Commission fails to answer big question: "How does America pay for Long Term Care?"
The 15 member commission proposed: an improved focus on quality across long term care service settings with particular attention paid to those care options provided in the home or in a community setting; advocated for new models of public payment on the basis of the service rather than the setting; suggested integration of long term care services with health care services; and proposed improvement in the working conditions for care workers. What they didn’t do was address an area of critical important and that is to determine how long term care would be financed. So a Forbes article by Richard Eisenberg looked at how the government could cut long term care costs and came up with a set of ideas.
For low income people, the government will provide care through programs such as Medicaid and the wealthy can presumably afford to self-insure but everyone else will need a better solution than our current one. Of the 78 million of us considered Baby Boomers, a majority of us will reach a point where we’ll need long term care. According to AARP, about 68 percent of Americans 65 and older will have two or more disabilities or become cognitively impaired. Those individuals will need long term care either in the community or within institutional care settings such as assisted living or nursing homes but a significant portion of Americans do not purchase long term care insurance (only about 7 percent do). The problem is that it costs a lot for long term care premiums: between $2,268 and $4,000 or more a year. On top of that long term care insurers have also been dropping out of the market in droves or increasing premium rates by double-digit numbers.
According to a Genworth Financial report the average cost for long term care in a nursing home was around $76,000 a year. In Washington state that care will cost you between $90,000 and $100,000 a year depending upon whether you want a semi-private room or a private room. You can possibly save a little money by getting care at home or moving into an assisted living facility for an average of around $50,000 a year. Keep in mind though that all of those numbers are the bottom of the barrel prices and do not include costlier care such as a secure memory care facility or even just additional assistance beyond a minimal level of care.
So, Eisenberg wrote about four ideas. He put forth the following:
- Streamline government regulations so that people who are suspicious of straight long term care policies might entertain ideas about purchasing hybrid policies which include life insurance. See this article on hybrid policies. Another idea closely related to that one would be to allow people to purchase a catastrophic policy that would only kick in the second or third year of care in a nursing home.
- Offer tax breaks similar to those offered for health insurance so that employees could purchase long term care insurance with pre-tax dollars.
- Allow individuals to use their 401(k)s and IRAs to pay for premiums or to help lower the taxes.
- Have Medicare only cover limited long-term care benefits that created a teamwork approach to paying for the benefits. For instance, the individual could be required to pay for care but the government would cover catastrophic costs or be limited to a core group of individuals.
What’s obvious is that Congress is unlikely to step up and provide a solution any time soon. Even if they were going to look at the four suggestions Eisenberg put forth, with all their partisan bickering they would be unable to move on it for years. To protect themselves against the high cost of long term care, private individuals need to look to themselves to find a solution. The easiest and least costly solution is to take care of your own health by eating right; getting plenty of sleep; eliminating high levels of stress; socializing and getting enough exercise to ensure you need the least amount of long term care as possible. In addition, prepare your home and your family for a time in which long term care will no longer be an option but a requirement and prepare your finances so that you can pay for the things you’ll need when you need them. And finally recognize that aging is a family affair. It’s time to work together to tackle a problem that will affect the entire family.