Paying For Long-Term Care

As a nation, saving money just isn’t something we’re very good at. Causes could include stagnant wages, or possibly our love of shopping, but the result is undisputed: 45% of people age 46 to 64 have less than $25,000 saved for retirement. Between the decline of pensions and the housing crash, it is unlikely that number will improve in the future.

Despite this, about 70% of people age 65 or older will need long-term care services at some point in their lifetime, and the median annual rate for a private nursing home room was $81,030 in 2012. My math skills aren’t the greatest, but these figures tell me there’s a huge (and growing) gap between need and ability to pay when it comes to long-term care.

One solution, perhaps more popular ten years ago than today, is long-term care insurance.  However, the recent low-interest rate environment (combined with rapidly escalating long-term care costs) has resulted in premium hikes many older adults cannot afford to pay.

Unfortunately Medicare only covers the first 100 days of skilled nursing care per illness, provided various requirements are met; Medicare does not cover “custodial care,” designed to help with activities of daily living. Increasingly, even middle-income seniors are turning to Medicaid to cover the cost of long-term care.

Eligibility guidelines for Medicaid vary state by state. In California, Medicaid (known as “Medi-Cal“) covers nursing home care with prior authorization from a health care provider if you qualify.

Determining whether you qualify for Medicaid or Medi-Cal is an extremely complex task. As noted by Disability Benefits 101, there are over 90 eligibility categories, each with its own rules and requirements. An elder law attorney is the best person to contact if you or someone you know may need Medicaid assistance. The National Academy of Elder Law Attorneys (NAELA) has a “find an attorney” feature on its website; this is a very good place to start.

A person may be automatically eligible for Medi-Cal if he or she receives aid from one of the following programs:

  • SSI/SSP (Supplemental Security Income/State Supplemental Program)
  • CalWORKs (California Work Opportunity and Responsibility to Kids). Previously called Aid to Families with Dependent Children (AFDC).
  • Refugee Assistance
  • Foster Care or Adoption Assistance Program.

A person with income above the eligibility levels of no-cost Medi-Cal programs may also qualify as “medically needy” if he or she is, for example, 65 or older, blind, or disabled. This program usually requires the person to pay a monthly share of cost, similar to a co-payment.

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