Extreme Solutions for Long Term Care

The American Association of Retired Persons magazine recently carried an excellent article describing the expense associated with long-term-care and the extreme measures some people have to take to provide that care to their loved ones.  This blog post describes the article and discusses some solutions to the problem.


Many people do not know that Medicare only covers a total of 100 days of skilled nursing home care and rehab.  When that coverage ends,  nursing home care is paid from your own pocket if you don't have long-term-care insurance.  For the couple profiled in the article, nursing home expenses of $7,500 a month, plus miscellaneous expenses drained their savings of $75,000 over the eight months after Medicare payments ran out.  In order to avoid financial ruin, the couple got a divorce and Medicaid took over the nursing home payments after the institutionalized ex-husband became indigent.  Other couples will try to preserve life savings by having one spouse file papers refusing to pay for an institutionalized spouse.  Without resources, the institutionalized spouse quickly becomes indigent and is provided Medicaid care.


Generally, if a nursing home patient is married, spending down assets to qualify for Medicaid often means that the healthy spouse is left with insufficient assets to live in retirement.  Medicaid only pays for nursing home care after an individual has spent down his or her assets, except for a nominal amount, usually $2,000.  The non-institutionalized spouse can keep the couple's home, but just half their savings.  Transferring assets to the children is not an option because Medicaid looks for gifts the patient made within a five-year period before applying for Medicaid assistance and then denies coverage for the number of months that those gifted funds could have paid for.


Some point to the huge cost of Medicaid, $333.2B in 2007 and charge that those who get divorces or file papers refusing to pay are gaming the system and avoiding their responsibilities.  Other experts point out that Medicaid and Medicare don't do enough to help people stay in their homes and avoid expensive nursing home care.  According to James Firman, CEO of the National Council on Aging, "powerful state nursing home lobbies make it very difficult to break the institutional bias in Medicaid."  AARP research shows that 90% of Americans prefer to remain in their homes as they age.


The Community Living Assistance Services and Support (CLASS) Act was passed as part of health care reform in March, and it would essentially set up a government-run insurance program to help pay for long-term care in the home or elsewhere.  The program will collect premiums from all working Americans who don't opt out, and after five years these participants would be eligible for modest cash payments that could be used to help pay for in-home care.  An analysis of the CLASS Act in the Washington Times concluded that although the program would work for awhile, by 2021 the premiums would be insufficient to provide the promised benefits and the program would be insolvent.  Only time will tell if the CLASS Act is a solution or a disaster.