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The Reality of Long-Term Care

Most Americans are unaware of the costs associated with long-term care and overestimate the amount that government programs such as Medicare will pay, according to an AARP.  "With an estimated nine million people over the age of 65 requiring long-term care services this year, there is a need for better public awareness, planning and coordination of government and private sector initiatives," said AARP National Board Member Jennie Chin Hansen, RN, MSN, FAAN.

Two Arkansas legislators are taking steps to do just that.  Representatives Will Bond and Sandra Prater have introduced legislation creating the “Long-term Care Partnership Program” and the “Arkansas Options Counseling for Long-term Care Program.”

"By 2020, the number of people needing long-term care is estimated to reach up to 12 million. We are working at the federal and state levels to pass legislation that will improve choices for long-term care services, assist family caregivers through a caregiver tax credit, and provide more and better options for financing long-term care," said Hansen.

The Options Counseling bill is AARP’s top legislative priority for 2007.  A recent poll found 76% of AARP members said they would prefer to receive long-term care in their own homes or in a home-like setting, such as an assisted living facility.  Ninety-one percent said they strongly support using Medicaid long-term care funds for services that help people stay in the own communities. 

AARP, like others, hold the position that nursing homes are a vital care option, but that many individuals could well be better served in an alternative setting.

Options Counseling, addressed by Governor Beebe in his State of the State address, seeks to inform individuals about all their options so that they may make informed choices.  The bill does not mandate or restrict consumer choice, but rather ensures consumers know what service options are available to them.

There is clear evidence most Americans are not well informed about long-term care.

Last fall AARP issued The Costs of Long-Term Care: Public Perceptions Versus Reality in 2006, a survey of Americans age 45 and older to assess their knowledge of the costs and funding sources for nursing homes, assisted living residences and in-home care.  The 2006 report confirms that little has changed since this study was first conducted in 2001.

The survey found that while many people say they are "familiar" with long-term care, most actually have little idea about the costs.  More than half (60%) say they are at least "somewhat familiar" with long-term care services currently available.  However, less than one in ten (8%) could “reasonably estimate” the cost of nursing home care.  Less than a quarter (23%) could reasonably estimate the cost of assisted living.

Americans 45-plus often think government programs provide coverage when they probably won't.  More than half (52%) incorrectly believe Medicare covers assisted living.  Six in 10 (59%) believe Medicare covers nursing home stays beyond three-months for age-related or other chronic conditions, which is not true.  The survey also found that many think they have long-term care insurance, when they likely do not.

The Long-term Care Partnership Program would be a concrete step in helping people prepare for their future.

If passed, the bill would  allow people to buy LTC (Long-Term Care) insurance policies that protect a specific amount of their assets. For example, someone who purchases a LTC insurance policy with maximum benefit coverage equaling $50,000 would have protection for $50,000 worth of assets if ever in need of Medicaid coverage. 

The rationale is that the amount the LTC insurance pays out is analogous to the beneficiary spending down private assets before qualifying for Medicaid.  Once the benefits of the policy have been exhausted, the beneficiary must use any remaining assets above the protected amount
(i.e., any assets above the $50,000 threshold) and income to pay for LTC services.  After such sources have been exhausted, the beneficiary qualifies for Medicaid benefits.  This creates a “win-win” situation.  The individual gets to keep money they otherwise couldn’t, and it reduces the financial burden on the State.

An added benefit is that both the private insurance industry and the government will be more involved in informing individuals about the reality of paying for long-term care services.  Given the misconceptions Americans have about the costs and financing of long-term care, a dose of reality is long overdue.

Division of Aging and Adult Services
Herb Sanderson, Director
PO Box 1437 - Slot S-530
Little Rock AR 72203-1437
Telephone: (501) 682-2441
Fax: (501) 682-8155