Long-Term Care Services and Supports (LTCSS) offer assistance with the activities of daily living, such as bathing and dressing, as well as instrumental activities of daily living, such as housekeeping and managing medications. These supports are something 70% of those 65 and older will need; yet they often come with high price tags and are out of reach for many. In 2019, total spending on LTSS within the United States reached over $426 billion. Here, we’ll explore who pays for these services and different public and private sector solutions.

Medicaid

The Medicaid program is the largest payer of LTSS in the United States, paying for over 40% of these services and supports, or about $183 billion. While Medicaid will cover most LTSS, Medicaid beneficiaries have little say in choosing a facility, and this option often represents a last resort for those who cannot afford the out-of-pocket costs of private facilities or regular home care. Some older adults find themselves needing to spend down their assets in order to qualify for Medicaid long-term care waivers, leaving little behind in terms of an estate or savings in order to ensure necessary care is accessible in life. This Medicaid spend-down for long-term care represents just how inaccessible these needed services can often be, with nearly 10% of the Medicaid population having spent down just to qualify for coverage.

Public Long-Term Care Insurance

Understanding the financial burden LTSS can represent and in an attempt to limit Medicaid spend down, states are exploring public insurance options. Washington state has been trying to implement such a program through a payroll tax. In this program, state residents must either enroll in LTC insurance plans from private organizations or be automatically opted into the public program. One of the key issues with this legislation, which is still being redrafted and modified, is the significant portion of adults who work in Washington but live elsewhere. These individuals would be subject to the payroll tax but would not have access to any of the LTC benefits as they are not Washington residents. While there is work to be done in finalizing this legislation, it represents an important step in acknowledging and acting on the lack of available LTSS, which most Americans will need within their lifetime.

Medicare

Medicare covers limited LTSS. Beneficiaries can access up to 100 days of LTC in a skilled nursing facility; however, unskilled care and assistance with the activities of daily living are not covered. Those 100 days are rarely the full length of LTC needs, with most individuals needing these service for over one year, and over 10% requiring LTC for five years or more. Many new Medicare policyholders do not understand their level of coverage when they age into the Medicare program, and are often surprised by high out-of-pocket costs and lack of coverage for those services and care most need throughout retirement.

Private Long-Term Care Insurance

For those who can afford it, private insurance options are often a good way to cover the costs of care later in life. While some policy options, such as traditional long-term care policies, can be expensive and difficult to qualify for, more and more private sector solutions are emerging to help middle-income Americans cover the care they need without spending down to Medicaid, or breaking the bank with steep out of pocket costs. Short-term care insurance is one option which provides a more limited benefit, but can help to bridge the gap between Medicare coverage and out-of-pocket costs. Aging at Home Association members have the option to add Home Care Secure with their membership, which offers policy face values up to $60,000. While this is unlikely to cover the full scope of care needs with age, it can provide the cash needed to allow individuals the autonomy and financial security to age in place. For a more in-depth look at private insurance options for LTSS, check out our blog post, “Long-Term and Short-Term and Hybrid Plans, Oh My!”

With the U.S. population of those over 65 expected to more than double by 2050 and those over 85 expected to triple, a greater public understanding of available aging supports is necessary. We at the Aging at Home Association want to ensure you have a plan in place to pay for and access both the support and care you, and most all Americans, will need with age. Understand your coverage and options, and explore private solutions if you find a gap in your financial plan.