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According to the Genworth Cost of Care Survey of 2015 (“Genworth Survey”), seventy percent (70%) of Americans over the age of sixty-five (65) will eventually need some type of long-term care.  In addition, by the year 2040, twenty-two percent (22%) of the population will be over the age of sixty-five (65), which is a ten percent (10%) increase from the year 2000.  Yet, this survey showed an increasing number of people over the age of forty (40) refusing to believe they will ever need long-term care.

The study showed a lack of understanding by many of coverage for long-term care by Medicare, Medicaid and private health insurance.  The truth is that Medicare does not pay for ongoing long-term care (although it will pay for intermittent stays at nursing facilities).  Yet, thirty-four percent (34%) surveyed thought Medicare would pay for long-term care while twenty-seven percent (27%) were unsure.  Furthermore, Medicare doesn’t typically pay for care in the home.  However, thirty-six percent (36%) of those surveyed thought it would and twenty-seven percent (27%) reported that they were unsure.

As for private insurance, most health insurance plans will not cover long-term services like a nursing home or ongoing care provided at home by a licensed home health care aide.  Yet, eighteen percent (18%) of Americans age 40 and older believe that their insurance will cover the costs of ongoing nursing home care.  While, twenty-five percent (25%) believe their plan will pay for ongoing care at home. About 1 in 5 people surveyed were unsure of the coverage provided for these types of long-term care services.

Medicaid is the largest payer of long-term care services.  Medicaid is a federally and state funded needs-based benefit that will provide for various types of long-term care depending on the state’s regulations.  In 2013, Medicaid paid for fifty-one percent (51%) of the national long-term care bill totaling $310 billion.  However, the majority of Americans age 40 and older reported that they don’t expect to have to rely on Medicaid to help pay for their ongoing living assistance expenses as they age. (kff.org)

The actual costs for long-term care are staggering.  The Genworth Survey reported that, in Maryland, the average bill for a nursing home is well over $100,000. Most of us will ultimately rely on Medicaid to finance these costs should long-term care become necessary. Planning for this can result in very significant wealth preservation for individuals and families.