Who Pays for Long-Term Care?
Within the next couple of years, every state will have sent out the “Own Your Future” educational campaign to residents between 45-64 years old. The purpose of the campaign is to educate Americans about their options in planning for Long-Term Care. The key purpose of this campaign was to destroy the myths about who pays for long-term care.
Long-Term Care services are paid by one of the following:
Medicare and Medicare Supplements
“While there are a variety of ways to pay for Long-Term Care, it is important to think ahead about how you will fund the care you get. Generally, Medicare doesn’t pay for Long-Term Care. Medicare pays only for medically necessary Skilled Nursing Facility or Home Health Care. However, you must meet certain conditions for Medicare to pay for these types of care.” 
Many American’s, especially those 65 and older, think that Medicare will pay for their Long-Term Care expenses. Medicare does pay for some care but not very much. Medicare and Medicare supplements will not pay for intermediate or custodial care—the care most people need long-term. It will pay for up to 100 days of skilled care in a Nursing Home. It’s designed to cover rehabilitative care after an acute situation—not for anything long-term.
View GC Medicare Brochure 2020 for a more descriptive chart on what Medicare covers.
Medicaid is a jointly funded federal and state program designed to provide long-term health insurance coverage to low-income elderly, blind and disabled, including nursing home care for those who qualify financially. Medicaid is often viewed as a form of welfare because in order to be eligible to receive Medicaid benefits, you must be considered impoverished under the guidelines of the program.
Most states require a person to spend down all of their nonexempt assets* until they have $2,000 left to qualify for Medicaid benefits. Unfortunately, many middle-class American families will unnecessarily impoverish themselves for no better reason than the lack of knowing or understanding the Medicaid eligibility guidelines.
Medicaid is by far the largest payer of Long-Term Care costs in the US today. Most people find out quickly when they need care that the government is not going to pay their way until they have spent most of their assets. There are many issues that people should be concerned about when thinking about impoverishing themselves, including:
- Medicaid may pay the bill for nursing home care, but you may not get to live where you want; nursing homes are not required to accept new patients who are on Medicaid
- Medicaid often uses nursing home care as the only choice; community based services such as, assisted living, home health care or adult day care are not a typical option for those relying on Medicaid
- Medicaid patients do not get private rooms and if they are unhappy with the facility, they may have limited ability to change situations
- There are consequences for the spouse; your spouse may be left with little income to maintain his or her lifestyle
In the current economic situation, Medicaid has become a serious budget problem for states. It is the largest budget item today in most states following public education. In 2011, 46 states passed legislation tightening up Medicaid law. There are now LTC and Life insurance policies that can protect Americans from a “Medicaid spend-down”.
*Exempt assets may include: the home if a spouse is living there, trusts set up for disabled minor children, a burial fund, one vehicle, household belongings and other assets listed by Medicaid in your state. Call your local county social services worker to request state specific information.
According to the Centers for Medicare & Medicaid Services, The Department of Veteran Affairs (VA) may provide Long-Term Care for service-related disabilities or for certain eligible veterans. Some veterans may be able to get some help paying for Long-Term Care needs, but you must be a qualifying veteran and are required to receive care in VA facilities. There may be a waiting list for VA nursing homes depending on where you are located.
You may have resources you could use. But would they be enough? If you do use them – dollars that are so vital to your income and security – it could be extremely difficult to replace them. And once you have spent them, those dollars will not be available for your later years or to leave behind to your family.
Long-Term Care Insurance
Long-Term Care Insurance covers care that is not covered by health insurance, Medicare or Medicaid. Long-Term Care Insurance helps pay for the care you need when you can no longer care for yourself. It protects your family’s financial future and your investments and savings.
We believe that for most people the sensible solution would be to transfer the risk to an insurance company. That way you and the insurance company would share the risk. And that’s a reasonable solution because it’s much easier to pay a few hundred dollars each year in premiums for a good LTC policy than pay huge sums of money out over what could be a long period of time.