Long-term care: A problem the Affordable Care Act didn’t fix

The Patient Protection and Affordable Care Act failed to solve one health care riddle: how to pay for long-term care for the rising tide of the nation’s aging population.

Long-term care, at home or in nursing facilities, isn’t cheap. In Colorado, a semi-private room in a nursing home runs more than $72,000 a year. Home health care in Colorado Springs is $19 an hour, and if round-the-clock care is needed, it costs more than a nursing home.

The government tried to crack the code in the Obamacare legislation. Known as the Community Living Assistance Services and Supports, or CLASS, the law provides long-term health insurance to anyone older than 18, regardless of illness or injury. The voluntary program would have clients pay into the program for five years, and they must be working three of those years. After that, they could tap into the benefits.

But after 19 months, Secretary of Health and Human Services Kathryn Sebelius threw in the towel. She cited difficulty in sorting out legal issues, solvency problems and rising health care costs as the reason she was unable to certify the program.

“We have not identified a way to make CLASS work at this time,” she said. It’s something the Obama administration doesn’t want to talk about, and its official stance is that the program is only on hold for the next three to five years.

It’s not surprising, said Steve Berkshire, director of the doctorate of health care policy program at Central Michigan University.

“Long-term care is expensive,” he said. “The program’s in jeopardy because it won’t cover costs.”

But Kathleen Stoll, deputy executive director at Families USA, a nonprofit industry group that lobbies for consumer health-care needs, says there’s still a chance that CLASS can be implemented.

“I think it’s more the legal issues and political issues,” she said. “It’s financially feasible, but at this time, we’re just not sure that HHS has the authority to implement the program.”

In the meantime, families are left to try to unravel the mystery of how to pay for long-term care on their own.

Insurance option

Right now, private long-term care insurance is the most attractive option for people who think they might need a nursing home or private in-home nurses. Like health insurance, it’s cheaper the earlier people get it, but premiums are growing more expensive. Most policies pay a daily rate, something between $150 and $200 a day, anything more than that is paid for out-of-pocket. And most companies only cover two to four years of care.

These days, fewer insurance companies are signing new policies, Berkshire said. They are realizing the full expense of the policies, as people live longer but need more care.

“Some companies are raising premiums by 40 percent,” he said. “And they aren’t writing any new policies.”

It is the one solid answer, however, and it makes sense for people to prepare for the costs through an insurance policy.

“I don’t know about you, but I know I won’t have millions socked away to self-insure,” said Bernie Benyak, senior tax manager at Stockman Kast Ryan in Colorado Springs. “It makes sense to look at getting a policy.”

But not until just before you need it.

“It doesn’t make sense to pay into it for 50 years if you start in your 20s; there’s not going to be a solid return on the investment,” he said. “The sweet spot is between 50 and 70. People should definitely start considering it in their 50s and sign up for it in their 60s. That way, you’re paying for it for a shorter amount of time.”

Chances are that people won’t need long-term care. Right now, the majority of people won’t see the inside of a nursing facility. But that could change, Berkshire says, as the population ages.

“Only 10 to 12 percent ever go into nursing homes,” he said. “Most people are being cared for at home, by their families or by home-health nurses. But that could change as the Baby Boomers get older. There might not be enough family members living close by to care for them.”

Despite the failure of CLASS, the federal government isn’t moving to address the issue further, he said.

“It’s hard to know how to address it,” he said. “There are programs, things like wellness or preventive care, that will keep people at home longer and keep people healthier. But for those who need long- term care — it remains a problem.”

Other alternatives

The failure to implement the public insurance program leaves only a few other options for families who don’t have long-term care insurance.

The least attractive option is Medicaid, Berkshire said.

“Medicaid will pay for long-term care — but only after assets are used up,” he said. “So, first, a person must spend all the assets collected during a lifetime, then Medicaid will step in.”

People using Medicaid must have no more than $2,000 in assets, he said, although the home is protected from that number.

“There have been a few cases, where a couple has gotten divorced because one of them needed long-term care, and the other didn’t want to lose property,” Berkshire said. “It’s rare, but it happens.”

Medicaid is the option that most families are forced to use, because long-term care is so expensive. Unless there are millions in the bank, Medicaid is the option, Stoll says. And thanks to the ACA, the state and federal government program now offers some help for people who want to stay at home as long as possible.

“Historically, Medicaid had an institutional bias,” she said. “It was only available for nursing-home care — and sometimes people were forced to use it before they were ready for nursing home care. It’s expensive, medically.”

Starting last year, the program started paying for home health nurses and personal assistants to keep people at home.

Many people mistakenly believe Medicare, the government-sponsored health insurance program for people over 65, will pay for nursing home care. But that’s not entirely true. Medicare is only a limited option for long-term care, Berkshire said.

Medicare will pay for a nursing home stay after an “acute event” thath requires hospitalization. The maximum is 100 days, and patients must show improvement.

“If they can’t show that they’re getting better, getting ready to go home, Medicare cuts them off, sometimes even after just a week,” Berkshire said. “It’s more for rehabilitation services — occupational therapy, physical therapy — than it is a long-term solution.”

Health care policy analysts agree that there needs to be some long-term care insurance solution from the federal government. As budgets grow tighter and health care becomes even more costly, families are going to be challenged to take care of their elderly relatives.

“We need something more viable than Medicaid,” Stoll said. “We only have partial solutions now.”  CSBJ

2 Responses to Long-term care: A problem the Affordable Care Act didn’t fix

  1. Most people overestimate the cost of a good long-term care policy. A healthy, married couple in their mid-fifties, can share a policy that starts off with over a half million in benefits for about $100 per month per spouse.

    There’s a new type of government-approved long-term care policy that can protect your assets from Medicaid even if the policy runs out of benefits.

    Here’s an explanation of how these policies work:

    http://bit.ly/How-Partnership-Policies-Protect-Assets

    Joyce
    November 24, 2012 at 4:19 pm

  2. Mr. Burkshire is clearly misinformed as to how LTCi policies work and or how they are approved. His comment about not getting one until right before you need it is absurd…because in most cases it’s now too late. Unless he has the crystal ball that no one else seems to have. People need to remember that they need to be able to health-qualify in order to get it. What good does it do someone to wait into their 60′s until they purchase coverage if they can’t even get it!

    I’m not saying everyone in their 20′s should go out and buy a policy…but let me be clear. You will NEVER save money by waiting to purchase coverage. LTC policies get more expensive every year you wait to buy coverage. By locking in to your age and your health, you can all but assure yourself of getting approved for coverage and lock into less expensive rates. Someone paying premiums for 40 years will pay less money in the long run than someone who waited 20 years to get their policy. That same person who is only paying for 20 years will spend thousands more taking into consideration inflation adjustments.

    Ed Young
    November 26, 2012 at 10:47 am