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Paying for Long-term Care

The new Russell Sage e-book on long-term care (viewed here), includes a chapter on the payment systems for these crucial services. It is impossible to separate programs to tackle the elimination of neglect and abuse without taking finances into account. Who pays for this care, how they pay for it, and how the funds are used is at the center of all discussions about quality of care.

In general, long-term care services–including stays in a nursing home or via at-home support–are paid for by insurance. Some individuals have private long-term care insurance while others (a majority) rely on public insurance programs (Medicaid) to pay for the care. It is undeniable that public coffers are stretched to the bone. No one is quite sure how the Medicaid system will be able to continue paying for the current level of services indefinitely, especially considering the growing number of seniors who will likely need long-term care paid for via Medicaid in the future. However, there has yet to be a strong push for increased use of private insurance to ease the burden on the public. Some hope this changes.

Private Long-Term Care Insurance
According to a report from the Long-Term Care Financing Strategy Group, about one in six people over 65 have LTCI (long-term care insurance). But that number is not growing. That’s because sales of these policies have dropped since 2003. By 2009, annual sales of private LTCI policies were about half of what they were in the mid-1990s.

There is disagreement about why this is the case.

The most common critique is that LTCI is too expensive. Surveys have shown that “cost” is the most common reason consumers give for not purchasing the policy. However, many suspect that there might be more to it. In particular, many community members may underestimate their risk of needing long-term care. Even though 70% of those over 65 years old will eventually need this care, it is hard to convince those in the prime of their life of the reality.

In addition, many individuals underestimate the actual cost of long-term care. Nursing home stays are quite expensive–thousands of dollars a month. Few are able to pay for this care on their own, making insurance a prudent choice.

At the end of the day, the authors suggest that it is unlikely a complete public or private approach will meet all of the needs for long-term care planning. Instead, the most reasonable approach will be a joint effort between private LTCI and Medicaid programs. But important innovations might help. One of the most encouraging is the “CLASS” program, signed into law as part of the Affordable Care Act. It is a program offered through employers that provides community living assistance and support.

There are no blanket answers to whether or not LTCI is necessary in your exact situation. However, it is important to at least think through all of the risks and benefits ahead of time. Doing so may ultimately prove to be the difference between between having choices of long-term care providers or being forced into a specific home and facing a higher chance of neglect, mistreatment, and general unhappiness.

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