Harry Baron had already lived through a tough week this summer, facing the reality that his wife of 67 years could no longer live at home. Her memory issues were serious, Baron learned, and she needed more care than he could provide.
Baron, who for years ran a popular deli in Atlanta, sadly accepted that Claire should move to assisted living and found a beautiful place not far from their home. His sorrow turned to shock when he presented his wife’s Medicare card to the staff.
“They said to me real quick – we don’t take Medicare,” Baron said. “You don’t take Medicare? I said, ‘What is this going to cost me?’ And when they told me, my knees buckled.” What they told him was nearly $4,300 a month – or more than $50,000 for a year of care.
Almost every family has faced some version of Baron’s experience. The health of a wife, father or aunt reaches a crisis point and suddenly the family needs to know: what are the options, and how do we pay for them? The questions also pose a difficult public policy dilemma for the nation. As baby boomers age and as people live longer than ever, many worry that neither the family nor the government is prepared for the coming tidal wave of demand for long-term care.
Congress appointed a national Commission on Long-Term Care this year. The group issued 28 recommendations this fall, but it couldn’t reach consensus about how to pay for services. It’s a tough and expensive problem, but it’s something the country can’t ignore: most families will eventually face a difficult kitchen table conversation about how to take care of the most important people in their lives.
Many families do not learn about the costs of long-term care until the crisis hits and many get the sort of rude awakening that Harry Baron experienced, said Jon Howell, president and CEO of the Georgia Health Care Association, an industry group that represents nursing homes, assisted living centers and companies that coordinate home care across the state.
Seventy percent of people now turning 65 will need long-term care at some point during their lives. Only a fraction of those who will need care have long-term care insurance, which can pay for services at home or in a nursing home or assisted living center.
Such plans grew in popularity during the 1990s, but sales have declined in recent years as some insurers exited the market, and many of the remaining insurers have hit policyholders with steep premium increases.
When speaking to civic groups, Howell said, he shares lots of key facts that catch people off guard, including: Medicare covers nursing home care after a hospitalization, but at day 21 a co-pay requirement kicks in that could cost up to $12,000 over the next 80 days of care.
To qualify for Medicaid, residents must effectively impoverish themselves, spending all but $2,000 of their nonexempt assets and also using all but $50 of their monthly Social Security checks to pay for their care.
Medicaid doesn’t cover assisted living – only nursing home care.
After a resident’s death, Medicaid can take the resident’s home equity and other assets in an estate to cover the cost of care paid by the government, although there are protections for surviving spouses.
The requirements represent a harsh reality for many once solidly middle class people – people who have spent a lifetime working toward financial security – who find they have no option other than turning to Medicaid to cover nursing home bills.
For many people who lived through World War II and the Depression and never seriously considered long-term care insurance, it’s a shock to see their estates decimated when they were sure they would at least pass on the value of their family home to their kids.
It’s important, Howell said, that more families understand this reality.
He wants people to understand that Medicare doesn’t cover the kind of care his wife needs and he also wants people to understand what qualifying for Medicaid entails. Baron said he relies mostly on a military pension and both his and Claire’s Social Security checks to pay for her care. He knows he’s fortunate that he can come up with the money, but he knows not everyone is in that position.
“If you’re on Medicaid, you don’t have anything left,” he said. “It’s sad.” He thinks the average person needs to consider long-term care insurance. He also thinks it might make sense for the government to expand Medicare or another program so that workers could contribute part of every paycheck to cover care down the road.
Governments today pay for 62 percent of the nation’s long-term care services at a cost of $130 billion a year. But demographic realities could make that public cost look puny in the not-so-distant future.
The number of Americans needing long-term care is expected to more than double by 2050, according to a report issued in December by the U.S. Long-term Care Commission. Meager retirement savings, in general, mean that people’s ability to pay for care will fall short of the need.
The commission found that long-term care is changing through technology and more services available in the home. In addition, more disabled people want the opportunity to work. Consumers need to have access to affordable insurance for long-term care at a time when many insurers have left this market and premiums are more expensive than most families can afford, the commission found. Medicaid needs to be strong enough to meet the demand for those who have exhausted their ability to care for themselves.
“The need is great,” the report said. “The time to act is now.”