According to the U.S. Department of Health and Human Services, someone turning age 65 today will have a 70 percent chance of requiring some long-term care (LTC) service and support during the remainder of their life. In the case of women, the typical LTC need will last about 3.7 years compared to men who will need about 2.2 years of care. While approximately one-third of today's 65-year-olds may not ever need long-term care 20 percent of those who do will require it for more than five years.
The statistics are clear; older Americans should be carrying a long-term care insurance policy to protect their future but only about 7.2 million Americans 65 years or older currently own a traditional long term care policy, and this number has held steady for the last seven years. While LTC insurance is overall considered expensive and finding the right plan for you in the myriad of insurance products available can be confusing and vary from state to state. There are myths about long term care that should be understand.
One myth is that a person cannot have any assets and receive Medicaid, which is the state and federal that can help pay for LTC. In general, the rule is a person is not allowed to have more than $2,000 in countable assets to be eligible for Medicaid. In Michigan, some assets do not count towards the $2,000 limit, meaning you can continue to own them and qualify for Medicaid. These non-countable assets include the home, if the equity is less than $585,000, burial plots or spaces, household furniture and furnishings of nominal value, one vehicle, and certain Medicaid-compliant prepaid funeral plans. The Community Spouse Resource Allowance rules permits the spouse who is living in the community and not needing nursing home care to keep a portion of the couple's countable assets to prevent them from becoming destitute. The amount the community spouse can keep ranges from $25,284 to $126,420, depending upon the total amount of countable assets the couple have. Also, using additional safe-harbors contained in the Medicaid law for married couples, additional countable assets above those amounts can be kept. However, it is important to know that the state Medicaid agency will not advise you of these additional options or help you take advantage of them. Before making any attempt to spend down assets to qualify for Medicaid speak to an elder law attorney as the federal five year "lookback" rules have penalties and exceptions. Also, it is important to not submit a Medicaid application until you know you qualify for Medicaid, otherwise the application will be denied, which can result in a large unpaid nursing home bill and the possibility of being evicted from the nursing home.
Medicare will not pay for long term care expenses except in the most specific and narrow of circumstances. Medicare will cover skilled in-home care from a nurse, occupational therapist, physical therapist, speech therapist or social worker for up to 21 days if ordered by a physician. In the case of a skilled nursing facility, Medicare may pay for the first 20 days with no co-pays but if the stay is between 21 to 100 days, Medicare only pays a portion, and the beneficiary must pay a daily co-pay of $170.50 in 2019; in some cases, this co-pay may be covered by a Medicare supplemental health insurance policy.
Another myth is that a person thinks they are too young to think about long term care insurance let alone the need to pay for it. The truth is that even under the age of 65 if the person has a chronic illness like diabetes or high blood pressure or in the event of an accident, long term in-home or residential care services may be needed. According to the US Department of Health and Human Services on average, about 8 percent of people age 40 to 50 have a disability that may require long term care services.
Relying on the hope that family will take care of a long term care need is often a myth. While many older Americans are successfully aging in place, in part due to the benefits of technology, unpaid family member caregivers and community organizations are typically not willing and available for long term, intensive caregiving. A family discussion is needed if there is an expectation that a family member is willing and able to take on a long term caregiver role. While many family members are eager to provide help from time-to-time, the intensive requirements of long term care are usually more than they can help with over a longer period of time.
Most health insurance policies will not cover long term care expenses to any meaningful degree. Some plans will have minimal home care and skilled nursing benefits; however the nature of the plan is short term and is intended to produce recovery and rehabilitation while long term care is generally custodial in nature for assistance with the activities of daily living such as bathing, help getting dressed, continence care, medication management, and the safety, maintenance and well-being of a person with a chronic condition. Even some long term care insurance policies will not cover all long term care expenses. There are elimination periods which function as a deductible or after a policy benefit has been exhausted. Specific coverage in long term care varies widely from policy to policy.
Finally, many aging Americans feel that their retirement savings will cover the costs of their long term care. Currently, the average US national median long term health care cost is about $50,000 for a home health aide which is above and beyond all other living costs. In many situations, in particular with assisted living or nursing home care, costs can run hundreds of thousands of dollars over a few short years. Unless a person is independently wealthy, most retirement savings will be spent down very quickly.
Chances are you or a family member will need long term care during your lifetime. Being educated about what is best suited to meet your personal financial and health background needs is a significant first step. Next, understand what legal options are available to help you in the event you need significant long term care and may run out of money trying to pay for it.
I am elder law attorney in Troy, Michigan and my practice includes helping with long-term care and Medicaid planning. Feel free to contact me to discuss how we can help with your or a family member's planning.