Health Insurance and Elder Care: Getting the Most from Your Benefits

Introduction

Health insurance can help cover some of the cost of eldercare.  It is important to understand that to which a policyholder is entitled and it is equally important to know the limitations of one's coverage so one does know 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 which 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.

  • Medications - includes prescription drugs, both generic and brand name, and over-the-counter medications.
  • Nursing Home Care - to the layperson, it is helpful to make a distinction between nursing home care and other forms of residential care such as assisted living.  Nursing home care, which is an official "level of care" is used for short term rehabilitation or for long term purposes.
  • Assisted Living - generally speaking, in assisted living residences, only non-medical care is provided. If medical care is offered, it is usually provided by an independent third party who bill insurance separately.
  • Home Care - another distinction worth making is between non-medical home care and home health care.  The latter can only be provided by trained medical professionals while the former can be provided by casual caregivers or family members.  
  • Medical Equipment - home or durable medical equipment (DME) refers to long lasting, re-usable devices such as wheelchairs, hospital beds and ventilators.
  • Medical Supplies - also referred to as home care supplies.  These are typically disposable single use items such as adult diapers or diabetic test accessories.



Elder Care Benefits by Type of Insurance

Medicare

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 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.  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 provided the items are medically necessary, prescribed by a physician and are 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, it covers ostomy supplies but not adult diapers, additional information here.  When Medicare does pay for some of these 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.  This 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.


Medicare Supplemental Insurance

Supplemental insurance policies 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 which are largely covered by Medicare. 

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 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.

 

TRICARE for Life and CHAMPVA for Life

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

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 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 challenges 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 is $2,000 / month and the value of their assets is limited to $2,200 (excluding their home).  The second challenge is the availability of services.  Nursing home care is an entitlement but assisted living, home care and adult day care all usually have a limited number of slots available and waiting lists are very common.

 

Tips to Maximize Your Insurance
Know Your Benefits
As difficult as it is to understand health insurance benefits, knowing your benefits is key to getting insurance to pay.  It is very common for insurance to decline payment because they don't see the medical need for a particular item, medication, therapy or procedure.  It is key to know that to which the policyholder is entitled and to communication the medical reason for it.

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 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.
 
Provide Additional Supporting Documentation
Laboratory test results, statements of medical justification, official letters which describe a patient's need can all serve as additional supporting documentation.  Do not be afraid to provide too much information. 
 
Make Use of a Patient Advocate
Patient advocates are 3rd party individuals or organizations that help patients navigate the health care system, they focus on education, use of health plans and how best to obtain care.  While there are private, fee-based advocates, there are also organizations that provide these services at no charge.  One might contact, for example, the American Cancer Society, the Alzheimer's Association or one's local Long Term Care Ombudsman
 
Contact Your State Protection and Advocacy Program
There are two programs in each state that work to protect their residents' rights when denied by their insurance.  These programs are known as the Protection and Advocacy for Assistive Technology (PAAT) and Protection and Advocacy for Individual Rights (PAIR).  It is worth noting that they are more focused on fighting denied claims for medical equipment than for care services. One can find contact information for the programs in their state here.
 
SHIPs
SHIPs is an abbreviation for State Health Insurance Assistance Programs.  These are free advisory services provided in each state that serve to help residents better understand and receive benefits from their insurance policies including Medicare, Medicare Advantage, Medicare Supplemental and Medicaid.  Find your state's SHIP office.