LTC: Financing Considerations

The general tendency of many to underestimate the cost of long-term care often goes hand-in-hand with a tendency to overestimate the amount of financing available through public programs and private health insurance. Contrary to popular belief, Medicare – the government health insurance program for people age 65 and over, as well as for people under the age of 65 with certain disabilities and chronic conditions – does not fund long-term care. In fact, no current government program is specifically designed to cover long-term care. Medicare only covers short-term care. It may cover some nursing home or assisted living costs, but only for “skilled care” deemed medically necessary for the duration of an illness, usually limited to 100 days.

It is also uncommon for Medigap – private health insurance intended to supplement Medicare coverage to provide for long-term care. As a result, Medicaid has, by default, become the major source of public funds for long-term care, but because it is a government program designed to help those in financial need, individuals may have to “spend down” their personal assets before being eligible for assistance. So, if you have savings, in order to qualify for Medicaid, you may have to pay out-of-pocket for long-term care expenses, effectively exhausting your savings. This process of “spending down” your assets will eventually put you in a position of financial need that would qualify you for government assistance.

-Robert Catalano