Monday, February 17, 2014
At the age of 93, my mother-in-law, who lives alone, fell and broke her ankle in three places. We knew that after her hospitalization, she would need to be in a rehabilitation facility until, hopefully, she regained mobility.
But on her first full day in the hospital we received terrible news: my mother-in-law was under observation rather than admitted, and thus was considered to be an outpatient. What this meant, was that she would incur co-payments for doctors’ fees and hospital services and would have to pay for the many drugs she ordinarily takes at home that were now being provided by the hospital. Worst of all, my mother-in-law would not be eligible for Medicare coverage for her follow-up rehab care in a nursing home because Medicare patients must spend three consecutive days as admitted patients in a hospital to be eligible for such coverage. In some sense, we were lucky to find out that she was only under observation, because hospitals are under no obligation to inform patients of this consequential fact. After much begging and pleading, the hospital admitted her, much to our relief.
Recently, the Centers for Medicare and Medicaid Services issued its “two midnight rule,” which will be enforced starting in October of 2014. The rule establishes that doctors should admit patients if they expect their stays to last through two midnights, but to list those expected to stay for less time as being under observation. Many have criticized this rule as arbitrary because it will advantage individuals who arrive shortly before midnight (they are more likely to stay a second midnight) and disadvantage those who arrive shortly after midnight, but the rule, at least, provides some clarity.
Were my mother-in-law’s financial concerns over once she was admitted? Far from it. Patients who meet Medicare requirements can receive 20 days of free nursing home care per benefit period and then pay a daily co-pay for days 21-100 (up to $152 per day in 2014), after which no Medicare funds are available until the next benefit period. Those who “spend down” their assets may meet Medicaid eligibility for full nursing home benefits. But “spending down” is a fairly literal term and requires one to drain most assets other than one’s home, personal effects, and vehicle. Detailed guidelines determine Medicaid eligibility, but typically, single people must have no more than $2,000 in “countable resources” (cash, financial accounts, stocks, bonds, available assets in trust).
Would long term care insurance have been an appropriate solution for my mother-in-law? The answer is not obvious. Had she purchased a policy with a 60-day deductible at age 70, she may well have paid over $3500 in annual premiums. Before she needed any benefits, she would have paid $80,500 in premiums, an amount that is unaffordable for many. Because most policies have deductibles as well as limits on daily and lifetime expenditures, they often do not turn out to be a prudent purchase.
Like my mother-in-law, many elderly individuals worked hard during their lives to build modest savings that they fervently wish to pass on to their children as an inheritance. Yet, a fall or other forms of mental and physical frailty that require long term care can quickly become financially ruinous and shatter any hope of fulfilling this final goal.
Offering solutions to this problem is well beyond the scope of this blog posting. But our complicated and costly health care system should do better for our most frail and elderly. No one deserves to die impoverished simply because she suffered a fall.
-Guest Blogger Professor Sharona Hoffman