Long-Term Care Funding: Here's Looking to You!

The Commonwealth Foundation conducted a study in Penn. looking at long-term care funding and came to some interesting conclusions. Pennsylvania taxpayers pay $6.6 billion per year to fund long-term Medicaid spending, 40% of the state's Medicaid spending. It is unsustainable so they are looking at several options.

• Rebalance Medicaid
  In other words, provide more home care at a perceived lower cost. But Commonwealth contends that research shows that home care does not result in overall savings.  Providing more home care delays, but does not replace, institutional care, and actually costs more in the long run they contend.
  
  That leads me to believe that aging-in-place in unattainable for many. If I am reading through the lines correctly, it would seem that they are saying that most people at one time or another will need care in a nursing home.
  
• Reduce Enrollees
  
  The only way to achieve the balance and assure quality care is available and being paid for in skilled nursing homes is to reduce the number of people on Medicaid says the Fund. They cite four things.
  
  
  1. Asset Spend Down
     
     By reaching aging Pennsylvanians while they are still young, healthy, and affluent and teaching them to plan responsibly for long-term care, the state could save  $120 million per year by preventing only 20% of its dual eligibles from ending up dependent on the program in the future. A dual eligible is someone who is on both Medicare and Medicaid.
     
     Lesson - plan for your long-term care needs because eligibility for Medicaid in the future may make it hard for many to avail.
      
  2. Estate Recoveries
     
     If Pennsylvania Medicaid recovered funds from estates, the commonwealth could recover an additional $213 million per year. States can come after estates to recoup Medicaid dollars it spent on a person's care.
     
     Lesson - this is money in the bank if states decide to pursue. So consult an accountant and elder attorney to learn more about asset protection.
     
     
  3. Home Equity Conversion
     
     In short, reverse mortgages as a cure. Pennsylvania may have 135,000 households that could receive an estimated $62,800 each or $8.5 billion in total from reverse mortgages to help pay for their own long-term care, and stay off Medicaid.
     
     Lesson - a reverse mortgage could be worth investigating especially now when you have the freedom to do so and not later when you may be forced to look at it as an option to help you survive retirement.
     
     
  4. Private Long-Term Care Insurance
     
     If there were tougher income and asset limits for Medicaid eligibility, the Commonwealth contends that more citizens would buy long-term care insurance.
     
     Lesson - read this as states are going to look to make eligibility more stringent and that puts more of the burden on you to finance your long-term care.
     

So in short as we try to say every day, you need to plan for your long-term care needs. And you can start by trying to minimize the likelihood that you will need long-term care. From looking at how to age-in-place, to keeping yourself in shape and healthy, to financially preparing, there are things you can do to make aging enjoyable not something that can turn into a crisis at the drop of a hat (does anyone wear hats!?).