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Paying for long-term care is complicated in the United States. It is not our purpose here to set health care policy. In fact, neither we nor any of the so-called pundits have the answer to the problem of high health care costs. What we do know is that something must change. In September, 2007, the Comptroller General of the United States said "The federal government is on a 'burning platform' and the status quo way of doing business is unacceptable." (See Health Care 20 Years From Now, page 4). A recent Congressional Budget Office report indicates that the problem is "excess cost growth - or the extent to which the increase in health care spending exceeds the growth of the economy." (See The Long-Term Outlook for Health Care Spending, Congressional Budget Office, November 2007).
Our purposes here is to briefly describe how Long-term care is funded. For non-chronic diseases and injury treatment, care is typically funded by private health insurance, Medicare (for those 65 and older, blind or disabled) and by private funds. Certain impoverished individuals will have Medicaid coverage as well. According to the Kaiser Family Foundation, long-term care is funded from the following sources:
| Funding Source | Total Long-Term Care Expenditures | Nursing Home Care Expenditures |
| Medicaid | 42% | 43%
| | Medicare | 20% | 14% |
| Out-of Pocket/Private | 26% | 32% |
| Private Insurance | 9% | 8% |
| Other Public | 3% | 3% |
(Source: KFF Medicaid Fact Sheet, July 2006)
When individuals suffer from chronic ailments, those that require long-term care, private health insurance and Medicare provide little if any coverage. The reason is that the "care" being provided is not deemed to be "health care;" instead, the care is deemed to be custodial. Severe limits are imposed on Medicare long-term care coverage. For example, Medicare covers up to 100 days of a nursing home resident's bill (and no more). Of those 100 days, during the first 20, Medicaid pays 100%; thereafter, the resident must pay the daily co-pay (in 2008, $128.00 per day). This "coverage" exists only if there is a qualifying hospital stay (3 days excluding the date of discharge), the nursing home admission occurs within 30 days following the hospital discharge and skilled care is required after discharge for the resident to attain or maintain his/her highest practicable physical, mental or pscho-social well-being. See Medicare and Nursing Home Costs for a brief outline of the requirements for Medicare nursing home coverage.
If the resident purchased long-term care insurance, then it will cover the cost of long term care within the terms of the policy, up to the policy limits. Otherwise, the resident will pay for long-term care out of his/her own pocket. You should review policies carefully. If you believe an item is covered and it is improperly denied, then you may need legal representation to pursue reimbursement.
When other resources are exhausted, assuming medical need is established, Medicaid will pay for the cost of nursing home care. In many cases, with proper planning, Medicaid eligibility can be accelerated and assets may be protected. This process is called Medicaid Planning. Our view is that if assets are protected, they should be protected for the purpose of improving the quality of the Elder's life (or the life of a disabled non-Elder); planning for how we will spend (invest) money in the Elder's life to improve his (or her) quality of life and the quality of care is called Life Care Planning.
Medicare provides limited coverage for home health care, typically for persons who are "homebound." Except for exceptional circumstances, care in assisted living facilities is not covered.
Long-Term Care Service |
Medicare |
Private Medigap Insurance |
Medicaid |
You Pay on Your Own |
Nursing Home Care |
Pays in full for days 0-20 if you are eligible, meaning you are in a Skilled Nursing Facility following a recent hospital stay. If your need for skilled care continues, may pay for days 21 through 100 after you pay a $128/day co-payment |
May cover the $128/day copayment if your nursing home stay meets all other Medicare requirements. |
May pay for care in a Medicaid-certified nursing home if you meet functional and financial eligibility criteria. |
If you need only personal or supervisory care in a nursing home and/or have not had a prior hospital stay, or if you choose a nursing home that does not participate in Medicaid or is not Medicare-certified. |
Assisted Living Facility (and similar facility options) |
Does not pay |
Does not pay |
May pay care-related costs, but neither Georgia nor Tennessee pay for room and board |
You pay on your own except as noted under Medicaid if eligible. |
Continuing Care Retirement Community |
Does not pay |
Does not pay |
Does not pay |
You pay on your own |
Adult Day Services |
Not covered |
Not Covered |
Financial and functional eligibility required, but coverage is limited |
You pay on your own [except as noted under Medicaid if eligible.] |
Home Health Care |
Limited to reasonable, necessary part-time or intermittent skilled nursing care and home health aide services, and some therapies that are ordered by your doctor and provided by Medicare-certified home health agency. Does not pay for on-going personal care or custodial care needs only (help with activities of daily living). |
Not covered |
CCSP in Georgia; very limited in TN |
You pay on your own for personal or custodial care, except as noted under Medicaid, if you are eligible. |
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Medicaid
Cost of Care
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