66% Of People Aged 65 or Older Will Lose Their Home and Be Robbed Of Their Life Savings...
Learn What You Can Do To Make Sure This Doesn't Happen To You
|By Dan Stemen
Without realizing it you may be one single event away from losing your home and your life savings. According to the social security administration, folks aged 65 and older have a 66% chance of experiencing a catastrophic illness or disability in their lifetime. If those statistics scare you then hold on because what I’m about to tell you next will cause you to lose sleep.
The Biggest Lie Ever Told About Medicare
The biggest lie ever told is that Medicare pays for long term care. During the summer of 2009 I met with 50 families and not one of these families had put anything in place to manage healthcare risk. Let me explain: healthcare risk is by far the greatest risk to your estate…bar none!
Most people believe that when they turn 65 that they simply sign up for Medicare and that’s it. Some folks go one step further and sign up for a Medicare Supplemental plan for prescription drugs etc. And yet, a few even continue to pay premiums for Health Insurance to companies like Blue Cross/Blue Shield or United Healthcare. But the problem is this: none of these organizations pay for illnesses lasting more than 90 days!
The tragic part of this story is that by the time most folks reach age 65 – 70 they are on a fixed income and in most cases cannot afford the premiums for the type of insurance that pays for care lasting more than 90 days. With the average cost of long term care ranging from $5,000 - $7,000 per month, it wouldn’t take more than a year or two to wipe out most families. This news is alarming to families when they consider the unintended consequences of not pre-planning for this life event.
However, let’s take a close look at the differences between Medicare vs. Medicaid so that you better understand the differences.
What Is Medicare?
Medicare is a government health insurance program for individuals over the age of 65. It’s important to know that Medicare does pay for some nursing home care, but it is limited to medically necessary skilled nursing and will only cover a period of up to 100 days.
In most situations Medicare is limited to 20 days, provided skilled care is required, and a doctor has to write a prescription for that. The remaining 80-day component falls under a category of care called Medicare Part A. This is for skilled care. If at any time during the 80 day period a patient fails to thrive or refuses to do the therapy, then that will trigger an event where the patient will drop off of Medicare coverage and go to private pay.
The medical condition is now known as a long term care condition and Medicare does not pay for the type of illness or disability lasting more than 90 days.
What Is Medicaid?
On the surface, the chief difference between Medicare and Medicaid is this: Medicaid has very little homecare benefit. It’s not to say that one doesn’t exist, but it is very limited and varies from state to state. One significant difference between Medicare versus Medicaid is that Medicare is a federal program, a government option if you will, that has zero state variance.
Medicaid on the other hand is funded 50 percent by the federal government and 50 percent by the individual states. Administratively speaking Medicaid is 100 percent state-run. In a nutshell, Medicaid is a Federal program but controlled locally. Because the Federal Government allows individual states to control things, this causes many variances from state to state. Is there any wonder why this is a confusing a complex program?
A Quick Look At Medicaid Benefits
Medicaid has very limited homecare and assisted living benefits. However in some states benefits are increasing under a program called the Assisted Living Waiver. Medicaid is by far the dominant payer source for nursing home care in most states. With this being the case, the reimbursement rate for the nursing homes becomes the expected payment that nursing homes gauge their profitability on.
Typically a payment below the reimbursement rate will eventually bleed profits.
Medicaid Compared To Private Pay
A resident who elects to private pay will typically pay 40 to 50 percent more than the reimbursement rate. Nursing Homes love the Private Payer because of the sheer profit to their bottom line.
An interesting and unknown fact is that most nursing homes give the state government a break on all of the incidentals like: rubber gloves, diapers and Kleenex by waiving all charges for those items. But for a resident who private pays watch out…$5.00 for rubber gloves and $5.00 for a box of Kleenex is not uncommon!
The Big Medicaid Myth
Like most folklore and myths, someone, somehow, somewhere started a rumor that Medicaid is for poor broke people. Nothing could be further from the actual truth. As a matter of fact, over 50% percent of people in nursing homes are on Medicaid. Does that mean that 50% of people in a nursing home are poor? Hardly!
So in its purest form, Medicaid is the Long-Term Care avenue of payment for most people in middle-class America with assets ranging from $100,000 to $1 million!