By the time the year is out, about 9 million Americans over age 65 will need some form of long-term care. This care could run the gamut anywhere from in-home assistance to adult day care facilities to skilled nursing facilities.
But the population is aging. By 2020, that 9 million figure will expand by 33 percent, to some 12 million elderly requiring long term care, according to the U.S. Department of Health and Human Services.
The bulk of that care – accounting for about 70 percent of that number, will come largely from family resources at any given time. But the facts are still startling: 4 out of every 10 Americans who make it as far as age 65 will enter a nursing home at some point – at a cost of as much as $85,000 per year and more, according to the Long Term Care Clearinghouse. About 1 out of 10 of those 4 will stay in that nursing home for five years or longer, again according to the Department of Health and Human Services.
Many people operate under the assumption that the government will take care of their long term care needs. This is not the case. The government, via the various state Medicaid programs, only picks up the tab for those who have spent themselves down to the poverty level. With very limited exceptions, if you have assets, you will be expected to spend them down to provide for your own care – or spend down your kids’ assets, even as they themselves struggle to provide for their own retirement.
Medicare does provide some support for nursing home care, but it is extremely limited:
First of all, Medicare is designed only to support care in a few Medicare-certified care communities, and then only for care incident to a qualifying hospitalization for at least three days. No three-day hospitalization? No Medicare nursing home benefit.
This means that Medicare is really only helpful for acute care circumstances. That is, to qualify for Medicare nursing home benefits, you need to have a specific medical event that leads to a hospitalization for at least three days. Medicare does not provide for long-term care for those with more chronic, slow-acting, long term conditions, such as Alzheimer’s disease, dementia, or degenerative disorders not requiring an immediate hospitalization.
Furthermore, Medicare only covers skilled care facilities. If you don’t need medical professionals attending you regularly, and your needs are more in the area of assisted living, and you haven’t arranged for your own private funding source for long-term care, you are going to fall through the cracks.
Medicare Length of Benefit
At best, Medicare will cover up to 100 days of care. But only the first 20 days are free. After 20 days, you will still need to pay a $128 co-insurance fee toward your long-term care costs per day. At the end of the 100 day period, you’re on your own.
No coverage for homemaker services
In many cases, elderly people are able to stay in their homes for a very long period of time – provided they get a little help around the house. Homemaker assistance, however, is not a Medicare responsibility – nor is Medicaid likely to cover it, though state Medicaid programs vary on this point.
This is one area where family support can make a huge difference – though we no longer have the extended families living in close proximity to one another as we had in past generations.
Homemaker services and in-home assistance then, will have to come from a combination of family, community and charitable organizations, including church and synagogue congregations, and long-term care insurance.
Many long term care insurance plans today do include some benefit for in-home assistance with homemaking and in-home assisted living. In many cases, you can choose the level of benefit. For example, you can choose a policy that has no in-home benefit, or pays 50 percent or more of the costs of bringing in a homemaker or in-home care provider, including mobile nursing service.
The more benefit you choose, of course, the higher your monthly or annual premium will be, all else being equal. If you have a lot of local support from your family, you may want to elect a lower in-home benefit to save premiums – or buy a higher per diem nursing home maximum benefit or a longer time period. If you are relatively young, it may be worth buying the most powerful inflation protection rider you can get.
If you have relatively little support from younger family members living nearby, you may want to invest in a more robust in-home nursing care benefit.
The aging baby-boomers are going to pose a significant strain on available long-term care resources. Medicaid resources are likely to become even more scarce in the coming years – and Medicare is under significant fiscal strain as well. Don’t rely on the government to pick up the tab for your long term care needs. This is a crucial aspect of retirement planning that you are responsible to address yourself.