Long-term Care Planning

What is long-term care?

"Long-term care" describes the help needed by people who have problems living independently because of chronic medical problems or severe disabilities. Most long-term care is provided by family members and friends. Local communities offer services like Meals-on-Wheels designed to help older people and people with disabilities remain in their homes. In-home care ranges from respite care to give family caregivers a break, to housekeeping services, to visits by home health or personal care aides, to 24 hour care. Costs vary according to the amount of time and the type of provider. In Oregon in 2008, the charges for homemaker services and home health aides started at $18 per hour, and the average charge was $33 per hour. If you hire people to provide in-home care, you become an employer and have legal responsibilities regarding FICA, withholding, workers' compensation, and unemployment insurance. Respite care is also provided by adult day care programs, which usually charge by the day.

There are more than140 nursing facilities in Oregon and a growing number of community-based care facilities. Nursing facilities (which may be called nursing homes, convalescent centers, rehabilitation centers, and similar names) provide nursing services on a regular basis as well as personal care and assistance with activities of daily living (ADLs). Some nursing facilities offer the skilled nursing facility (SNF) care typically needed by people recently discharged from hospitals following major surgeries or strokes. Nursing facilities are licensed by the state. The average cost for nursing facility care for someone in a semi-private room was $205 per day (about $6,355 per month) in Oregon in 2008.

Residential care facilities (RCFs) provide meals and housekeeping services for six or more residents, and have staff on duty 24 hours a day. The amount of personal care and supervision varies. Assisted living facilities (ALFs) also provide meals and housekeeping services for six or more residents, and have staff on duty 24 hours a day. ALFs offer several levels of care for residents who live in private apartments. RCFs and ALFs are licensed by the state.

Adult foster care homes (AFHs) provide meals, housekeeping, and care to no more than five residents in a home-like environment. The operator or a resident manager lives in the home and sleeps there at night. AFHs are licensed by the county or by the state and may offer several levels of care, depending on the qualifications and experience of the provider.

The average base cost for care in ALFs, RCFs, and AFHs was $2,827 per month in Oregon in 2008. Many providers add charges for residents who need more services.

Who should plan for long-term care?

It is difficult to predict who will need long-term care. The need for assistance with some of the basic activities of daily living (such as preparing meals, doing housework, bathing, dressing, eating, taking medication, and managing money) increases with age. More than half of the people age 85 or older report difficulties with some of the activities of daily living. A serious decline in function (which can be caused by a physically disabling condition or by Alzheimer's Disease or dementia) is the major factor that determines whether someone will enter a care facility. Some types of planning, such as preparing durable financial powers of attorneyrevocable living trusts, and advance directives for health care, or purchasing long-term care insurance, work best when they are done well in advance. Other types of planning, such as asset transfers between spouses, usually are not done until it becomes clear that the husband or the wife needs long-term care.

Does Medicare pay for long-term care?

Medicare covers a limited amount of skilled nursing care, which is not the type of long-term care that most people need. Medicare is the federal health insurance program for people age 65 and over, people who have received Social Security disability benefits for at least two years, and certain people who have kidney disease or ALS. Medicare Part A covers a maximum of 100 days of skilled nursing facility (SNF) care following a hospital stay of at least three (3) days. The person must have an unstable medical condition that fits the Medicare criteria for "skilled care." There is a significant co-payment after the first 20 days. Medicare Part B covers certain in-home services when they are provided by a Medicare-certified home health agency for a person who is homebound and needs some skilled care. Medicare does not cover other nursing facility care, other in-home care, or care provided in an adult foster care home, residential care facility, or assisted living facility.

What does long-term care insurance cover?

People who are concerned about the future cost of long-term care and who want to protect their assets should consider buying long-term care insurance. Both individual policies and employer- based group plans are available. However, once a person has been diagnosed with a condition that may require long-term care, he or she will probably be unable to buy an individual policy. Long-term care insurance policies now being sold in Oregon must cover care provided at home and in different types of care facilities, not just nursing facilities, and cannot exclude particular illnesses, such as Alzheimer's Disease.

Policies vary according to the amount of help the person must need before coverage begins; the length of the waiting period before coverage begins; the dollar amount of the daily benefit; and the length of time for which benefits will be paid. The premiums are calculated based on the options chosen. In addition, the premiums are substantially lower for people who purchase the policies at younger ages. Insurance companies can increase the premiums, but cannot single people out for higher premiums. Some long-term care insurance policies are tax-qualified, which means that the premiums can be deducted as a medical expense.

Oregon has a long-term care partnership program that allows people who have long term care insurance coverage that meets certain standards to qualify for Medicaid benefits while protecting a larger amount of resources. A person who buys a qualified partnership policy (QPP) in Oregon on or after January 1, 2008, (or a QPP issued in another participating state) can receive two types of resource protection. First, in the Medicaid eligibility determination process, an amount equal to the QPP payments that the person has received will be excluded and not counted as a resource. Second, in the estate recovery process, the state will disregard an amount equal to the QPP payments if certain conditions are met.

Are there other options for paying for long-term care?

Oregonians who need long-term care and their families pay for more than 40% of long-term care costs from income and savings. The federal Department of Veterans' Affairs (VA) has a non-service connected disability pension program called Aid and Attendance which pays cash benefits to eligible veterans who are homebound or living in care facilities. The eligibility criteria include dates of service, degree of physical and mental impairment, and financial need. The Oregon Department of Veterans' Affairs (ODVA) operates a nursing facility in The Dalles. Oregon Project Independence (OPI) has a limited amount of funding to provide in-home care and respite care to help people who are over age 60 or who have been diagnosed with Alzheimer's Disease stay in their own homes. People who use OPI pay an hourly rate for the services they receive, based on their incomes. The Medicaid program administered by the state Department of Human Services (DHS) pays approximately 50% of the long-term care costs in Oregon.