How Do People Pay for Professional Long-Term Care?

Most Long-Term Care (LTC) is paid by one of the following: personal funds, government programs, or LTC insurance. Personal funds may involve drawing down retirement savings or other assets, using retirement income, or even funds provided by adult children.

Medicare Won’t Pay

Medicare health coverage is designed primarily to cover medically-necessary care, skilled care, and some preventative screenings. The Medicare website itself states, on the page titled What’s not covered by part A & Part B?: “Services that include medical and non-medical care provided to people who are unable to perform basic activities of daily living, like dressing or bathing: Long-term supports and services can be provided at home, in the community, in assisted living, or in nursing homes. Individuals may need long-term supports and services at any age. Medicare and most health insurance plans don’t pay for long-term care.”

Medicaid Is a Payer of Last Resort

Medicaid is a means-tested program. It is designed to provide health care and long term care for the poor. Medicaid has an institutional bias, meaning that, although nursing homes are filled with people whose bills are paid by Medicaid, home care paid by Medicaid is not as readily available in most states.

In the vast majority of states, in order to qualify for Medicaid, an individual is only allowed to have $2,000 of (countable) assets to her name. Countable assets generally include all investments and assets, with the exception of business property and most primary residences. Legislative reform has made it virtually impossible for an individual (i.e. unmarried, widow or widower) to do the kind of last-minute Medicaid planning which was once commonplace.

Unlike Medicare and Social Security, Medicaid is not a program that we pay into through payroll taxes. Medicaid is funded jointly by general tax receipts of both the federal government and the state government where the applicant resides.

Smart Buying Tip: Work With Someone Who Represents Multiple Companies

As Abraham Maslow said, “If your only tool is a hammer, everything looks like a nail.” Most people will benefit from working with an agent who doesn’t recommend the same insurer to everyone. Not only do available plans vary among insurance companies, but premiums for the same type of coverage can vary dramatically. An independent agent, like Merriam Insurance, who represents multiple companies can recommend the plan best suited to your situation.

Most people are concerned about the long-term sustainability of government programs, including Medicaid. Speculation abounds that it will become even tougher to qualify for Medicaid in the future. Contact Merriam Insurance today to learn more or to receive a free copy of our Long-Term Care Insurance Consumer Guide.

This information was taken from the Long-Term Care Insurance Consumer Guide, courtesy of the National LTC Network, Inc.

How do People Pay for Long-Term Care?

Brian H. Merriam, CPCU, ARM, AAI
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