Long-term Care Planning

What is long-term care?

“Long term care” describes the assistance people who have chronic medical problems or disabilities may need in order to do their everyday activities. 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 services range 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 and tend to be higher in metropolitan areas. In Oregon in 2017, the median charge for a home health aide was $24.50 per hour. If you hire people to provide in-home care, you become an employer and have legal responsibilities regarding FICA, income tax withholding, workers’ compensation, and unemployment insurance. Respite care is also provided by adult day care programs, which usually charge by the day.

There are close to 140 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 or rehabilitation typically needed by people recently discharged from hospitals following major surgeries or treatment for infections. Nursing facilities are licensed by the state. The median cost for nursing facility care for someone in a semi-private room was about $9,000 per month in Oregon in 2017.

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. A nursing facility, RCF, or ALF may have a memory care unit. A memory care unit endorsement from the state allows the facility to provide care in a secure setting for people who have Alzheimer’s Disease or another type of dementia.

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 state (except in Multnomah County, where they are licensed by the county) and may offer several levels of care, depending on the qualifications and experience of the provider.

The average cost for care in ALFs, RCFs, and AFHs was between $3,500 and $4,000 per month in Oregon in 2017, according to one study. The average cost in a memory care unit is higher. The charges are usually tied to the amount and types of services that the resident needs.

Who should plan for long term care?

It is difficult to predict who will need long term care. People who have intellectual or developmental disabilities, traumatic brain injuries, physical disabilities, or behavioral health diagnoses may need long term care at any age. According to one study, 70% of people over age 65 will need long term care services at some point. 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 other 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 attorney, revocable 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 one spouse 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 an inpatient 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 for SNF care after the first 20 days. In 2018, the co-payment is $167.50 per day. 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 usually cannot buy an individual policy. Long term care insurance policies that are sold in Oregon must cover care provided at home and in different types of care facilities, not just nursing facilities, and cannot exclude particular conditions 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 out individuals 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. It allows people who have long term care insurance coverage which 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 much of long term care costs from income, savings, and other assets. The U.S. Department of Veterans Affairs (VA) has non- service connected disability pension benefits called Aid and Attendance or Housebound benefits which make monthly payments to eligible veterans (and to certain surviving spouses of veterans) who are living in care facilities or who are homebound. The eligibility criteria include the veteran’s dates of service, the applicant’s degree of physical and mental impairment, and financial need. The Oregon Department of Veterans’ Affairs (ODVA) operates nursing facilities in The Dalles and Lebanon that accept Medicaid payment. The Oregon Veterans’ Home in The Dalles includes a memory care unit.

Oregon Project Independence (OPI) has a limited amount of state funds 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 or a related disorder 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) and the Oregon Health Authority (OHA) pays approximately 50% of the long term care costs in Oregon.