INSURANCE

In October of 2014, Sapphire Pacific successfully admitted our first insurance-pay resident (i.e. insurance paid the rent). Since that date, all Sapphire Pacific Residential Care Facilities have pursued and contracted with several different insurance entities with the aim of having these insurance entities cover some or all of the cost of rent for their insured members receiving care at Sapphire Pacific. While Sapphire Pacific will always welcome private-pay residents, we understand that the cost of this type of care is expensive, and the risk of residents outliving their retirement funds (i.e. running out of money) is a very real problem. As a result, Sapphire Pacific will continue to seek out opportunities where insurance will help cover the cost of rent, as we anticipate this marketplace may gradually transition from a predominantly private-pay model to a more cost-effective insurance-pay model.

Here is a brief outline of the 5 most prevalent insurance entities we’ve worked with since 2014. Since we are not in the business of marketing insurance (just dealing with insurance is more than enough), we will not present every minor detail and exception associated with these insurance entities. If you have more specific questions or if you are interested in obtaining more information about Sapphire Pacific’s Residential Care Facilities, we encourage you to contact us directly.

(1) Long Term Care Insurance (LTC Insurance)

  • Definition: Long Term Care Insurance refers to insurance that pays for any costs associated with long term care. Since the type of care provided at a Residential Care Facility is considered long term care, Long Term Care Insurance can cover the cost of rent in a Residential Care Facility when certain conditions and requirements are met.
  • Qualification: Long Term Care Insurance Policies are most commonly acquired as either a benefit from a life insurance policy, or as a benefit from a retirement plan. Long Term Care Insurance can also be purchased privately, but the premiums can be rather expensive.
  • Rates: Long Term Care Policies will contain a section discussing rates and caps on payouts. This section is extremely important as these rates and caps will not only apply to potential rent payments to a Residential Care Facility, but they will vary greatly from one Long Term Care Policy to another and possibly even adjust over time. Here are some important terms and limitations to look for in this particular section of a Long Term Care Policy:
    • Daily Cap or Daily Rate: The maximum amount the Long Term Care Policy will pay per day. This amount cannot be exceeded.
    • Monthly Cap or Monthly Rate: The maximum amount the Long Term Care Policy will pay per month. This amount cannot be exceeded.
    • Annual Cap or Annual Rate: The maximum amount the Long Term Care Policy will pay per year. This amount cannot be exceeded.
    • Lifetime Cap: The maximum amount the Long Term Care Policy will pay over the life of the policy. This amount cannot be exceeded.
  • Cost Of Living Increase: A Long Term Care Policy can increase the daily, monthly, or annual payment by a certain amount over time. These increases typically occur at the beginning of the year or on the anniversary date of the policy. Even though cost of living increases are somewhat rare in Long Term Care Policies, they can become a critical feature in the long run.
  • Payments: Long Term Care Insurance can either pay a Residential Care Facility directly, or Long Term Care Insurance can reimburse the resident (i.e beneficiary) directly. In our experience, Long Term Care Insurance does not appear to have any preference one way or the other.
  • Other Benefits: Long Term Care Insurance Policies will vary as to which additional benefits may be covered. The 2 most common benefits Long Term Care Insurance Policies can provide that are of use in Residential Care Facilities are:
    • DME (Durable Medical Equipment) such as wheelchairs, walkers, hospital beds, etc.
    • Incontinence Supplies.
  • Requirements: All Long Term Care Insurance Policies will have a set of requirements that both the resident (beneficiary) and the Residential Care Facility must meet. These requirements (i.e staffing requirements, license requirements, inspections, building guidelines, etc) vary greatly from policy to policy. If either the Residential Care Facility or the resident (beneficiary) is not able or not willing to meet the requirements of the Long Term Care Insurance Policy, then the policy will not cover the rent.
  • Contract: The majority of Long Term Care Insurance Policies do not appear to require the resident (beneficiary) or the Residential Care Facility sign a separate contract or agreement. Instead, Long Term Care Insurance Policies ask both the resident (beneficiary) and the Residential Care Facility to provide several documents validating the resident’s level of care, and illustrating how specific requirements of the policy will be met in order for the Long Term Care Insurance Policy to approve making payments towards the rent.

(2) Medi-Cal (California’s version of Medicaid)

  • Definition: Medi-Cal Insurance is the state of California’s public health insurance program to insure low-income individuals of any age. Medi-Cal has several subprograms that can cover the cost of rent in a Residential Care Facility. However, not all Medi-Cal members will automatically qualify for the various subprograms that can cover the cost of rent in a Residential Care Facility. For example, a popular Medi-Cal subprogram is the ALW (Assisted Living Waiver) Program. Being approved for Medi-Cal does not automatically guarantee a member will be approved for ALW (Assisted Living Waiver) Program.
  • Qualification: Medi-Cal Insurance can be obtained by submitting an application to the state of California. Approval for Medi-Cal Insurance is based solely on income. After a Medi-Cal applicant is approved for Medi-Cal, then a second application will be required to be approved for one of the subprograms that can cover the cost of rent in a Residential Care Facility. For example, if we consider the popular ALW (Assisted Living Waiver) Program, after an applicant is approved for Medi-Cal, the applicant would submit a separate application to apply for the ALW (Assisted Living Waiver) Program. Please note that being approved for Medi-Cal does not automatically guarantee a Medi-Cal member will be approved for the ALW (Assisted Living Waiver) Program or any other Medi-Cal subprogram.
  • Rates: All Medi-Cal subprograms have a contracted rate. This rate can be an hourly rate, a daily rate, or a combination of both. These rates are based on level of care and/or diagnosis.
  • Payments: Medi-Cal will typically pay the Residential Care Facility directly. There are subprograms that can reimburse a Medi-Cal Member’s family or payee. However, a presentation of those subprograms is beyond the scope of this discussion.
  • Other Benefits: Medi-Cal Insurance will provide a wide range of important benefits that are of use in a Residential Care Facility. The 4 most important benefits Medi-Cal will provide that are of use in Residential Care Facilities are:
    • DME (Durable Medical Equipment) such as wheelchairs, walkers, hospital beds, etc.
    • Incontinence Supplies.
    • A wide range of Prescription Medications, over the counter medications (i.e. Tylenol, Imodium, etc), and vitamins / supplements.
    • Hospice Services.
  • Requirements: Medi-Cal tends to have the strictest set of requirements of all the insurance entities. Here are the 4 most important requirements:
    • The Residential Care Facility must be a Medi-Cal provider in order for a Medi-Cal subprogram to cover the cost of rent. There are no exceptions to this.
    • The Medi-Cal Member must keep their Medi-Cal insurance policy active. Medi-Cal will stop payments if the Medi-Cal insurance lapses or becomes inactive.
  • Annual Inspections: The Residential Care Facility will be subject to both state inspections as well as federal inspections (as Medi-Cal is funded by both the state and federal governments).
  • Wellness Visits: Both the Medi-Cal member and the Residential Care Facility will receive and participate in frequent “wellness visits” from a team of social workers and nurses who are contracted with Medi-Cal. These visits can occur as often as every month and will help Medi-Cal track the progress and well-being of Medi-Cal members.
  • Contract: The Medi-Cal member will sign several agreements and waivers throughout the application process until an approval date is issued. The approval date marks the first day Medi-Cal will begin making payments towards the rent. The Residential Care Facility typically does not play any role in this process.

(3) Medicare (Straight Medicare or Original Medicare, not HMO Medicare)

  • Definition: Straight Medicare Insurance is the federal government’s insurance program to insure individuals who are 65 or older (or individuals of any age who have a documented disability or kidney failure). Straight Medicare currently does not cover the cost of rent in a Residential Care Facility.
  • Other Benefits: Straight Medicare can be broken up into 4 parts (Part A, B, C, and D). 3 of these 4 parts (Medicare Part A, B, and D) each provide different, important benefits that are of use in a Residential Care Facility:
    • Medicare Part A: In Residential Care Facilities, Medicare Part A will cover home health services (nursing, physical therapy, occupational therapy, speech therapy) and hospice services.
    • Medicare Part B: In Residential Care Facilities, Medicare Part B will cover mobile physician visits, mobile diagnostic / lab services (i.e. blood draws, xrays, etc), and DME (durable medical equipment) such as wheel chairs, walkers, hospital beds, etc.
    • Medicare Part D: In Residential Care Facilities, Medicare Part D will cover a pre-determined group of prescription Medications, but Medicare Part D will not cover over-the-counter medications (i.e. Tylenol, Imodium, etc) or vitamins / supplements.

(4) VA Aid & Attendance

  • Definition: VA Aid & Attendance is a benefit that is added to the VA pension plan for qualified Veterans and survivors (i.e. spouse). This benefit was created to help qualified Veterans and survivors who need assistance with performing daily activities. Since Residential Care Facilities provide assistance with performing daily activities, the VA Aid & Attendance benefit can help cover the cost of rent in a Residential Care Facility when certain conditions and requirements are met.
  • Qualification: Any qualified Veteran and survivor (i.e. spouse) is eligible to apply for the VA Aid & Attendance benefit. Eligibility is ultimately determined by completing an application and demonstrating the need for assistance with performing daily activities (or assistance managing a comparable disability).
  • Rates: The amount of the VA Aid & Attendance benefit will vary and is typically based on a simple formula that considers the qualified Veteran’s rank and tenure.
  • Payments: All VA Aid & Attendance payments are made to the qualified resident. In our experience, The VA Aid & Attendance payment has never been made directly to the Residential Care Facility.
  • Other Benefits: The VA Aid & Attendance Benefit should also cover the cost of incontinence supplies.
  • Requirements: The VA Aid & Attendance Benefit does not appear to have a strict set of requirements. As long as the Residential Care Facility is licensed and deemed an appropriate setting, The VA Aid & Attendance benefit will remain active.
  • Contract: The VA does not require the qualified veteran or Residential Care Facility to sign a separate contract or agreement. Qualified veterans have been able to receive the VA Aid & Attendance benefit once the application is approved.

(5) HMO (Private Insurance HMO, Medicare HMO, Medi-Cal HMO)

  • Definition: HMOs (also referred to as Managed Care Plans or IPAs) refer to a broad range of health insurance plans that have a pre-determined network of doctors and hospitals that the insurance plan will cover. While HMOs are most commonly associated with private health insurance, Medicare and Medi-Cal both offer HMO plans as well. This discussion will broadly apply to all 3 classes of HMOs (private insurance HMOs, Medicare HMOs, and Medi-Cal HMOs). HMOs can cover the cost of rent in a Residential Care Facility on a case by case basis.
  • Qualification: The key criteria for an HMO to cover the cost of rent in a Residential Care Facility will be the insured member’s diagnosis and level of care. In our experience, no other factors have been taken into consideration when an HMO agrees to cover the cost of rent in a Residential Care Facility.
  • Rates: All rates are subject to negotiation. These rates may vary from one HMO to another, and the rates may also vary from contract to contract.
  • Payments: In our experience, every HMO will pay the Residential Care Facility directly. We have never come across an HMO that will reimburse the insured member or insured member’s family or payee.
  • Other Benefits: Any other benefit (i.e. mobile physician visits, incontinence supplies, DME, etc) must be negotiated between the HMO and Residential Care Facility. In our experience, the negotiation of these other benefits takes place exclusively between the HMO and Residential Care Facility. It has never involved the insured member. Here are the 4 most common benefits that Sapphire Pacific negotiates with HMOs when applicable:
    • DME (Durable Medical Equipment) such as wheelchairs, walkers, hospital beds, etc.
    • Incontinence Supplies .
    • Home Health Services (nursing, physical therapy, occupational therapy, speech therapy).
    • Hospice Services.
  • Requirements: All HMOs will have certain requirements that both the insured member and the Residential Care Facility must meet. These requirements vary greatly from one HMO to another. If either the insured member or the Residential Care Facility is not able or not willing to meet the requirements of the HMO, then the HMO will not cover the cost of rent.
  • Contract: This is typically the final and most important step. The contracts will vary greatly from one HMO to another. For example, some contracts may require the insured member’s signature, while others may not. However in our experience, HMO contracts always require the signature of the Residential Care Facility, as the contract outlines the requirements of both the Residential Care Facility and insured member when applicable, and defines how the HMO will make payments towards the rent.