medigap policy during the six month open enrollment period and make sure they understand the services covered by their Medigap policy.

Tom Packer is an Elder Law Attorney serving all of Southeast Idaho. As part of his law practice, Tom offers life care planning to deal with the challenges created by long-term illness, disability and incapacity.  If you have a question about a senior’s legal, financial or healthcare needs, please call us.

After the Department of Health and Welfare deems an individual eligible for Medicaid, the next question that families face is this:  “What portion of the individual’s monthly income must be used to pay for their care?”

When families come in to visit with me about paying for long-term care for a loved one, the conversation often culminates in an application for Medicaid. During this initial conversation, families are narrowly focused on figuring out how to pay the high costs of facility care. After the Department of Health and Welfare deems an individual eligible for Medicaid, the next question that families face is this: “What portion of the individual’s monthly income must be used to pay for their care?”

The Department of Health & Welfare refers to the portion that the individual pays for their care as ‘patient liability’ or ‘share of cost.’  A formula, with several variables, is used by Health & Welfare to determine each individual’s countable income and resulting patient liability. For example, for a single individual in long-term care with no spouse, patient liability is determined as follows:

Income of Participant in Facility                    $700.00

Less AABD exclusions                                  –    0.00

Less certain deductions to income:

Aid and Attendance from VA                 – 290.00

Personal Needs Allowance                   –   40.00

Total Patient Liability                                   $370.00

(The variables used are for the purpose of illustration only.)

This person would be required to pay to the facility $370.00 per month as a condition of his continued eligibility. Other variables which may reduce total patient liability include: the first $90 of a VA pension, a VA Aid and Attendance Allowance, and the cost of home maintenance up to $212 if the individual is likely to return home within six months.

For married couples, rather than impoverishing the spouse who remains at home, the federal government has enacted legislation which allows the at-home spouse to keep a portion of the monthly income of the spouse that is in a facility. This is called a Community Spouse Allowance and may reduce the patient liability. Let’s look at an example:

John’s medical problems require him to live in a skilled-nursing facility. His wife, Amy, is healthy and remains in the family’s home. John’s income is $3300.00 per month and Amy’s is $600.00. The couple elects the ‘community property’ method of determining ownership of income.

Income of Couple                               $3900.00

Less AABD Income Exclusion                       0.00

Less Personal Needs                                  40.00

Less Community Spouse Allowance          1946.00

Total Patient Liability                            $1914.00

In this example, John would be required to pay to the facility $1914 per month to continue Medicaid eligibility.

Many different variables influence the amount an individual is required to pay. It is important that these variables are disclosed to Medicaid during the application process. Failure to do so may result in a higher share of cost. If you have questions about Medicaid, contact an Elder Law Attorney.

Tom Packer is an Elder Law Attorney serving all of Southeast Idaho. As part of his law practice, Tom offers life care planning to deal with the challenges created by long-term illness, disability and incapacity.  If you have a question about a senior’s legal, financial or healthcare needs, please call us.

When choosing a Medicare plan or buying supplemental insurance, make sure you understand what is covered and tailor your plan and insurance to your specific needs and circumstances.

One way to avoid mistakes is to learn from the experience of others. Here’s an opportunity to learn from one of my clients.

I have a client whose husband was in a Skilled Nursing Facility (SNF).  When asked how she was paying for his care, she said that Medicare and her supplemental insurance were paying for it. This seemed like a reasonable explanation since Medicare will pay for the cost of care in a SNF, if her husband had a 3-day stay in the hospital prior to entering the facility, and if he continued to need skilled nursing services.  However, I knew that Medicare would only pay the full cost of care for the first 20 days; after that, Medicare would pay part of the cost for an additional 80 days, with a $148.00 copay per day.

My client’s husband stayed in the facility for the full 100 days.  Time passed and a bill came from the SNF.  When the bill was substantially more than my client anticipated, I called the SNF and learned the following:  My client did not have Medicare and a supplemental insurance; instead, she had a Medicare Advantage Plan.  Medicare Advantage Plans fall under Medicare Part C and include some types of managed care plans to provide Medicare benefits.  There are four different plans available under Medicare Part C.  Each plan has advantages and disadvantages in the services and coverage offered.  We learned that while some supplemental insurances will pick up the copay for care in a SNF, the plan that my client had did not completely cover her husband’s care.

When buying Medicare supplemental insurance, make sure you understand what it covers and tailor your insurance to your specific needs and circumstances. If you need help understanding Medicare, SHIBA (Senior Health Insurance Benefits Advisors) provides free assistance in understanding the complexities of the Medicare program.  You can contact SHIBA at 1-800-488-5764 or go online at www.shiba.idaho.gov.  An attorney experienced in handling Medicare and Medicaid questions can also help you.

A traditional estate plan, prepared for a couple when they were healthy, will be turned upside down if one of them develops a chronic health problem.  The cost of long-term care can quickly deplete a couple’s savings that has taken a life time to acquire.  When paying for long-term care, there is always the question of how to preserve assets to meet the life-time needs of the spouse who remains at home and to provide the highest quality of care for the spouse in a facility.  Medicaid will help pay for long-term care; however, money received from Medicaid to pay for long-term care may be recouped through Estate Recovery, just like I had to repay my student loan when I graduated from college.

Qualifying for Medicaid is based on a means test of an applicant’s monthly income, assets, and medical need.  When a married applicant with spouse at home applies for Medicaid, the applicant spouse is allowed to keep $2,000, and the at-home spouse is allowed to keep their home, one vehicle, plus one half of the countable assets up to a maximum of $115,920.  (Medicaid rules set the allowable amount and define countable and noncountable assets.)

Many couples, when applying for Medicaid, make mistakes based on misinformation they have received from a well-intentioned friend, neighbor, or health-care worker.      The following example shows how this can happen.  Bill has dementia and is being cared for at home by his wife, Mary.  Knowing that one day her Bill may need to go to a facility and knowing how much health care cost, Mary discusses her concerns with a neighbor.  The neighbor tells Mary that Medicaid requires a spend down of one half of the couple’s assets to qualify for Medicaid.  Acting on her neighbor’s advice and unaware that she should file a Community Spouse Resource Allowance (CSRA) with the Idaho Department of Health and Welfare (IDHW) before spending down their money, Mary spends down half of the Couple’s $200,000 that they have in CDs and various bank accounts to $100,000.

Mary then files an application for Medicaid and provides the necessary financial information to IDHW.  Mary is told that her attempt to spend down the money had no effect because she had not filed a CSRA before spending down the money.  Therefore, she will have to do a second spend down of one half of the couple’s current assets before Bill will be eligible for Medicaid.  Had Mary filed the CSRA first, she would have been able to keep $100,000 instead of $50,000. This brief example shows how complex Medicaid rules are, and how mistakes like this one can be avoided by obtaining advice from an attorney experienced in handling Medicaid cases.