Who Pays for Long-Term Care?

Several studies indicate that the chances of requiring long-term care (LTC) services in one form or another are unquestionably significant and should be included in financial planning. Ironically, as the population ages, further advances in healthcare are likely to increase—not decrease—the need for LTC services. 

Why long-term care will become more inevitable 
More and more people are living long enough to experience the inevitable infirmities of mind and body. This is especially noticeable among women because their average life expectancy is a bit longer than that of men. 

The risk of needing long-term care is vastly greater than other risks we ordinarily cover with insurance, such as medical, automobile, and fire insurance. Society has been reluctant to acknowledge this possibility as we save and plan for retirement. 

Three ways to pay for LTC 
Many people mistakenly think that the long-term care costs of the aged are covered by Medicare. In fact, there are generally only three ways to pay for LTC: 

1. Out-of-pocket by the individual 
2. Long-term care insurance 
3. Medicaid 

The difference between Medicare and Medicaid
Medicaid services are state-administered, and recipients have strict income and asset limitations. Medicaid is welfare—only the poor qualify. Medicare, by contrast, is not narrowly restricted. It is health insurance available to most citizens aged 65 and above, regardless of income. But Medicare provides extremely limited LTC services, and typically never more than a short period of time. Because of the widespread, but mistaken, belief that Medicare or Medicaid is readily available to render assistance, you might find it worthwhile to examine the LTC shortcomings of both these government programs in more detail. Keep in mind that your state probably operates its Medicaid program under a unique name—it is called "Medi-Cal" in California, for example. 

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