Long-term care reality check

Medicare, the primary medical insurance for anyone over the age of 65, is commonly misunderstood. Many clients and their families are surprised when they find out that Medicare does not pay for long-term “custodial” help, either in the home or at a facility. This surprise includes the actual cost of the care and the struggle to accept that seniors really need it.

Medicare was enacted in 1965 to provide federal health insurance for people age 65 and older, those who at any age have permanent kidney failure, or certain disabled people. The program was originally designed to help offset medical care costs, but not to pay for them entirely. Medicare is available through and managed by the Social Security Administration. Not everyone who is 65 is eligible for Medicare, however. In order to be eligible, you or your spouse must have the required amount of work credits. To find out if you are eligible for Medicare, go to or call 1-800-772-1213.

Medicare is now comprised of three parts. When a person applies for Medicare at age 65, Part A coverage is automatic and has no monthly premium. Part A covers hospitalizations, rehabilitation stays in a skilled nursing facility, some in-home medical care and hospice services. Part B offers optional coverage and requires a monthly premium which is usually taken out of your monthly Social Security benefit. This year, the monthly premium is $96.40, with a deductible of $135.00 per year. However, even though Part B is optional, if you do not sign up for it at your first time of eligibility and decide later on that you want it, you will be charged a penalty for signing up late. Medical care for seniors is also driven by Medicare rules. If you have Part A, doctors expect you to have Part B to help cover their costs. Part B is called Medical Insurance and helps to cover your doctor services and outpatient care. It does not pay the fee charged to you by the doctor. It usually pays about 80 percent of the doctor’s fees, and you are responsible for the remaining 20 percent. Another twist to this benefit and the reason why some doctors are no longer accepting Medicare is that Medicare only pays on an “assigned value.” Medicare sets the rates that doctors can charge for different services, which may not mesh with what the doctor fees actually are. If a doctor accepts Medicare, it means that he accepts the assigned value, and the Medicare recipient is only responsible for 20 percent of that assigned value.

In January 2006, Medicare rolled out a new plan called Part D, which covers prescriptions. Where is Part C, you ask? We will get to that later. Part D is also an optional coverage that has a monthly premium. A penalty applies here as well if you do not apply for this plan at the first time of your eligibility. There is no penalty if you already have a prescription plan with your supplemental insurance. An example of this is the Boeing supplemental retiree plan that includes prescription coverage. The premiums vary depending on your state and what plan you choose. The plans are offered through private insurance companies that contract with Medicare to provide plans in your area. This is an extremely complicated process, and I have found that unless you utilize the Medicare Web site (, it is nearly impossible to pick a plan that works well for each individual’s needs. I have heard that my clients, even though they pay a monthly premium for prescription coverage, are saving a significant amount of money on their monthly drug costs.

Part C coverage consists of Medicare Managed Care Plans that are offered by HMOs such as Group Health and Secure Horizons. This means that people on these plans stay within the Group Health network for all of their medical care. Instead of identifying them as Part C, they are called Medicare Advantage Plans or Other Medicare Plans.

Medicare provides coverage for medical needs, not custodial needs. The service must be medically necessary according to Medicare rules, prescribed by a doctor, and temporary for the benefit of rehabilitation. Custodial or long-term care needs are defined as assistance with cooking, housekeeping/chore, taking medicine, bathing or other activities of daily living.

One way to plan for the cost of long-term care is to purchase a Long-Term Care Insurance policy that helps to offset the costs. For some people, this offers peace of mind even if they never have to use it. For others, they would rather take the chance that they will not need to pay for long-term care or use their assets to pay for such care. For those who are financially eligible, there is Medicaid.

Medicaid is a state-administered program that is based on financial need. People must spend down their resources before becoming eligible for Medicaid programs, which can pay for some in-home care, assisted living facilities, adult family homes and long-term stays in nursing homes. The basics for eligibility are no more than $2,000 in resources, and monthly income that is less than the cost of monthly care. Full details on Medicaid eligibility and possible exemptions can be found at or by contacting the Department of Social and Health Services (DSHS): or (206) 341-7404.

Contact Betsy Zuber at (206) 275-7752 or e-mail

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