Americans Mistakenly Think Medicare Will Cover LTC Needs

Americans Mistakenly Think Medicare Will Cover LTC Needs

Posted on September 29th, 2016

A newly released survey, ‘2016 Long-Term Care in America’, conducted by the Associated Press-NORC Center for Public Affairs Research at the University of Chicago, shows 38% of adults age 40+ believe Medicare will pay for their future Long Term Health Care needs. This despite the fact that both traditional health insurance and Medicare (health insurance for those 65 and older) does not typically cover most Long Term Care (LTC) services and support services.

Medicare doesn't cover Long Term Care which is also called custodial care.People require Long Term Health Care services due to illnesses, accidents or the impact of aging. The US Department of Health and Human Services says if a person reaches the age of 65 they will have a 70% chance of requiring some type of LTC service before they die. Most of this care is custodial in nature (help with activities of daily living {ADL} or supervision due to cognitive issues). Custodial care is not paid for by health insurance or Medicare.

Only 2 out of 10 older adults anticipate using Medicaid to finance their LTC needs even though Medicaid ranks as the largest public payer of Long Term Care services, the report's authors noted, citing data from the Kaiser Commission on Medicaid and the Uninsured.

Medicaid is the nation’s medical welfare program and requires a person to have little or no assets or to spend down to those levels after paying for extended care out-of-pocket. This places enormous financial burdens on American families.

“Medicare and Social Security were not built to cover Long Term Care costs, leaving American families unprotected, and as this survey shows, unaware of this fact,” said Bruce Chernof, M.D., president and CEO of the SCAN Foundation, in a statement on the findings.

Long Term Care Insurance, and the partnership LTC insurance plans in most states, is available. Many people now look at LTC insurance as part of their retirement planning. The survey shows a majority of those who have LTC insurance (69%) are very satisfied or somewhat satisfied with the cost of the premiums. Among those who do not have LTC insurance, just 23% say they have looked into purchasing a plan. This could be since so many people think other sources will pay for these costs.

LTC Partnership Plans provide additional dollar-for-dollar asset protection or what is referred to as ‘asset disregard’. In the event a person spends down money in their LTC policy they can legally shelter part of their estate based on the value of the benefits paid out.

36% report they are very or extremely confident they will have the resources to pay for Long Term Care, while another 36% say they are somewhat confident and 24% are not too confident or not at all confident.

Genworth Financial, a leading insurance company, does an annual research study on the cost of LTC services and the public perception of those costs. The 2016 study showed most Americans underestimate the cost of Long Term Care at home care by nearly 50%.

Richard Eisenberg in a recent Forbes article, “Americans’ Estimates of Long Term Care Costs Are Wildly Off, said, “Nearly a third of Americans (30%) believe home health care expenses are under $417 a month, but according to Genworth’s number-crunching, the national median rate is about nine times that: $3,861 per month for an in-home aide or $3,813 per month for homemaker care (that’s hiring someone to handle household tasks such as cooking, cleaning and running errands). Genworth assumes 44 hours a week of home care in its calculations.”

Valerie VanBooven, RN BSN, Editor In Chief Of HomeCareDaily.com, says the study also determined that women are more likely to be the ones who underestimate the cost of in-home care, even though they comprise 80 percent of the care providers or family members who find the right level of care and support for a loved one.

“If people underestimate the cost of long-term home care, they are more likely to be unprepared for it in the event that they or someone else in their family requires significant long-term care in the future,” VanBooven said.

Other points the AP/ NORC survey showed:

  • 77% of respondents would prefer to receive care in their own home.
  • 67% indicate they would want their loved ones to receive LTC services in a home setting.
  • One third of the respondents have not made any plans to pay for their LTC services.

Just under half (46%) anticipate that it is at least somewhat likely that an aging family member or close friend will need ongoing living assistance in the next five years. Those who have experience with Long Term Care are more likely to anticipate that their loved one will need assistance, as are those who are younger than 65. Of those who say their loved one will need ongoing living assistance, 1 in 3 say they will be at least partially responsible for providing that care, and half say that someone else will be responsible for providing that care.

However, these prospective caregivers are not confident that they are prepared to provide this care. Just 30% of those who will be responsible say they feel very or extremely prepared to provide this ongoing care to their aging family member or friend, 47% say they are somewhat prepared, and 20%  say they are not very or not at all prepared.

Meanwhile those who have LTC insurance policies are receiving benefits from those plans. Long Term Care Insurance companies paid $8.15 Billion in claim benefits in 2015 according to the American Association for Long-Term Care Insurance (AALTCI) a national consumer advocacy group.

“Americans are living longer and often the result is a need for long term care,” said Jesse Slome, executive director of the AALTCI. 

“The individuals who own LTC insurance policies benefit from the protection as do their families and loved ones.” 

Without insurance to pay the cost, Slome acknowledges the caregiving responsibility often falls on elderly spouses or adult children of aging parents.

“LTC insurance provides choice and control, while protecting your retirement plans and lifestyle. It allows loved ones to care about you rather than being forced to care for you,” Slome adds.  

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