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Chapter
4 Who Pays for
Long-Term Care?
50 and older has more than quadrupled in the past 13 years. A New
York Times report published in 2007 estimates that over 15 mil-
lion adult children are providing care for their elderly parents. The
average caregiver is a married, middle-class woman in her late 40s
caring for her mother-in-law and/or her own mother, usually in that
order. 28% of caregivers are men. Over half of those providing care
are employed full time and another 13% work part time. According
to another report released in 2007, these caregivers experience the
highest rates of depression among all U.S. workers.
Some well-meaning children insist they will personally provide
for their parents’ long-term care. This is contrary to the wishes of
most parents, who will do almost anything to keep from becoming
a burden on their children.
But if you decide that relying on your family is a viable option
for your plan for care, talk seriously with your spouse and chil-
dren about the type of care they can and will provide. This option
should be put in writing by accessing your online assessment at
www.adviceonltc.com. This will ensure that everyone’s responsi-
bilities are clearly outlined in writing. It may also be a good idea to
have your family members present when developing the specifics
of your plan because the need for care often has less impact on the
person in need of care than it has on the rest of the family.
Personal Assets
Americans spend billions of dollars in personal assets annually
on long-term care expenses. The dollar value of personal assets
used to pay for care is predicted to double between 2010 and 2015.
Personal assets used to pay for care are normally withdrawn from
one or more of three places: personal savings, retirement accounts,
and home equity.
When considering this option, analyze:
• Your ability to accumulate enough assets to pay for long-term
care expenses
54 Chapter 4: Who Pays for Long-Term Care?
not cover the expenses associated with the care of people who
simply need assistance with activities of daily living or supervision
due to cognitive impairment.
The myth about Medicare covering long-term care is due to
the wording in the Medicare Handbook (U.S. Health and Human
Services, 2010). The handbook explains that, under certain condi-
tions, Medicare covers the first 20 days in a skilled nursing home
and another 80 days of care on a co-payment basis. But care with a
duration of less than 100 days is short-term care.
Medicare’s “short-term care” benefit is designed to partially
cover rehabilitation from a serious injury or illness. A three-day
prior hospitalization is required to qualify for benefits, and care
must be provided in an approved skilled nursing home. Custodial
care, the most common level of care, is not covered by Medicare.
56 Chapter 4: Who Pays for Long-Term Care?
Private Benefits
n Medicare Supplement Insurance
Medicare Supplement policies only cover services approved by
Medicare. These policies do not cover long-term care.
Medicare Supplement policies may supplement short-term care.
Specifically, Medicare Supplement coverage may offer a co-pay-
ment benefit for care given by approved providers, beginning
on the 21st day of care and continuing for up to 100 days in an
approved skilled nursing home. This skilled care must also be
preceded by a three-day hospitalization.
n Health Insurance
Health insurance, like Medicare, is only a provider of “short-term
care.” Health care benefits cover most Americans against illness
and accidents but specifically exclude long-term care coverage.
The maximum benefit for care provided by health insurance plans
is 100 days.
Chapter 4: Who Pays for Long-Term Care? 57
When the Money Under the
Mattress Is Gone
Having lived through the Great Depression of the
1930s, Nana and Gramps lived very frugally on my
grandfather’s salary as a construction worker. As
a result of careful planning, after Gramps passed
away, my grandmother was able to live comfortably
on the money they had stashed away under the mat-
tress (literally!).
When Nana first went into a nursing home, she went
in as a “private pay” patient. Allen and I were very
impressed with the facility the first few times we
went to visit her.
Within a few months, Nana had spent all of her sav-
ings and was officially a Medicaid (welfare) patient.
No longer on the first floor, Nana was “housed” on
the second floor—away from the beautiful lobby
with fresh flowers, the library with original works of
art, and the community room where social activities
took place. Our first impression of a caring facility
was suddenly replaced by genuine concern for her
well-being as we noticed a “distinct odor” permeat-
ing the hallway. Not long after that, Nana became
bedridden and—within a few weeks of going on
Medicaid—passed away.
Would Nana have deteriorated so fast if she had
remained a private pay patient? We’ll never know
the answer to that question.
— Eileen Hamm
58 Chapter 4: Who Pays for Long-Term Care?