Financial Planning for Caregivers

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As a caregiver, you will need to evaluate the long-term care needs of your loved one. In making this evaluation, it is important to consider financial options. Long-term financial planning is important for everyone, but it is essential when you are coping with the expense of chronic illnesses such as Alzheimer's or Parkinson's disease.

Developing a Plan

For the security of the caregiver and the patient, long-term financial planning is very important for all parties involved. Planning ahead is essential.

Long-term financial planning is very important for the security of the caregiver and the patient. If you wish to handle your loved one's finances, you must receive written authorization to do so. This authorization can be obtained through documents such as a power of attorney. When considering a financial plan, you may contact professional financial managers and/or medical lawyers who deal with financial planning for people facing chronic or progressive illnesses. You also may want to talk to a social worker and investigate other resources, such as those available on the Internet. Ask your loved one's doctor for a referral, or speak with a national association or support group to find reputable professionals in your region.

Understanding Medical Coverage

• If your loved one is insured, either through his or her employer or retirement policy, read all of the policies pertaining to chronic/progressive illnesses. If you are unsure about the language or terms, contact the personnel department or your financial planner.
• If your loved one is unemployed and does not have coverage, look for the highest level of affordable coverage.
• If your loved one is 65 or over, he or she qualifies for Medicare. This insurance can be supplemented with a "Medigap" policy available through a private insurer. Many states also have prescription assistance/reimbursement programs for low-income senior citizens.
• If your loved one is disabled but does not qualify for Social Security, he or she may be eligible to receive a form of Medicare for the disabled.
• If your loved one cannot get insurance and his or her income is low, he or she may qualify for Medicaid, a government "safety net" program that pays for medical costs that exceed a person's ability to pay.

Investigating Long- and Short-Term Disability Insurance

If your loved one is employed, have him check to see if his employer has private disability insurance. He or she should contact his employer's human resources to investigate eligibility, the cost of enrolling, and how much of his/her salary it will cover.

If your loved one is not working, he or she may want to apply for Social Security. If they do not qualify for Social Security, state-run disability programs may be considered.

If their total income is below a certain level, he or she may qualify for federally subsidized Supplemental Security Income (SSI). If an individual collects SSI, he or she is a candidate for Medicaid regardless of age.

Medicare and Medicaid

What Is Medicare?

Medicare is a federal health insurance program providing healthcare benefits to Americans 65 and older, as well as to some disabled individuals under age 65, and people of any age with permanent kidney failure requiring dialysis or kidney transplant. Eligibility for Medicare is linked to Social Security and railroad retirement benefits.

Medicare has co-payments and deductibles. A deductible is an initial amount the patient is responsible for paying before Medicare coverage begins. A co-payment is a percentage of the amount of covered expense the patient is required to pay.

What Are Medicare's Coverage Options?

Medicare has several parts.

Part A Medicare covers hospital bills and includes:

• Inpatient hospital care
• Skilled nursing facility care (not custodial or long-term care)
• Home health services, including a visiting nurse, or a physical, occupational, or speech therapist
• Blood that you receive at a hospital or skilled nursing facility during a covered stay
• Medical supplies
• Hospice services
• Mental health care given in a hospital

Part B Medicare deals with doctors' bills and includes:

• Doctor charges (not routine physical exams)
• Medically necessary ambulance services
• Physical, speech, and occupational therapy
• Home health care services (physician certification is necessary)
• Medical supplies and equipment such as wheelchairs, hospital beds, oxygen, and walkers
• Transfusion of blood and blood components provided on an outpatient basis
• Outpatient medical/surgical supplies and services
• Outpatient mental health

Part B Medicare benefits require payment of a monthly premium. A patient must also be entitled to Part A benefits in order to receive Part B benefits.

Part C refers to Medicare Advantage, which are managed care insurance plans you can buy from private insurers to replace your traditional Medicare coverage. They include Medicare HMOs, Medicare PPOs, Medicare Special Needs Plans, and Medicare Private Fee-for-Service Plans.

Part D, as of January 2006, covers prescription drugs. Depending on your income, you pay a monthly premium and part of the prescription cost.

Medicare Coverage of Skilled Nursing Care Facilities

If nursing home care becomes necessary, your loved one may be eligible for Medicare. In order to receive care in a skilled nursing home under Medicare:

• Most patients' HMO plans require them to have had a three-day hospital stay prior to admission into the skilled nursing facility. There are exceptions, however, and the patient's insurance provider should be consulted to determine whether these restrictions apply.
• The patient must meet specific criteria to receive treatment. The patient's doctor or nurse will help him or her to determine if the criteria are met.
• The patient must be admitted into the skilled nursing facility within 30 days of discharge from the hospital.
• The patient must enter the skilled nursing facility for treatment of the same condition for which he or she was hospitalized.
• The patient must require daily skilled care.
• The condition must be one that can be improved.
• The facility must be Medicare-certified.
• The patient's doctor must write a care plan. The care plan must be carried out by the skilled nursing facility. (Once the skilled needs are met, Medicare will no longer pay for services.)

Medicare Coverage of Home Care

In order to receive home care under Medicare:

• The patient must be homebound.
• The doctor must certify a plan of care.
• Care must be needed on an intermittent (not continuous) basis.
• Care cannot exceed 35 hours per week or 8 hours per day.
• Physical or speech therapy must be provided on a "necessary and reasonable" basis. There are no restrictions on the number of days or hours per week of these therapies.
• If a person qualifies for home health care, he or she is entitled to a home health aide to provide some personal care.

What Is Medicaid?

Medicaid is a joint federal-state health insurance program providing medical assistance primarily to low-income Americans who have limited resources. It is also available to people under 65 if they are blind or disabled. The purpose of Medicaid is to provide preventive, therapeutic, and remedial health services and supplies that are essential to attain an optimum level of well-being.

How Do People Receive Medicaid Benefits?

There are two ways to receive Medicaid:

• Supplemental Security Income (SSI) -- People who receive a cash grant under SSI and Aid to Dependent Children are automatically eligible for Medicaid benefits.
• Medicaid "spend-down" -- This is similar to a deductible or a co-payment that a patient must pay every month. Once the patient meets his "spend-down" amount, the patient is eligible for Medicaid for the remainder of the month.

Who Is Eligible for Medicaid?

Medicaid eligibility requirements depend on financial need, low income, and minimal assets. In determining Medicaid eligibility, officials do not review rent, car payments, or food costs. Officials only review medical expenses, which include:

• Care from hospitals, doctors, clinics, nurses, dentists, podiatrists, and chiropractors
• Medications
• Medical supplies and equipment
• Health insurance premiums
• Transportation to get medical care

The four eligibility tests required to receive Medicaid include:

• Categorical -- A patient must be age 65, blind, or disabled.
• Non-financial -- A patient must be a U.S. citizen and a state resident. A patient also must have a Social Security number.
• Financial -- A patient's total gross income, personal assets, and property will be evaluated and must meet a certain standard. This amount varies from state to state.
• Procedural -- A patient must complete and sign an application and have a personal interview with a Medicaid official.

Each eligible Medicaid recipient receives a monthly Medical Identification card. The card is valid for one month only.

Medicaid Coverage

Medicaid coverage varies from state to state. For specific coverage guidelines, contact your state's Department of Human Services. Generally, Medicaid benefits include:

• Transportation -- This may include ambulance services when other means of transportation are detrimental to the patient's health or may include transportation to and from the hospital at time of admission or discharge when required by the patient's condition. Transportation also may cover trips to and from a hospital, outpatient clinic, doctor's office, or other facility when the doctor certifies the need for this service.
• Ambulatory Centers -- Ambulatory health care centers are private corporations or public agencies that are not part of a hospital. They provide preventive, diagnostic, therapeutic, and rehabilitative services under the direction of a physician. Ambulatory services covered by Medicaid include dental, pharmaceutical, diagnostic, and vision care.
• Hospital Services -- These services include inpatient hospital care up to 60 days for an illness. Private hospital rooms are covered only when the illness requires the patient to be isolated for his or her own health or the health of others. Outpatient preventive, therapeutic, and rehabilitative services also are covered. So are professional, laboratory and radiology services.
• Medical Supplies and Medications -- These include general medical supplies (when prescribed by a physician), as well as medications prescribed by a physician, dentist, or podiatrist. Durable medical equipment (such as hospital beds, wheelchairs, side rails, oxygen administration apparatus, and special safety aids, etc.) also is covered.
• Home Health Care -- These services include those provided by a visiting nurse, home health aide, or physical therapist.
• Skilled Nursing Facilities -- Skilled nursing facilities and intermediate care facilities (providing short-term care for a patient whose condition is stable or reversible) are covered through Medicaid with a doctor's authorization.

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Reviewed by the Department of Social Work at The Cleveland Clinic..

Edited by Celia E. Dominguez M.D. WebMD, January 2008.