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Division of Aging and
Adult Services
PO Box 1437
Slot S-530
Little Rock AR 72203

By Herb Sanderson, Director
Division of Aging & Adult Services

This column appears in the August 2008 edition of Aging Arkansas,
a publication of the Arkansas Aging Foundation.

Planning for Long-Term Care

The answer:  250 million Americans.  The question:  How many Americans are uninsured for 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 article.  "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.

Arkansas is doing just that.  Governor Beebe recently announced the Long-term Care Partnership Program, a new effort for our state that will help Arkansans get the long-term care they need while preserving the assets they’ve worked a lifetime to build.

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.

This is unfortunate since over 25% of those of those with a long-term care need will face expenses in excess of $100,000.

The Long-term Care Partnership Program is a concrete step in helping people prepare for this reality and their future.

The Partnership Program allows individuals to buy private LTC insurance policies that protect a specific amount of their assets. For example, someone who purchases a LTC insurance policy with maximum benefit coverage equaling $150,000 would have protection for $150,000 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 $150,000 threshold in this example) 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 individuals get 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. 

The “younger” population, those who have not reached their 60th birthday, are encouraged to consider the Partnership Program as the rates are rise with age.

The Long-Term Care Partnership Program is not a “silver bullet.”  It is a critical piece of the puzzle to help meet the challenge of providing long-term care to 78 million baby boomers.