Make the best senior care decision

It depends, to put it simply. There are plenty of factors to consider, including your loved one’s preexisting financial position and the policy they choose.

Part of the trouble with funding memory care is that patients can live with dementia for many years. In that time they may need quite a bit of care. Not only is this difficult for most families to afford, but it also makes memory care something that most insurance companies would rather not cover.

When it comes to long-term care, most insurance providers will not cover custodial care costs. Custodial care generally consists of nonmedical care. This can include assistance with cooking, cleaning, and activities of daily living such as bathing and dressing. It can also include companionship or supervision to prevent wandering for those with dementia. However, insurance providers typically will cover some medical costs.

So what options are available to assist with the cost of memory care? While there are many personal factors that might affect coverage, we’ll take a look at some basic options.

Your loved one may receive an early-onset diagnosis of Alzheimer’s or another form of dementia while still gainfully employed. In that case, they may be able to utilize the employer-offered insurance while they’re still employed.

But what if the spouse of the employee has the Alzheimer’s or other dementia diagnosis? In this situation, the spouse may have their care covered as long as they’re a beneficiary of the employee’s plan.

Because these are permanent conditions, Alzheimer’s and other types of dementia qualify as disabilities. Typical health insurance may not cover much in terms of memory care, but many employers offer disability insurance.^[01]

If your loved one’s employer doesn’t offer disability insurance, it may be worthwhile to purchase an individual disability plan. Just make sure that dementia is not listed as a disqualifier on the policy.

Let our care assessment guide you

Thanks to the United States’ Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, newly unemployed people and their dependents may receive limited insurance coverage for a period of time after their employment ends. A person’s COBRA coverage will be the same as the coverage they had under the insurance with their employer.^[02]

There are a few caveats. For instance, if the employee was terminated for gross misconduct, they may be ineligible for COBRA.^[03]

The law generally only requires companies that have 20 or more employees to participate.^[03] If your loved one worked for a company smaller than this, they may not be eligible. Your loved one may also face higher premiums, as some COBRA coverage will charge them the premium that had been partially covered by their employer.

Because it’s temporary and has limited coverage, COBRA is not a long-term solution for people needing memory care coverage. However, it can hold your loved one over between employment ending and finding a more permanent coverage solution.

If your loved one isn’t employed, if they’ve already retired, or if they served in the U.S. military, public health insurance programs or VA health care may help with long-term memory care. Like private insurance programs, however, there can be caveats to the coverage offerings, so make sure you read carefully.

Medicare

It’s easy to get Medicare and Medicaid confused, but we’ll cover both.

Medicare is a federal health insurance program for individuals 65 and older or for younger individuals with disabilities. It can help your loved one receive regular income if they have a disability that keeps them from being gainfully employed. Medicare doesn’t cover long-term custodial care for Alzheimer’s disease and other types of dementia. It will, however, cover medical needs related to dementia and end-of-life (hospice) care.^[04]

Medicare can cover some nursing homes or in-home care. This is typically limited to skilled nursing or physical therapy for injury or surgery recovery, as opposed to the long-term custodial care required for memory support.

Medicaid

Medicaid is public health insurance for people with low incomes. It does provide coverage for memory care patients to receive custodial support.

The types of care that are covered can vary from state to state. In some states, Medicaid will cover some in-home care or adult day care. In others, the services must be rendered in a Medicaid-eligible care home to receive coverage. Depending on what state your loved one is in, Medicaid may have a different name. Check state resources for what it’s called in your loved one’s state.

Medicaid offers a higher level of coverage than many other types of insurance. To maintain this, Medicaid keeps a more limited eligibility — its coverage is reserved for people with much lower incomes. If your loved one falls into this category, or if they’ve exhausted their resources, Medicaid might be the right option.

VA health care

Veterans already enrolled in VA health care may qualify for programs and services related to memory care. The benefits of VA memory care resources vary, so it’s best to explore the options based on your loved one’s eligibility.

Talk with a Senior Living Advisor

Traditional employer-offered insurance and federal insurance aren’t the only programs available. There are a few more options when it comes to covering the costs of support for Alzheimer’s and other types of dementia.

Long-term care insurance

Long-term care insurance is designed to be a good option for someone with a condition such as dementia. To be eligible for benefits, a policyholder has to either receive a diagnosis of Alzheimer’s or another type of dementia or be unable to perform at least two activities of daily living.^[05]

However, long-term care insurance requires prior planning and preparing for the worst. Once your loved one has received a dementia diagnosis, they can no longer enroll in a policy — they must have applied for the policy before having a chronic condition. So if they’re still healthy and currently have no chronic conditions, now is the time to apply.

As you’re planning the budget with your loved one, remember that long-term care insurance doesn’t guarantee a fixed premium. In other words, whatever monthly fee your loved one agrees to upon enrolling in the policy may increase over time. It’s a bit of a gamble: Your loved one can experience financial hardship by paying for a policy they may never need to use, but if they don’t enroll in long-term care insurance, there may not be many options for care coverage should they need it in the future.

Long-term care insurance typically works through reimbursement. This is unlike most insurance policies, which pay a portion beyond the copay or deductible. You or your loved one will have to be prepared to cover the bill out of pocket for a while. Your loved one will be paid back retroactively by the long-term care insurance provider.

Life insurance

Did you know life insurance can often be used for care prior to the policyholder’s death?

If a policyholder is diagnosed with a terminal illness or an illness that they will suffer from until their death, they may be able to borrow funds from their life insurance policy to pay for their care. This is called accelerated benefits or living benefits.^[06] Upon the policyholder’s death, the amount they received while they were living will be deducted from the policy’s worth. The remainder will then be bestowed upon the beneficiary of the life insurance policy.

However, this may not be an option for term life insurance policies. It’s important to know the unique limitations of your or your loved one’s policy.

The options only get narrower once a dementia diagnosis has been given. It’s best to plan ahead as well as you can. If you or your loved one is still relatively young and healthy, look into your options now. Decide how your loved one can prepare to have coverage in case their situation changes.

If you or your loved one already has a diagnosis, don’t fret — there are other ways to pay for care. Remember that insurance coverage and offerings can vary from state to state, so make sure you look into what assistance your state can offer.

Have more questions about covering the costs of memory care? Speak to a Senior Living Advisor at A Place for Mom today, all at no cost to you.