Page Reviewed / Updated - September 27, 2020
Health insurance can help cover some of the cost of eldercare. It is important to understand what a policyholder is entitled to. And it is equally important to know the limitations of one's coverage so one does not waste time and energy pursuing benefits that they will never receive. For individuals doing long term planning, knowing the limitations of coverage is essential to prevent misconceptions about who will pay for care in the future.
"Eldercare" is a broad term and one not used by health insurance companies in their descriptions of benefits. Therefore, it is helpful to review insurance benefits in terms that are relevant to the elderly and their care needs. As we examine the benefits of specific insurance policies, such as Medicare, we'll examine the following areas of coverage.
As the vast majority of elderly Americans have Medicare as their primary health insurance coverage, we will examine its benefits in some detail here and at the links below. First and foremost, it must be said that Original Medicare will only pay for medical care, it does not cover the cost of personal care. This means Medicare does not pay for assistance to help the elderly perform their activities of daily living, such as bathing, grooming, eating, and mobility. Therefore, Medicare does not pay for home care or assisted living. (One exception is that some Medicare Advantage plans may now offer in-home personal care). Medicare does cover nursing home care and some personal care is provided in nursing homes. However, Medicare does not cover nursing home care at 100% and Medicare only pays for a limited period of time. More details.
With medical equipment, medical supplies, and medications, Medicare does offer benefits in each of these areas. However, the items must be medically necessary, prescribed by a physician, and be on the list of approved items. For example, with medical equipment, Medicare will pay for walkers, but not bathroom grab bars. More coverage details are available here. With medical supplies, Medicare covers ostomy supplies, but not adult diapers. Additional information can be found here. When Medicare does pay for some of these medical items, typically they will only pay for 80% of the cost. With medications, Medicare Part D will pay for certain drugs, known as formulary drugs. However there are deductibles and coverage gaps. Details here.
When it comes to helping individuals to age in place (aging at home as opposed to in residential care), Medicare provides little assistance. It does not pay for home modifications of any kind. However, Medicare does offer a unique program in some locations called PACE or LIFE in which all of a participating senior’s medical needs are covered. These programs are generally well liked by participants who are lucky enough to live in an area of the country where this sort of coverage is offered. More details available here.
Supplemental insurance policies (Medigap) for Medicare are designed to help with Medicare's co-payments and deductibles. They do not broaden the coverage offered by Medicare into new areas. Instead they reduce the out-of-pocket costs for items and services that are largely covered by Medicare. Note: Persons who receive their Medicare benefits via Medicare Advantage plans are not eligible for Medigap plans.
For example, with nursing home care from day 1 to day 20, Medicare covers 100% of the cost. From day 20 to day 100, it covers 80% of the cost. After day 100, Medicare pays nothing. Medicare supplemental insurance will pay 20% for the last 80 days, but does not extend nursing home care beyond 100 days.
Since Original Medicare does not cover non-medical personal care, Medicare supplemental insurance policies do not either. To be clear, this means they do not pay for assisted living, non-medical home care or adult day care (unless it is medical in nature). Read more.
These are insurance programs for active military members, retirees and the family members of military veterans who are at least 65 years of age. These programs function very much like a Medicare supplemental insurance policy in that they do not extend the benefits of Medicare but simply help to cover co-payments and deductibles. Therefore, unfortunately, they provide little assistance towards non-medical eldercare. More details are available on the following links for TRICARE, CHAMPVA and other options for veterans.
Medicaid is an insurance program for very low income individuals with limited financial assets. Medicaid, unlike Medicare, offers significant benefits for eldercare including non-medical care. Medicaid will pay for unlimited nursing home care. And through each state's HCBS waivers, Medicaid usually pays for some home care, assisted living,adult day care, adult foster care, and medical alert services (even the non-medical care versions of these services). Click on the preceding links to find your specific state's waivers.
There are two major challenges associated with Medicaid. The first is qualifying. The program is reserved for individuals with very limited income and assets. The approximate income limit per individual (in 2019) is $2,313 / month, and the value of one’s assets is limited to $2,000 (excluding their home, household furnishings, and a vehicle). The second challenge is the availability of services. Nursing home care is an entitlement (anyone who meets the requirements, will receive the benefit). But assisted living, home care, and adult day care all usually have a limited number of slots available and waiting lists are very common.
Be Proactive with Your Doctor
One must be aggressive with their doctor in getting them to write very detailed prescriptions that include the specific reasons why an item, brand, procedure, therapy or type of care is necessary. For example, if prescribing a wheelchair, the doctor should specify the weight, muscle strength, typical usage patterns and cognitive ability of the individual. All of these factors play a role in the type of wheelchair that insurance deems necessary and pays for. This information can make the difference between whether a manual or powered wheelchair is approved, which is a difference of thousands of dollars.