Long-Term Care Insurance: Should I Self-Insure?

In some situations it is better to plan for Medicaid avoidance when possible rather than eligibility.  This is because having Long-Term Care (LTC) insurance has some advantages over the state system.  First, in order to qualify for Medicaid benefits an applicant must meet not only the financial requirements, but also must meet a "Medical Necessity" requirement.  This Medical Necessity standard is not a small hurdle and many people who need assistance with their daily activities simply do not meet the threshold.  Whereas, insurance contracts do not require the same high level of care in order to receive coverage.  

Second, with LTC Insurance, a person may be able to purchase better care.  Roughly 94% of Texas nursing homes are Medicaid-certified facilities.  However, the 6% which aren't offer some of the best care.  The Medicaid program does not reimburse nursing facilities for the full daily rate it actually costs to provide adequate care.  In fact in 2007 the average daily shortfall was $12.54 per day.  As such, many Medicaid-certified facilities have low staffing ratios.  In fact, in a 2002 Congressional study as it applied to Texas found that only 6% of Texas nursing homes met all of the minimum hourly nursing staff levels.  I am not suggesting that only the 6% of non-Medicaid facilities meet these requirements, but it is not a far stretch. 

Third, individuals who pay privately have the ability to choose the facility in which they would like to stay.  Since Medicaid does not fully reimburse the actual cost of care, most nursing facilities limit the number of "Medicaid Beds" allowed at their location.  If the Medicaid beds are full, an applicant may be put on a waiting list or be forced to reside elsewhere.  Further, Medicaid does not pay for "bed-holds."  For example, if the patient has to leave the facility for a temporary hospital stay, when he or she is subsequently discharged, if the nursing facility no longer has a Medicaid-bed then he or she may have to move to another facility.  

Finally, for some Medicaid is a defamatory form of "welfare" and are very resistant to utilizing benefits, even when it is clear that they will eventually qualify.  These values and feelings are important to take into consideration when planning for the future.  LTC insurance is a good way to pay privately for the care you may one day need.