2. Pay with Your Own Funds? This is the method many people are required to use at first. Quite simply, it means paying for the cost of a nursing home out of your own pocket. Unfortunately, with nursing home bills exceeding over $72,000 per year in our area, few people can afford a long term stay in a nursing home.

3. Medicare - This is the national health insurance program for people 65 years of age and older, certain younger disabled people, and people with kidney failure. Medicare provides only short term assistance with nursing home costs and only if you meet the strict medical qualification rules.

4. Medical Assistance - Also known as "Medicaid," this is a federal and state funded medical benefit program.  It is administered locally and by the state and can pay for the cost of the nursing home if certain asset and income tests are met.

Since the first two methods are self explanatory, our discussion will concentrate on Medicaid and Medicare.

What About Medicare?

There is a great deal of confusion about Medicare and Medicaid.

Medicare is the federally funded and administered health insurance program primarily designed for older individuals (i.e., those over age 65). There are some limited long term care benefits that can be available under Medicare. In general, if you are enrolled in the traditional Medicare plan, and you've had a hospital stay of at least three days, and then you are admitted to a skilled nursing facility (often for rehabilitation or skilled nursing care), Medicare may pay for a while. If you are a Medicare Managed Care Plan beneficiary, the three day qualifying hospital stay may not be required to qualify.

If you qualify, traditional Medicare may pay the full cost of the nursing home stay for the first 20 days and can continue to pay the cost of the nursing home stay for the next 80 days, but with a co-pay that's over $100 per day. Some Medicare supplement insurance policies will pay the cost of that deductible. For most Medicare Managed Care Plan enrollees, there is no co-pay for days 21 through 100, as long as the strict qualifying rules continue to be met. So, in the best case scenario, the Traditional Medicare or the Medicare Managed Care Plan may pay up to 100 days for each spell of illness. In order to qualify for this 100 days of coverage, however, the nursing home resident must be receiving daily "skilled care" and generally must continue to "improve." (Note: Once the Medicare and Managed Care beneficiary has not received a Medicare covered level of care for 60 consecutive days, the beneficiary may again be eligible for the 100 days of skilled nursing coverage for the next spell of illness.)

While it's never possible to predict at the outset how long Medicare will cover the rehabilitation, from our experience it usually falls far short of the 100 day maximum. Even if Medicare does cover the 100 day period, what then? What happens after the 100 days of coverage have been used?

At that point, you're back to one of the other alternatives...long term care insurance, paying the bills with your own assets, or qualifying for Medical Assistance.

What is Medical Assistance?

Medicaid is funded by both federal and state funds and is administered by the state. The program will pay for the cost of the nursing home if the resident meets certain asset and income tests. Medicaid program rules differ from state to state. The Pennsylvania version of the Medicaid program is called "Medical Assistance."

One of the primary benefits of Medical Assistance is that, unlike Medicare which pays for only skilled nursing, the Medical Assistance program will pay for long term custodial nursing home care.

To qualify for Medical Assistance in Pennsylvania, a person entering a nursing home must: (1) Be at least 65 years of age, blind, or disabled; (2) Be a resident of Pennsylvania; (3) Need the level of care provided in the nursing home; (4) Meet the financial qualification rules; and (5) Not be ineligible due to a recent transfer of assets.

An applicant for Medical Assistance must qualify both financially and medically. The financial qualification rules are discussed below. To qualify medically, your doctor must certify that you need the level of care being provided by a nursing facility. In addition to that, the local Office of Aging is required to complete an assessment (known as the Options assessment) to determine if you require this level of care. In order to be eligible for Medical Assistance benefits for nursing home care, the Office of Aging must decide that nursing home level care is essential and that you could not adequately be cared for in another setting.

Why Plan for Medical Assistance?

As life expectancies and long term care costs continue to rise, the challenge quickly becomes how to pay for these services. Few people can afford to pay $6000 or more each month for the cost of nursing home care, and most of those who can pay find that their life savings have been depleted in a short time. Fortunately, the Medical Assistance program is there to help. Unfortunately, a person seeking Medical Assistance for help in paying nursing home costs must qualify under complicated income and asset rules. Please note: the Medical Assistance rules are very complicated, confusing and vary from state to state (interpretations within a state can also vary). Please seek help from a knowledgeable professional!

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