More than half of Americans, 55%, incorrectly believe health insurance or Medicare will pay for long term care, the assistance with daily living that some people need because of illness or injury.
People who are sick or injured may need help with activities of daily living such as bathing, dressing, preparing food, and so forth that they would normally do for themselves.
A recent online survey asked adults how they would pay for assistance with activities of daily living if they are unable to take care of themselves for an extended period of time. More than half, 55%, said they would use Medicare or health insurance. But Medicare and health insurance, although they cover some of the medical costs, do not pay for long term assistance with daily living. See “Who Pays for Care”
Medicare covers these costs for a maximum of 100 days (or until you stop improving). Medicaid will pay for these costs only when the individual’s assets are down to around $2,000 or $3,000 – depending on the state of residence – and Medicaid will recover the costs from the estate after death. This is often done with a lien on the Medicaid recipient’s primary residence. How long will your savings/investments last if paying $75,000 a year per person for care?
The survey involved 2,065 U.S. adults age 18 and older. People over age 55 were more likely to say they would pay for long term care needs with health insurance and/or Medicare. People ages 18-54 were more likely to say they would borrow money from family and friends or use a credit card or loan. Long term care costs are estimated to be $70,000 a year or more, most of which will not be covered by health insurance or Medicare.
The U.S. Government Accounting Office and The Wall St. Journal report that 72% of Americans will need long term care at some time, either part-time assistance at home or full-time care in a facility. But people need to be educated about the costs of care and how to pay for it. Long term care insurance will relieve some of the burden. Many states now have available a Partnership insurance policy that protects assets by exempting the policyowner from Medicaid spend-down. Read more about The Partnership.