VERMONT LONG-TERM CARE INSURANCE TRAINING COURSE (8 Hour/2014 Edition)

Transcription

1 VERMONT LONG-TERM CARE INSURANCE TRAINING COURSE (8 Hour/2014 Edition) Researched and Written by: Edward J. Barrett CFP, ChFC, CLU, CEBS, RPA, CRPS, CRPC

2 Disclaimer This course is designed as an educational program for financial advisors and insurance professionals. EJB Financial Press is not engaged in rendering legal or other professional advice and the reader should consult legal counsel as appropriate. We have tried to provide you with the most accurate and useful information possible. However, one thing is certain and that is change. The content of this publication may be affected by changes in law and in industry practice, and as a result, information contained in this publication may become outdated. This material should in no way be used as an original source of authority on legal and/or tax matters. Laws and regulations cited in this publication have been edited and summarized for the sake of clarity. Names used in this publication are fictional and have no relationship to any person living or dead. This presentation is for educational purposes only. The information contained within this presentation is for internal use only and is not intended for you to discuss or share with clients or prospects. Financial advisors are reminded that they cannot provide clients with tax advice and should have clients consult their tax advisor before making tax-related investment decisions. EJB Financial Press, Inc Congress St. New Port Richey, FL (800) This book is manufactured in the United States of America 2014 EJB Financial Press Inc., Printed in U.S.A. All rights reserved 2

3 About the Author Edward J. Barrett CFP, ChFC, CLU, CEBS, RPA, CRPC, CRPS, began his career in the financial and insurance services back in 1978 with IDS Financial Services, becoming a leading financial advisor and top district sales manager in Boston, Massachusetts. In 1986, Mr. Barrett joined Merrill Lynch in Boston as an estate and business-planning specialist working with over 400 financial advisors and their clients throughout the New England region. In 1992, after leaving Merrill Lynch and moving to Florida, Mr. Barrett founded The Barrett Companies Inc. and Broker Educational Sales & Training Inc., Wealth Preservation Planning Associates and The Life Settlement Advisory Group Inc. Mr. Barrett was a qualifying member of the Million Dollar Round Table, Qualifying Member Court of the Table and Top of the Table producer. He holds the Certified Financial Planner designation CFP, Chartered Financial Consultant (ChFC), Chartered Life Underwriter (CLU), Certified Employee Benefit Specialist (CEBS), Retirement Planning Associate (RPA), Chartered Retirement Planning Counselor (CRPC) and the Chartered Retirement Plans Specialist (CRPS) professional designations. EJB Financial Press EJB Financial Press, Inc. ( was founded in 2004, by Mr. Barrett to provide advanced educational and training manuals approved for correspondence continuing education credits for insurance agents, financial advisors, accountants and attorneys throughout the country. Broker Educational Sales & Training Inc. Broker Educational Sales & Training Inc. (BEST) is a nationally approved provider of continuing education and advanced training programs to the mutual fund, insurance and financial services industry. For more information, visit or call

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5 Table of Contents About the Author... 3 CHAPTER 1 UNDERSTANDING LONG-TERM CARE Overview Activities of Daily Living (ADL) Instrumental Activities of Daily Living (IADL) Levels of Care What Long-Term Care Is Not Chronic Conditions vs. Acute Conditions Who Needs Long-Term Care? Aging of the U.S. Population Increases in Life Expectancies Future Costs of Long-Term Care Review Questions CHAPTER 2 LTC SERVICES AND FACILITIES Overview Long-Term Care Services Skilled Nursing Care Intermediate Care Custodial Care Long-Term Care Facilities Community- Based Care Home Health Care Adult Day Care Providers Residential Care Facilities/Assisted Living Facilities Continuing Care Retirement Communities Institutional Care Nursing Home Size and Resident Population Nursing Home Population Characteristics Informal Network of Care Home Care Homemaker Personal Care Other Long-Term Care Services Respite Care Hospice Care Licensing Requirements Costs for Long-Term Care Services Nursing Home Care Home Health Care Assisted Living Facility Adult Day Health Care Long-Term Care Costs Now and In the Future National Long Term Care Ombudsman Resource Center Contacting an Ombudsman

6 Review Questions CHAPTER 3 WHO PAYS FOR LONG-TERM CARE Overview Medicare Medicaid Private Insurance Family Caregivers Review Questions CHAPTER 4 MEDICARE Overview Medicare Eligibility Medicare Services Part A: Hospital Insurance (HI) Eligibility Financing Hospital Insurance Premium Deductible and Co-insurance Benefits Skilled Nursing Facility Care Part B: Medical Insurance (MI) Eligibility Financing Medical Insurance Premium Deductible Part C: Advantage Plans (MA) Benefits Enrollment Periods Part D: Prescription Drug Insurance Eligibility Benefits Provided Medicare Supplement Insurance (Medigap Policies) Enrollment Federal Standards of Medigap Policies Rules for Selling Medigap Policies New Rules for 2010 and Beyond Review Questions CHAPTER 5 VERMONT MEDICAID Overview What Medicaid Covers Medicaid Eligibility Income Test Asset (Resource) Tests Special Rules for Community Spouses Income Rules Resource (Asset) Rules New Medicaid Rules under the DRA

7 Section 6011: The Look-Back Period Section 6014: Home Equity Limits Section 6012: Disclosure and Treatment of Annuities Section 6021: State Long-Term Care Partnerships Section 6015: Continuing Care Retirement Communities Medicaid Planning Transfer of Assets Use of Trusts Qualified Income ( Miller ) Trust Medicaid Estate Recovery Program (MERP) Status of Estate Recovery Program Use of Liens Role of the Children Review Questions CHAPTER 6 LONG-TERM CARE INSURANCE Overview Defining Long-Term Care Insurance NAIC Model Act Components of the Model Act Evolution of Long-Term Care Insurance Regulation of Long-Term Care Insurance State Regulation Licensing Product Filings Review and Approval of Rates State Guaranty Associations Reporting Requirements The National Association of Insurance Commissioners (NAIC) Federal Regulation Health Insurance Portability and Accountability Act of LTC Awareness Programs State Activities Review Questions CHAPTER 7 LTCI POLICY PROVISIONS AND BENEFITS Overview LTCI Policy Provisions Issue Ages Underwriting Medical Underwriting Premiums Limited Pay Premiums Premium Discounts Spousal Discount Preferred Health Discount Renewal Provisions Conditionally Renewable

8 Guaranteed Renewable Non-cancelable Limitations and Exclusions Pre-existing Condition Lapse Protection Other Benefits Waiver of Premium Policy Upgrades Bed Reservation Home Modification Care Coordination Shared Care Caregiver Training Guaranteed Insurability Review Questions CHAPTER 8 LTCI POLICY DESIGN Overview Daily Benefit Amount Benefit Period Counting Days The Pool of Money Approach Elimination Period Consecutive Days vs. Accumulating Days The Accumulation Period Service Days vs. Calendar Days Per Episode vs. Once Per Lifetime What Counts as a Day of Care? LTCI Inflation Protection Inflation Options How Benefits Are Paid Indemnity Method HIPAA and the Indemnity Model The Reimbursement Method Tax-Qualified LTCI vs. Non-Tax-Qualified LTCI Recertification Chronically Ill Individual Terminally Ill Individual Identification of Type of Policy Material Modifications of Existing Policies Tax Treatment of Tax-Qualified Policies Tax Deductibility of Premiums Non-Tax-Qualified Policies Benefit Triggers State Tax Incentives Review Questions

9 CHAPTER 9 LTCI PARTNERSHIP Overview Deficit Reduction Act of LTCI Partnership Policies Asset Protection Required Provisions Benefit Triggers Residency Requirements Producer Required Training Next Steps for States Review Questions CHAPTER 10 GROUP LTCI POLICIES Overview Advantages and Disadvantages of Group LTC Insurance Continuation and Conversion of Group LTC Insurance Replacement Rules for Group LTC Policies Review Questions CHAPTER 11 CONSUMER PROTECTION AND SUITABILITY REQUIREMENTS Overview Unfair Trade Practices Misrepresentation False or Misleading Advertising Discrimination Other Illegal Marketing Activities Suitability Requirements NAIC Personal Worksheet NAIC Suitability Letter Importance of Rate Stability Premium Rate Schedule Filing Premium Rate Increases Nursing Home Residents Bill of Rights Federal Requirements Review Questions CHAPTER 12 ALTERNATIVES FOR LONG-TERM CARE Overview Life Insurance Combo Life Insurance Use of Annuities Waiver of Surrender Charges Enhancement of Annuity Benefit Use of Annuity Cash Value Pension Protection Act of Tax Favored LTC Riders Premium Charges Not Taxed

10 Section 1035 Exchanges Expanded New Policy Developments Life Settlements Reverse Mortgages Types of Reverse Mortgages Advantages of Reverse Mortgages Determining Loan Amounts Lending Requirements and Loan Costs Use of Loan Proceeds Reverse Mortgages and Long-Term Care Insurance Review Questions Chapter Review Answers Confidential Feedback

11 CHAPTER 1 UNDERSTANDING LONG-TERM CARE Overview Long-term care involves a wide variety of services for people with a prolonged physical illness, disability or cognitive impairment. A cognitive impairment is a deficiency in a person s short-or long-term memory; orientation as to person, place and time; deductive or abstract reasoning; or judgment as it relates to safety awareness, (such as Alzheimer s disease). Long-term care services may include, but are not limited to, help with daily activities at home, such as bathing and dressing, respite care, home health care, adult day care, and care in a nursing home. People with cognitive impairments usually need supervision, protection, or verbal reminders to do everyday activities. This chapter will review the various activities of daily living, the levels of long-term care and what long-term care is not. Activities of Daily Living (ADL) Back in 1963, Stanley Katz was researching the basis for physical impairment and developed a measurement of physical functioning called activities of daily living (ADL). They are as follows: Bathing Dressing Toileting Continence Transferring Eating Ambulating Today, most physicians and other health care practitioners use these ADLs to determine whether a person is capable of living independently. ADLs are excellent measures to assess a person s need for nursing home, home health care and/or other long-term care services. Another term used by many physicians and health care practitioners that you need to become familiar with is the instrumental activities of daily living. 11

12 Instrumental Activities of Daily Living (IADL) Another measurement of a person s independence and to continue living on their own is sometimes called instrumental activities of daily living (IADL). These include cooking, cleaning, doing laundry, household maintenance, transporting themselves, reading, writing, managing money, using equipment such as a telephone, and comprehending and following instructions. IADLs can be broken down into the following areas: Managing medications Moving about outside Shopping for essentials Preparing meals Laundry Light housekeeping Levels of Care Today, the way long-term care services are provided is changing. Skilled care and personal care are still the terms used most often to describe long-term care and the type or level of care people may need. People usually need skilled care for medical conditions that require care by medical personnel such as registered nurses or professional therapists. This care is usually needed 24/7, and a physician must prescribe it, and the care must follow a plan. Individuals usually get skilled care in a nursing home but may also receive it in other places. For example, a person may get skilled care in their home with help from visiting nurses or therapists. Examples of skilled care are physical therapy, caring for a wound, or supervising the administration of intravenous medication. Personal care, also known as custodial care, is less involved than skilled care, and it may be given in many settings. Personal care helps people who do not need continuing medical or health Care services but instead require only help with activities of daily living (ADLs). What Long-Term Care Is Not Long-term care differs from traditional medical care as it is designed to assist people with chronic conditions to compensate for limitations in their ability to function independently, as opposed to care or services that are designed to rehabilitate or correct certain medical problems (acute conditions). 12

13 Chronic Conditions vs. Acute Conditions Chronic conditions are those which are long lasting and require continuing care rather than the type of care provided in emergency medical situations. The care required for chronic conditions may involve some medical monitoring and treatment, but it primarily involves non-medical care such as assistance with various activities of daily living (ADLs: bathing, dressing, toileting, continence, transference, eating and ambulating). Chronic conditions may evolve over time and require high levels of care as time passes. Longterm care is generally provided for chronic rather than acute conditions. Acute conditions require a high level of medical monitoring and treatment in order to restore a person to good health. This type of care is often rendered as the result of a condition that would be life threatening without immediate medical attention and care that is usually provided in a hospital setting. Care for an acute condition is usually provided only for a short period of time (such as emergency care provided after an accidental injury), or they may evolve into situations that require long-term care. For example, a stroke or heart attack victim may initially need emergency medical treatment but then only requires a lesser degree of personal care after the initial medical emergency is over. However, once the patient stabilizes he or she may be released or transferred to a nursing home for rehabilitation. Who Needs Long-Term Care? The risks of needing long-term care are not insignificant. As the population ages and life expectancies lengthen, the number of people requiring long-term care services is expected to increase substantially. Today, the chance of requiring long-term care services is roughly 50 times the chance of sustaining a major loss from an automobile accident. Most consumers would never dream of driving an automobile without owning automobile insurance, but yet they have not planned accordingly for the time when they will require long-term care services. According to the Kaiser Family Foundation, Medicaid Facts March 2011, they estimate that over 10 million Americans, need long-term care services and support to assist them in life s daily activities. The majority of individuals, 58 percent who receive long-term care services are age 65 or above, while 42 percent are under age 65. The facts are as follows: Age 65+ Nursing Home Residents 1.5 million (14%) Under Age 65 Nursing Home Residents 0.17 million (2%) Age 65+ Community Residents 4.6 million (45%) Under Age 65 Community Residents 4.2 million (41%) 13

14 Aging of the U.S. Population A brief look at the facts is sufficient to convey the extent of the looming long-term care crisis. Between 2000 and 2030, the number of people aged 65 and older will double, dramatically changing the proportion of the nation s older adult population from 12.4 percent to 21.5 percent. Older adults also have a higher prevalence of disability: one estimate puts the disability rate for people aged 18 to 64 at 3.2 percent in contrast with the rate for people aged 65 and older at 22 percent. Given these two factors, the number of people who will need long-term care will swell. Since the early 1980 s, the warnings have been clear: the aging of the baby boom generation will create massive financing challenges for federal and state governments. Today s elderly comprise percent of our nation s total population. That percentage will increase by nearly one-third to percent in At that time, one in six Americans will be 65 years old or older and will represent nearly 20 million more seniors than today. By 2050, the number of seniors aged 85 years and older, the age group most likely to require long-term care, will increase to 4.34 percent of the population, to an estimated 14 million (see Table 1.1). Table 1.1 Percent Distribution of the Projected Population by Selected Age Groups and Sex for the United States: 2010 to and older and older 65 and older Source: U.S. Census Bureau, National Population Projections Released 2008, based on 2000 Census. Increases in Life Expectancies Besides their numbers, the extended life spans of the baby boom generation will have an impact on long-term care. Life expectancy has grown over the last decades, increasing more than 9.1 years since 1960 when male life expectancy at birth was 66.6 years to 75.7 and female life expectancy from 73.1 to 80.6 in With aging individuals who reach 65 today, many baby boomers can expect to survive well into their eighties (see Table 1.2). The increasing proportion of baby boomers that will live to age 85 and beyond will be most likely to need long-term care services. 14

15 Table 1.2 Life Expectancy Figures Age Average Men Women Source: National Vital Statistics Report: Vol. 60, No. 4, January 11, Don t think that the only people needing long-term care services are the elderly. Statistics show a very different picture. Forty percent of those receiving long-term care are working age adults, ages They may be receiving long-term care for any one of several reasons. The most common are accidents, strokes, AIDS, and multiple sclerosis. Since only ten percent of nursing home patients are under age 65, it is safe to assume that these younger people receive most of their care at home. Future Costs of Long-Term Care According to Congressional Budget Office (CBO), as a result of these trends, total longterm care expenditures will more than double over the next 35 years, from $200 billion today to nearly $540 billion (after adjustments for inflation) in 2040 (see Table 1.3). To put this in context, this is greater than the current Social Security budget today. Table 1.3 Growth in Long-Term Care Expenditures (Billions) $600 $500 $400 $352 $467 $540 $300 $200 $200 $265 $100 $ Source: Congressional Budget Office 15

16 Chapter 1 Review Questions 1. Cooking, cleaning and doing laundry are examples of: ( ) A. Skilled care ( ) B. Instrumental Activities of Daily Living (IADL) ( ) C. Chronic care ( ) D. Activities of Daily Living (ADL) 2. What do most physicians and other health care practitioners use to determine whether a person is capable of living independently? ( ) A. IADL ( ) B. Family net worth ( ) C. Family history ( ) D. ADL 3. All of the following are measurements of instrumental activities of daily living (ADL), EXCEPT? ( ) A. Managing medications ( ) B. Light housekeeping ( ) C. Bathing ( ) D. Preparing meals 4. What level of care requires medical personnel be provided around the clock and prescribed by a physician? ( ) A. Skilled care ( ) B. Custodial care ( ) C. Personal care ( ) D. Community care 5. Which of the following statements about personal care is FALSE? ( ) A. Personal care is also known as custodial care ( ) B. Personal care is more involved than skilled care ( ) C. Personal care may be given in many settings ( ) D. Personal care helps people who require only help with ADLs 16

17 CHAPTER 2 LTC SERVICES AND FACILITIES Overview Generally long-term care services may be categorized as formal care (which is provided by medical professionals or people with other skilled training, often in nursing homes or other facilities) or informal care (which includes non-medical services, such as assistance with bathing and cooking, that may be provided by people without special training). Within these general categories, there is a broad continuum of possible services. At the top end, we might find a need for acute care by medical professionals in an institutional setting. The next range of services, we might find a need for personal assistance and some medical care that may be rendered by nurses, therapists or aides in an institutional or noninstitutional setting. At the lowest level of care needed, we might find a need only for custodial care, which means assistance with daily activities and can be provided under more than one category. For example, personal care may be provided in a nursing facility, at home, or at a community based program. This chapter will discuss the various types of long-term care services and providers (facilities), analyze the costs for these services and facilities, and then review the various resources available to help individuals deal with long-term care issues. Long-Term Care Services As an insurance producer/agent, you need to understand the definitions of various levels of care to evaluate what benefits are available and to determine whether an individual has any unmet needs. The three levels of care are: Skilled nursing care Intermediate care Custodial care Skilled Nursing Care Skilled nursing care is daily nursing and rehabilitative care that is performed only by, or under the supervision of, skilled medical professionals or technical personnel. This care is available 24/7 and involves a medical treatment plan. Skilled nursing care is based on a physician s plan of care and performed directly by or under the supervision of a registered nurse. This type of care is provided when a patient s condition is stable and acute medical care is not needed, but the patient does need a high level of nursing care. Care may be required for a short period or for an extended period of time depending on 17

18 the time frame until the patient can make a transition to a lower level of care. Skilled nursing facilities are licensed by the state in which they operate. It can be paid for by Medicare and private insurance. Intermediate Care Intermediate care is medically supervised health care for person s who do not require the level of care and supervision provided in a hospital setting or skilled nursing home, but who require daily medical care of some kind and other assistance. Generally, 24/7 nursing supervision is not required, but some medical care is provided under the direction of medical personnel. This care is also prescribed by a physician and supervised by registered nurses, but the care provided is less specialized than skilled care and may actually be rendered by licensed practical nurses or physical therapists. Intermediate care can also be paid for by Medicare and private insurance. Custodial Care Custodial care is primarily rendered to meet personal needs, such as help with the activities of daily living or the instrumental activities of daily living. Custodial care is also known as personal care, and it is one of the lowest levels of care because it does not involve any medical services. This type of care may be administered by licensed practical nurses, but it may also be given by non-medical personal, such as volunteer workers, therapists, and in some cases other family members. This is perhaps the most common type of long-term care and it is provided in a variety of settings, ranging from nursing homes to convalescent homes to the person s own home. Note: Custodial care is not covered by Medicare. Long-Term Care Facilities Many people think that long-term care is synonymous to nursing home care. Years ago, that may have been true, but today s long-term care services and care providers are diverse and not all offered in the same setting. The long-term care continuum in many states is comprised of several layers of care. Starting with the individual needing assistance in the home, to institutionalized patients requiring 24/7 skilled nursing care. The system is classified into three general categories: Community-based care Institutional Care services, and Informal Network consisting of friends and family caregivers. 18

19 Community- Based Care The main advantages of community-based care are as follows: Cost-effectiveness: Community-based care is a more cost-effective approach to care because the emphasis is not on providing resources from outside, but rather identifying the existing resources in a community and building on those. Community participation: There is an extremely high degree of community participation in community-based care programs because the onus is on communities to care for their own. Extended families will frequently take sole responsibility for many family members, using their own resources to provide accommodations, food, clothing, education and nurture. Neighbors and local organizations such as churches often make a tangible contribution by helping out struggling families with child minding, advice and other contributions. Connectedness: Community-based care allows family members to stay within the network of people that have loved and nurtured them throughout their lives. Home Health Care Home health care is a community-based service, but it is for skilled nursing in a person s home. It can include part-time, intermittent skilled nursing services, home health aide services, physical therapy, occupational therapy, speech therapy, audiology services and even medical social services by a social worker. In recent years, home health care has become a popular alternative to care in a nursing home. This type of care allows a person to live at home and still receive part-time medical services or other professionally prescribed treatment by a physician or a licensed person. Services can include skilled nursing, part-time and intermittent skilled nursing services, home health aide services and so forth. These services are provided by a home health agency and can be paid for by the patient, by Medicare, or private insurance (see Figure 2.1). According to the National Association for Home Care and Hospice ( it estimates that approximately 12 million individuals currently receive care from 33,000 providers because of acute illness, long-tern health conditions, permanent disability, or terminal illness. In 2012, the Centers for Medicare and Medicaid estimated that annual expenditures for home health care were projected to be $80.2 billion. 19

20 Figure 2.1 Source of Payment for Home Health, 2010 Other, 1% Out of Pocket, 7% Private Insurance, 6% Medicare, 45% State/Local Gov't, 4% Medicaid, 37% Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Care Expenditures, March 2012 Adult Day Care Providers Adult day care centers (ADCCs) provide therapeutic programs of social and health services as well as activities in a protective setting. Participants may utilize a variety of services offered during any part of a day, but less than a 24-hour period. Adult day care centers generally operate programs during normal business hours five days a week. However, there may be some adult day care centers that offer services in the evenings and on weekends. Adult day health care (ADHC) is a more structured setting that may provide medical monitoring, occupational and physical therapy, counseling and support groups for families, etc. Adult day care centers are often the only way an employee-caregiver can work while continuing to care for a parent or older relative. For many older people and their families, adult day care is the key to meeting a loved one s increasing need for supervision and care. For families who are struggling to balance work, life, and care giving demands, adult day care may provide a solution. Residential Care Facilities/Assisted Living Facilities A residential care facility/assisted living facility are a variation of a retirement community for elderly citizens, people age 60 and older. The facilities may be part of a retirement community or nursing home, or they may stand alone. They may offer single or double rooms, or some have suites or apartments, depending on what the person s needs are and how much one can afford. The levels of care provided in addition to housing is for personal care only (such as providing meals, housekeeping, and other personal services) and do not provide any medical or nursing care. Some offer low levels 20

21 of medical care in addition to personal care. Generally, residential care facilities do not offer the same level of health care that is available in a nursing home. Many facilities now offer specialized Alzheimer s care, with entire facilities devoted to the care of people with dementia, or wings with special activities and programming. In several states, facilities describing themselves as assisted living and offering personal care and supervision are licensed as residential care facilities for the elderly. To be covered by long-term care insurance a facility must be licensed. Residential care facilities for the elderly are dominated by smaller (i.e. 6 to 15 beds), locally owned facilities with shared rooms. On the other hand Assisted Living is used to describe a philosophy of care (i.e. freedom to choose among service plans and aging in place ) and as a marketing slogan. Assisted living facilities usually offer private apartments in larger, corporately owned facilities (i.e. 75 to beds) with different fee options depending on the level of care needed. To locate a residential care facility or to investigate a facility s annual survey report and any citations you can contact the local District Office of Community Care Licensing. Some Ombudsman Programs also have listings, offer pre-placement services, and provide access to licensing reports. Continuing Care Retirement Communities Continuing care retirement communities (CCRCs), also known as life care facilities are residential care facilities that provide many different services and levels of care skilled nursing, assisted living, and/or independent living all in one location. Usually, these facilities provide housing, recreational activities, and personal and medical care according to a person s needs. One of the advantages of this type of facility is that a person can enter the community initially not requiring any special care, but care will be provided if the person s health declines. The level of care can be increased if needs change. These fees vary by community, depending on the type of housing and services it provides. Some other CCRCs may operate on a rental basis, in which an individual makes a monthly payment, but would not have to pay an admission fee. Institutional Care Institutional care provides 24- hour care to individuals with disabilities or the elderly with significant levels of impairment. Residents receive room and board, supervision, nursing services, transportation, recreational and social services. Necessary medical services not included in the daily rate are arranged for as needed. 21

22 Nursing Home The most common type of facility that provides long-term care services is the nursing home. Nursing homes provide nursing care, personal care, and custodial care to people who are ill or physically infirm. They serve residents with ADL and IADL limitations, as well as those with cognitive impairments. Size and Resident Population According to data from the Henry Kaiser Family Foundation s statehealthfacts.org website, in 2011 the national number of certified nursing facilities and certified nursing facility beds totaled 15,465 and 1,646,302 respectively. This results in a nursing facility occupancy rate of 83 percent. Nursing Home Population Characteristics According to a study by MetLife Mature Market Institute, The MetLife Market Survey of Nursing Home & Assisted Living Costs, October 2012, reports that with the availability of alternative long-term care settings such as assisted living and increasing home care options, residents in nursing homes tend to be older and frailer. Here are some other key findings of current nursing home residents: According to the U.S. Census Bureau, in % of residents were women 16% of all residents were under the age of 65 The median age of residents was 82.6 years 86% of all nursing homes are freestanding facilities, and 11% have an associated assisted living unit or wing. 56% of nursing homes surveyed provide Alzheimer s or dementia care. Over 30% of the current nursing home residents have been there for at least one year (see Table 2.2). Less than 3 months Table 2.2 Average Length of Stay, Nursing Home Residents 3-6 months 6 months to less than 12 months 1 year to less than 3 years 3 years to less than 5 years 5 years or more Source: The National Nursing Home Survey: Nursing Home Current Residents, June 2008 Avg. length of time since admission (in days) 20.0 % 9.8 % 14.3 % 30.3 % 13.6 % 12.0%

23 Informal Network of Care Most of those receiving long-term care and most caregivers prefer a home environment. Out of an estimated 11 million Americans receiving care, about 8 million or 75% are in their own home or home of a family member or friend. Older Americans prefer their home over the unfamiliar proposition of living in a care facility. Family or friends attempt to accommodate the wishes of loved ones even though care giving needs might warrant a different environment. Home Care Often the decision to stay in the home is dictated by funds available. It is much cheaper for a wife to care for her husband at home than to pay out $2,000 to $4,000 a month for care in a facility. Likewise, it s much less costly and more loving for a daughter to have her widowed mother move into the daughter s home than to liquidate mom s assets and put her in a nursing home. Besides, taking care of our parents or spouses is an obligation most of us feel very strongly about. Those needing care feel comfortable and secure in familiar surroundings and a home is usually the best setting for that support. But despite the psychological advantage, a home may not always be the best place for those receiving care or for the caregiver. Caregivers face many challenges providing care at home. A wife caring for her husband may risk injury trying to move him or help him bathe or use the toilet. Another situation may be the challenge of keeping constant surveillance on a spouse with advanced dementia. Or a son may live 500 miles from his disabled parents and find himself constantly traveling to and from the home, trying to manage a job and his own family as well as taking care of the parents. Homemaker Personal Care This type of service allows a patient to remain at home while receiving assistance with the activities of daily living and/or instrumental activities of daily living under a plan of care prescribed by a physician. This care can be rendered by a licensed nurse, or a nonmedical person who is paid either by the patient, or with certain qualifications, by Medicare. Some insurance plans may also cover this type of care. Other Long-Term Care Services Respite Care This type of care is provided to family members or others who are taking care of a patient. It also applies to anyone providing full time care for an individual with Alzheimer s and/or a mental impairment. Respite care is normally associated with hospice care and this level of care allows the caregiver to admit the patient to a nursing 23

24 home or hospice for care and thus relieve the caregiver of the responsibility of taking care of that patient temporarily. Hospice Care Hospice care is for patients with a terminal illness and it includes counseling for the patient and the family. Hospice care can be offered in a hospice setting, a nursing facility or in the patient s home whereby nurses and social workers can visit the patient on a regular basis. The purpose of care is to keep the patient comfortable and to enable the patient to die with dignity. The benefit period consists of two-90 day periods followed by an unlimited number of 60-day periods. The medical director or physician member of the hospice interdisciplinary team must re-certify that the beneficiary is terminally ill at the beginning of the 60-day periods. Licensing Requirements Most types of LTC facilities are required to be licensed by the state. In most states, the following long-term care providers must be state licensed: Skilled nursing facilities Intermediate care nursing facilities Custodial Care nursing facilities Congregate living health facilities Hospices Residential care facilities Residential care facilities for the elderly Respite care facilities Home care agencies The program that inspects and licenses nursing facilities is usually located within the state Licensure and Certification Division. Sometimes it is located within an umbrella agency relating to human services, health, or human resources. The Licensure and Certification program is responsible for an onsite inspection of all nursing facilities every 9-15 months to find out if they meet both the state licensure standards and the federal standards for Medicare and Medicaid. This inspection is called a "survey." Nursing home surveys are supposed to be unannounced and the homes are required to post the most recent survey report. The Centers for Medicare and Medicaid Services (CMS) is the federal agency that oversees nursing homes. Their website ( contains information on every Medicare and Medicaid certified nursing home in the country, including the latest state reported survey results. CMS Licensure and Certification is also responsible for complaint investigations and has the authority to sanction facilities (impose fines, limit admissions, etc.) that do not meet state and federal standards. 24

25 Costs for Long-Term Care Services Long-term care costs can be quite expensive. The cost depends on the amount and type of care needed and where the care is given. Below are the median rates for care provided in nursing homes, assisted living facilities, adult day health care facilities, and at home according to the Genworth 2014 Cost of Care Survey. See the Genworth 2014 Cost of Care Survey Vermont for state specific costs in your area. Nursing Home Care Private Room The national median daily rate for a private room (single occupant) in a nursing home is $240 for 2014, an increase of 4.35 percent over the Genworth 2013 Cost of Care survey rate. Over five years, the cost has increased by a 4.19 percent annual growth rate from 2009 to Semi-Private Room The national median daily rate for a semi-private room (double occupancy) in a nursing home is $212 for 2014, an increase of 2.62 percent over the 2013 rate. Over five years, the cost has increased by a 3.91 percent annual growth rate from 2009 to The 2014 median daily nursing home rates for private and semi-private rooms in Vermont are $303 and $277 respectively. Home Health Care Home Health Aide Services The National median hourly rate charged by a licensed home care agency for home health aide services is $20 for 2014, reflecting a 1.59 percent increase over Viewed historically over five years, the cost has increased by a 1.32 percent annual growth rate from 2009 to Homemaker Services The national median hourly rate charged for homemaker services is $19 for 2014, an increase of 4.11 percent over the 2013 rate. Over five years, the cost has increased by a 1.20 percent annual growth rate from 2009 to The 2014 median hourly rate range charged by home health aide and homemaker services in Vermont is $24 and $23 respectively. 25

26 Assisted Living Facility The national median monthly rate for a private (one-bedroom unit) assisted living facility is $3,500 for 2014, an increase of 1.45% percent over the 2013 rate. Over five years, the cost has increased by a 4.29 percent annual growth rate from 2009 to The 2014 median monthly assisted living cost in Vermont is $4,075. Adult Day Health Care The national median daily rate for adult day health care facilities is $65 for 2014, same rate as Over five years, the cost has increased 3.40 percent from 2009 to The 2014 median daily rate for adult day health care in Vermont is $135. Long-Term Care Costs Now and In the Future Think about this! If we were to take the 2014 national median annual private room nursing home costs $87,600, and take into consideration the cost of that same room in the year 2030 (inflation adjusted), the annual costs would be $162,142 (see Table 2.3). Individuals would have to have over $162,000 in savings by 2030 to pay for just one year in a nursing home and nearly $51,000 for home health care. Given that the average stay in a nursing home is 2.5 years, future retirees will have to have over $405,000 saved above and beyond their other retirement savings just to pay for a nursing home stay. How many of your clients can afford this out of their retirement savings? Table 2.3 Annual Long-Term Care Costs: Now and In The Future Inflation Adjusted Nursing Home Costs $ 87,600 $ 162,142 Home Health Aide $ 41,600 $ 50,643 Source: 2014 Nursing home and home health care costs are based on Genworth 2014 Cost of Care Survey. Inflation adjusted projections are based on Genworth year annual historical growth rate of 4.19% for Nursing Home Costs and 1.32% for Home Health Aide. 26

27 National Long Term Care Ombudsman Resource Center The Long Term Care Ombudsman Program is authorized by the federal Older Americans Act. This act requires every state, through the Office on Aging, to create a statewide ombudsman program to "investigate and resolve complaints made by or on behalf of older individuals who are residents of long term care facilities" (including nursing homes, assisted living and board and care facilities). The statewide program is usually composed of several regional or local ombudsman programs that operate within an Area Agency on Aging or other community organization. While ombudsmen do not have direct authority to require action by a facility, they have the responsibility to negotiate on a resident's behalf and to work with other state agencies for effective enforcement. Most state ombudsman programs publish annual reports about the problems and concerns they address. In addition to their advocacy work, ombudsmen can also serve as a valuable resource for residents, families and community members. Although programs vary in the scope of their activities and in funding resources to support their work, they can offer important services. An ombudsman may be able to: Share information about community groups and activities available to improve life and care for nursing home residents; Provide education on residents' rights; Offer advice about how to select a nursing home and answer questions about long term care facilities; Help people find the services they need in the community instead of entering a nursing home; Explain how nursing homes are inspected; Provide information on and assistance with family and resident councils; Direct residents to a local legal services program if they need legal assistance; and Provide information about current legislative and regulatory efforts in the state. Many ombudsman programs have limited staff resources. For this reason, most local programs seek volunteers who can be trained to help visit residents, act as advocates, and monitor general facility conditions. It is important to learn about, understand, and support local and state ombudsman programs so they can maintain an effective advocacy program for residents and their representatives. Contacting an Ombudsman Each licensed long-term care facility is required to display a poster with the facility's assigned Ombudsman's name and contact information. To find the LTC Ombudsman nearest you, contact your State Ombudsman office or visit their website at 27

28 Other Resources The state Medicaid Fraud Control Unit (MFCU) is authorized by the federal Social Security Act to investigate fraud and abuse by providers (nursing facilities and others) who receive payments from Medicare and Medicaid. Most units are located within the Office of the State Attorney General. They have broad investigative powers and can bring criminal and civil cases against providers. Federal law mandates licensing of nursing home administrators. A state Board of Examiners for Nursing Home Administrators oversees this requirement. The board provides a test to potential administrators and maintains their licenses. The board also receives complaints about administrators. States establish boards to set standards for other health care personnel including registered nurses, licensed practical nurses, physical therapists, certified nursing assistants, social workers, physicians, dentists, and optometrists. Check with your board to see if they handle direct complaints from consumers. The state Medicaid Agency establishes the state Medicaid benefit and eligibility requirements as well as the reimbursement rates the state pays nursing home facilities for their services. The annual cost reports they receive from facilities are available to the public upon request. The Quality Improvement Organization (QIO) formerly known as a Peer Review Organization (PRO) is a physician-directed organization operating in every State, the District of Columbia, and the territories. QIOs share information about best practices with physicians, hospitals, and nursing homes. Working together with health care providers, QIOs identify opportunities and provide assistance for improvement. By law, the governing body of every QIO must include at least one consumer representative. QIOs are paid by the Medicare program to: Conduct health care quality improvement projects, chiefly in hospitals but increasingly in long term care facilities, Resolve appeals by Medicare enrollees who believe they are about to be discharged too early from a hospital stay, Investigate complaints by Medicare enrollees regarding the quality of care that they receive, and Reduce Medicare hospital payment errors -- overpayments, underpayments, and unnecessary admissions. The Protection and Advocacy System (P&A) is a federally funded, state designated organization which provides protection and advocacy for the mentally ill and disabled. The P&A System staff are legally mandated (with probable cause) to enter a nursing facility and take action to protect a resident in danger. The Adult Protective Service Agency (APS) provides protective and supportive services for aged, disabled, or incapacitated adults who are abused, neglected, or exploited. In 28

29 some states APS staffs are responsible for investigating complaints from individuals about abuse, neglect or exploitation in licensed/unlicensed long term care facilities. A Citizen Advocacy Group (CAG) is a local or statewide organization formed to work for nursing home reform in order to help assure that residents in long term care facilities receive quality care according to publicly adopted state and federal standards (regulations). Many people who organize and join CAGs have had direct experience as family members of nursing home residents. Often, they directly question and challenge owners and providers of care and officials in the government regulatory program that are responsible to help protect residents. The Eldercare Locator is a nationwide, directory assistance service designed to help older persons and caregivers locate local support resources for aging Americans. Anyone can call the toll-free number, , Monday through Friday, 9 a.m. to 11 p.m., Eastern Time. 29

30 Chapter 2 Review Questions 1. What agency provides protective and supportive services for adults who are abused, neglected or exploited? ( ) A. Eldercare Locator ( ) B. Adult Protective Service Agency ( ) C. Protection and Advocacy System ( ) D. Citizen Advocacy Group 2. What level of long-term care service may be provided by people without any specialized training? ( ) A. Informal care ( ) B. Formal care ( ) C. Skilled care ( ) D. Institutional care 3. What is the most common type of long-term care service? ( ) A. Adult Day care ( ) B. Nursing home care ( ) C. Community based care ( ) D. Custodial care 4. Care provided to patients with terminal illness is known as: ( ) A. Hospice Care ( ) B. Home Health Care ( ) C. Respite Care ( ) D. Adult Day Care 5. Which Act enacted by Congress authorized the State Long-term Care Ombudsman Program? ( ) A. Older Americans Act ( ) B. Pension Protection Act ( ) C. Deficit Reduction Act ( ) D. Health Insurance Privacy Protection Act (HIPPA) 30