The future of long term care in America is heading for a real crisis. The intent of this article is not to scare the average citizen but to give him or her early warning as to the impending changes in Medicaid as we know it. One problem with predicting the future, even with all the cards on the table, is knowing precisely when this change is coming about.
In addition to the inevitable change, to make matters worse is the reality that this is a political question. Neither the Democrats nor the Republicans want to be known as the party that killed the golden goose. That includes the President whoever that may be at the time that the inevitable becomes reality for our elderly population.
According to the 2012 Social Security Fiscal Report, 76 million Americans will turn 65 from 2007-2027; that averages out to 10,000 everyday. That means 200 new senior citizens each day in each state. Of those, 70% will require some form of Long Term Care in their lifetime. That’s 53.2 million long term care patients. And of those, 50% or 26.6 million people will need care that will last for more than one (1) year.
The 2009 National Nursing Home Survey reports that the average patient stays in a Long Term Care for approximately thirty (30) months. While the Congressional Budget Office projected that the average cost of care in 2014 will be $7,833 per month or $93,996 a year. Of course, an average means that the cost of care in some states already exceeds the national average.
The reality is that most people will not be able to afford to pay $7,833 a month or $93,996 a year for long term care. Granted that some of this care is already picked up through an individual’s Social Security monthly income, but Medicaid pays the bulk of the long term care bill. Even the Veterans Administration cuts its pay out to disabled veterans and their spouses from perhaps several thousand dollars each month for home care and assisted living expenses to just $90 a month or $1,080 a year when the eligible patient must be placed into a skilled nursing facility.
Ask yourself these questions, can I afford to pay upward of $93,966 per year for my long term care or my spouse’s care? Can my children pay upward of $93,966 for my long term care? Who pays for me and my spouse when we are both in a nursing home at the same time and the total bill runs to $187,992 for the year? Can you afford $234,990 to take care of you or your spouse for 2.5 years in a long term nursing facility? Can you afford $469,990 to take care of you and your spouse for 2.5 years in a long term nursing facility? What will be the effect of inflation on these numbers over the coming years?
Since for most people their largest asset is their home, the current protection for their home under the Medicaid rules must and will change. That doesn’t mean that they will lose their home to the government as most people wrongly fear today. But, people will have to tap into their home equity to pay for long term care in the future. This will, undoubtedly, mean that seniors will have to obtain a reverse mortgage on their home to pay for long term care insurance.
Even with the addition of long term care insurance, that doesn’t mean that the need for some reduced form of Medicaid will not be needed. There will still be costs that will not be covered due to inflation. There will still be costs for those that haven’t purchased enough long term care insurance protection and there, of course, will be those that have no protection, at all, when the need for long term care becomes a reality.
While this article will certainly make you stop and take notice of the impending problem, its true purpose is to cause you to realize that NOW is the time to take positive action for your future. The only resolution, in whole or in part, to this problem is to PLAN, PLAN and PLAN for that future. Those that are wise and successful will act like squirrels and prepare for the impending winter. Those that don’t take this warning will be like the ostrich that hides his head in the sand. Wouldn’t you rather be a squirrel?
By Ivan Michael Tucker, Esq.
Altamonte Springs, Florida