7 in 10 will need long-term care, ready or not
The health of a wife, father or aunt reaches a crisis point and suddenly the family needs to know: what are the options, and how do we pay for them? The questions also pose a difficult public policy dilemma for the nation. As baby boomers age and as people live longer than ever, many worry that neither the family nor the government is prepared for the coming tidal wave of demand for long-term care.
(MCT) ATLANTA — Harry Baron had already lived through a tough week this summer, facing the reality that his wife of 67 years could no longer live at home. Her memory issues were serious, Baron learned, and she needed more care than he could provide.
Baron, who for years ran a popular deli at Phipps Plaza in Atlanta, sadly accepted that Claire should move to assisted living and found a beautiful place not far from their home. His sorrow turned to shock when he presented his wife's Medicare card to the staff.
"They said to me real quick — we don't take Medicare," Baron said. "You don't take Medicare? I said, 'What is this going to cost me?' And when they told me, my knees buckled." What they told him was nearly $4,300 a month — or more than $50,000 for a year of care.
Almost every family has faced some version of Baron's experience. The health of a wife, father or aunt reaches a crisis point and suddenly the family needs to know: what are the options, and how do we pay for them? The questions also pose a difficult public policy dilemma for the nation. As baby boomers age and as people live longer than ever, many worry that neither the family nor the government is prepared for the coming tidal wave of demand for long-term care.
Congress appointed a national Commission on Long-Term Care this year. The group issued 28 recommendations this fall, but it couldn't reach consensus about how to pay for services. It's a tough and expensive problem, but it's something the country can't ignore: most families will eventually face a difficult kitchen table conversation about how to take care of the most important people in their lives.
Many families do not learn about the costs of long-term care until the crisis hits and many get the sort of rude awakening that Harry Baron experienced, said Jon Howell, president and CEO of the Georgia Health Care Association, an industry group that represents nursing homes, assisted living centers and companies that coordinate home care across the state.
Seventy percent of people now turning 65 will need long-term care at some point during their lives. Only a fraction of those who will need care have long-term care insurance, which can pay for services at home or in a nursing home or assisted living center.
Such plans grew in popularity during the 1990s, but sales have declined in recent years as some insurers exited the market, and many of the remaining insurers have hit policyholders with steep premium increases.
When speaking to civic groups, Howell said, he shares lots of key facts that catch people off guard, including: Medicare covers nursing home care after a hospitalization, but at day 21 a co-pay requirement kicks in that could cost up to $12,000 over the next 80 days of care.
To qualify for Medicaid, residents must effectively impoverish themselves, spending all but $2,000 of their non-exempt assets and also using all but $50 of their monthly Social Security checks to pay for their care.
Medicaid pays an average of $158 a day in Georgia for nursing home care; private pay prices are higher.
Medicaid doesn't cover assisted living — only nursing home care.
After a resident's death, Medicaid can take the resident's home equity and other assets in an estate to cover the cost of care paid by the government, although there are protections for surviving spouses.
The requirements represent a harsh reality for many once solidly middle class people — people who have spent a lifetime working toward financial security — who find they have no option other than turning to Medicaid to cover nursing home bills.
For many people who lived through World War II and the Depression and never seriously considered long-term care insurance, it's a shock to see their estates decimated when they were sure they would at least pass on the value of their family home to their kids.
It's important, Howell said, that more families understand this reality.
"Unfortunately, all too often, society is focused on things like pop culture rather than how we care for the Greatest Generation and there is such a lack of understanding of how it is funded," Howell said.
At 88, Baron isn't interested in slowing down. He still holds down a part-time job in sales and has no plans to retire. Always a star athlete, he still plays tennis. He spends hours every day with Claire. That's the way it's always been. "Claire wants me here and if she wants me here, I'll be here," he said.
Since Claire's move, Baron has also found a new mission: educating anyone he sees about long-term care financing. He didn't think about it much until it happened to him, he said. Now, he wants people to know how the system works, and Harry Baron is not a shy man.
"I think I have been put on this earth now as a one-man emissary from the guy upstairs — tell people what you are going through, because you can probably help them," Baron said.
He wants people to understand that Medicare doesn't cover the kind of care his wife needs and he also wants people to understand what qualifying for Medicaid entails. Baron said he relies mostly on a military pension and both his and Claire's Social Security checks to pay for her care. He knows he's fortunate that he can come up with the money, but he knows not everyone is in that position.
"If you're on Medicaid, you don't have anything left," he said. "It's sad." He thinks the average person needs to consider long-term care insurance. He also thinks it might make sense for the government to expand Medicare or another program so that workers could contribute part of every paycheck to cover care down the road.
Baron isn't peddling a particular solution, but he wants our nation to seriously contemplate the problem and he would even like to testify on the issue before Congress. He thinks his story could help policymakers understand how important the issue is.
Some influential voices agree with Baron. This month, Tom Daschle, a former Senate majority leader, and Tommy Thompson, secretary of health and human services in the second Bush administration, publicly urged the nation to address the problem. They pledged to form a bipartisan group to seek solutions.
Part of the process will be helping the public understand the issue.
"There is a lack of planning for retirement in general," said Kathy Floyd, state legislative director for AARP. "When people think about that, they think in terms of 'How much money am I going to need to live?' and they think about food and shelter — even medical. But the component that is missing there is the support services you most likely will need as you age. The way our society is set up it's either family and some friends (providing care), or it's impoverishment and on Medicaid."
An AARP study found that fewer people will be able to turn to family members for care in the future. In 2010, there were 7.2 potential caregivers between 45 and 64 for every person age 80 and over. That will drop to just 4.1 available caregivers in 20 years, the report found.
Just as families convene when a crisis hits to study the options and confront the costs, state and federal officials have also been huddling on this issue.
Governments today pay for 62 percent of the nation's long-term care services at a cost of $130 billion a year. But demographic realities could make that public cost look puny in the not-so-distant future.
The number of Americans needing long-term care is expected to more than double by 2050, according to a report issued in December by the U.S. Long-term Care Commission. Meager retirement savings, in general, mean that people's ability to pay for care will fall short of the need.
The commission found that long-term care is changing through technology and more services available in the home. In addition, more disabled people want the opportunity to work. Consumers need to have access to affordable insurance for long-term care at a time when many insurers have left this market and premiums are more expensive than most families can afford, the commission found. Medicaid needs to be strong enough to meet the demand for those who have exhausted their ability to care for themselves.
"The need is great," the commission report said. "The time to act is now."
BY THE NUMBERS
70 percent of people now turning 65 will need long-term care at some point during their lives.
Families provide most long-term care, with 42 million caregivers providing basic care to family members on a typical day in 2009.
The value of family caregiving is estimated at $450 billion a year, compared with all paid caregiving at $211 billion.
In 2010, every American age 80 and older had 7.2 potential caregivers between the age of 45 and 64. In 20 years, as baby boomers need more care, that ratio will drop to just 4.1 potential caregivers for each 80-plus person.
Medicaid programs cover most paid long-term care, at $131 billion
Long-term care insurance coverage is rare: only 10 percent of the potential market of Americans 50 and older is currently insured.
LONG-TERM CARE QUESTIONS AND ANSWERS
Q: How much do nursing homes or assisted living centers cost?
A: The Metlife annual survey of national long-term care costs for 2012 found: Nursing home: private room, $248 a day; semi-private room, $222.
Assisted living is closer to $118 per day, or about $3,550 per month.
A home-health aide costs $21 per hour.
Daily rate for adult day services was $70.
Q: Does Medicare cover this cost?
A: Generally, no. Medicare focuses on "medically necessary" care, such as doctor visits, hospital stays and drugs. It may cover short-term stays in skilled nursing centers, hospice care or home health care under certain circumstances.
Q: Is long-term care the same as medical care?
A: It can include medical care, but it tends to be more custodial in nature; for example, you've been injured and now need help getting out of bed or dressing yourself, bathing or eating — assistance with the activities of daily living. Caregivers also help people who have a cognitive impairment.
Q: When am I likely to need long-term care?
A: About seven in 10 people will require it sometime after they turn 65. On average, people in long-term care are in their 80s.
Q: Will Medicaid cover the cost?
A: Yes, but Medicaid is a program for the poor, and you have to meet strict requirements to qualify. In effect, you must be impoverished (or become impoverished) to enroll in Medicaid. The program pays about $158 a day for a nursing home bed in Georgia.
Q: Is there some other way to pay for all this?
A: You can buy long-term care insurance, but it's expensive, and fewer companies offer it today than just 15 years ago.
Q: How much does long-term care insurance cost?
A: The American Association of Long-term Care Insurance, according to its website, priced a policy for a couple, ages 60 and 55, from four leading insurers. The results ranged from $3,133 per year to $5,148 per year, which covers both people.
Q: Do I have to qualify for it?
A: Usually. Insurers "health-qualify" their policyholders. If you have multiple or severe health problems, chances are you won't qualify for a plan.
Q: Can you switch if you find a better deal, like with car insurance?
A: Generally speaking, you only buy long-term care insurance once. That's because the cost increases with your age, and you probably won't want to give up the investment you've already made in a policy.
Q: What is life expectancy in the U.S.?
A: The Organization for Economic Cooperation and Development this year released a comparison of its 34 member nations. The OECD found the average life expectancy in the United States is 78.7 years, putting Americans in 26th place, behind Slovenia. (The Swiss, Japanese and Italians — one, two and three on the OECD list — live four years longer than Americans, on average.)
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