Seniors have limited options in regard to paying for long-term care.
When organizing long-term care, individuals and families must navigate the benefits and requirements of numerous programs, support systems and products, such as:
1. The Role of Medicare
Medicare is an unfulfilled promise for many Americans with chronic illnesses. Under this program, eligibility is determined by the type of illness one has. In general, if one has an acute illness like heart disease or cancer, Medicare provides comprehensive care. Medicare provides very limited coverage in a nursing home setting (up to 100 days), and it does not cover long-term care at home unless the senior needs skilled care and then the services covered are highly restricted in scope and duration. Private health insurance programs generally do not cover services beyond short-term rehabilitation care.
2. The Role of Medicaid
Medicaid provides coverage for chronic illnesses. However, unlike Medicare, Medicaid is a program with income and asset limitations requiring virtual impoverishment to qualify for benefits, which generally provide for basic care services. Eligibility is complex and, because it is a joint federal-state program, varies from state-to-state. When people do become eligible for Medicaid, regardless of whether they have engaged in long-term care planning, they are required to pay all but a small portion of their income each month for their care. Medicaid then pays whatever the difference is between that amount and the Medicaid rate. Thus, costs to Medicaid are always mitigated by the Medicaid recipient’s monthly income.
3. The Role of Long-Term Services and Support
The role of the aging network and the services and supports funded by the Older Americans Act and state governments can be critical in helping to keep older adults with multiple chronic illnesses in their homes longer. For individuals with means, these programs are out of reach since they are designed to target those with the greatest economic and social needs.
4. The Role of Private Long-Term Care Insurance
Long-Term Care Insurance (“LTCI”) products provide one planning option for some seniors, and Elder Law attorneys discuss this option with clients as part of a comprehensive evaluation of long-term care options. However, the long-term care insurance sector offers products that address only a small portion of long-term care needs, typically paying for less than 12 percent of all long-term care expenses. At present, the potential to meet financing needs has been limited by the proportion of the population with sufficient lifetime earnings and asset accumulation to afford such insurance. LTCI, like life insurance, is most affordable when purchased well before retirement age is reached or the need is immediate. Thus, LTCI products are beyond the reach of most retirees. In addition, unlike Medicare and Medicaid, individuals applying for LTCI usually must undergo a health underwriting screen.
5. The Role of Private Pay
This is what many seniors and their families do: privately pay. By privately paying, they can better control the quality of care and the choices available in selecting the type of care. The problem here is simple and widespread: Most seniors do not have financial means to pay for necessary care and daily living expenses for an extended period of time.
Source: NAELA, “Our Nation’s Long-Term Care Crisis and Medicaid: The Need for Systematic Change.”