The Health Care Financing Administration (HCFA) has announced that Medicare will increase payments to skilled nursing facilities by an estimated 2.1% for fiscal year 2002.

With next year's adjustment, HCFA is also proposing to begin the transition of "swing-bed" hospitals to the skilled nursing facilities payment system (the prospective payment system, or PPS), except for critical access hospitals, which are exempt from the PPS. Under Medicare, "swing-bed" hospitals can use their beds to furnish either acute or skilled nursing care, as needed. Currently, "swing-bed" services are paid on a reasonable cost basis, subject to limits.

It is important to note that Medicare covers a portion of up to 100 days of skilled nursing care per illness, and the system's definition of "skilled nursing care" is quite restrictive. Many people confuse this Medicare benefit with Medicaid long-term care coverage.

Medicaid covers long-term nursing home care for those who meet the resource eligibility requirements. In general, the applicant may have no more than $2,000 in "countable" assets, which does NOT include the following:

• Personal property (clothes, jewelry, furniture, etc.);
• One motor vehicle (value limits may apply);
• One principle residence;
• A limited amount of life insurance;
• Prepaid funeral expenses.

If someone you know may need to enter a nursing home in the future, begin planning immediately and talk to an attorney who specializes in Medicaid planning.