Who Will Pay for Elders Who Need Care? 6 "Myths" of Long Term Care in America

As long as the prevailing “mythology of long-term care” continues to be embraced by most Americans, these myths will continue to create a barrier to finding serious solutions to the problem of greater need for services to frail elders and a growing shortage of those available to take care of them.

The “Mythology of Long-term Care” consists of the following beliefs:

1. The "Entitlement" Mentality: Medicare will pay for long-term care.

The tradition of having most health care related services paid for by an employer during their working years and then by Medicare when we retire has created an expectation that has become firmly established in the American psyche. The prevailing attitude toward the payment of long-term care services, whether provided in a facility or in the community is that, " long-term care should be paid for by somebody else regardless of the family’s income and assets."

Several surveys conducted by organizations such as AARP have found that a significant percentage of Americans age 65 and over believed that Medicare, or Medicare supplemental insurance (Medigap), would pay for long-term care. The reality of course is that Medicare will pay for up to 100 days of "short-term" nursing home care in qualifying circumstances, but it will not pay for long-term custodial care.

2. "I'm Not Old Enough to Worry About That Now” The need for long-term care can occur at any age. According to the National Center for Health Statistics,nearly half of the population in the United States will need some type of long-term care. 40% of the disabled population who need long term care are working age adults. An accident, a chronic illness, or an injury can all result in the need for long term care. Things like this can happen at any age......not just when you're old.


3. “It Will Never Happen to Me"
Demand for long-term care is on the rise. Already, 60 to 70 percent of Americans who live to age 65 will require such assistance at some point in their lives, according to research by the American Society on Aging and other organizations…”
Paul Hodge, director of the Generations Policy Institute at the Kennedy School, writes in the debut edition of the Harvard Generations Policy Journal, a publication exploring age-related policy issues. And even though many of those long-lived people will remain healthy for most of those additional decades, others will require years of assistance.

4. "My Family Will Take Care of Me"
Until a few decades ago, women traditionally cared for their aging parents and other relatives. With the rise of the two-income household, working women can no longer serve as full-time caregivers. Many women start families later, meaning they're busy raising their own children just as their elders need help; in addition, they often live hundreds or thousands of miles away.

5. "I Have Enough in Savings"
According to the American Council of Life Insurance, a two-year nursing home stay could cost about $500,000 in forty years' time. Therefore, a 45-year old would have to save about $3,500 per year for 40 years and achieve a 7% annual return, to fund the expense at age 85.

6. "Long-term Care is So Expensive I’ll never be Able to Afford It."
In fact, using options such as private long-term care insurance or a reverse mortgage, a substantial percentage of middle class Americans can afford to pay privately for their care, giving them far more autonomy in choosing care at home and to avoid placement in a nursing home.
Annual premiums for private long-term care insurance for those in their 50’s and early 60’s can be less than $900 per year, depending on age, medical history and the degree of coverage purchased.

Reverse mortgages are loans that allow homeowners aged 62 and over to convert home equity into cash while living at home for as long as they want. Borrowers continue to own their homes, and do not need to make any monthly payments. Instead, they can choose to receive the funds as a lump sum, line of credit, or as monthly payments (for up to life). The loan comes due only when the last borrower moves out, dies or sells the home.

According to a study by the National Council on Aging “… out of the nearly 28 million households age 62 and older, some 13.2 million are good candidates for reverse mortgages.” Of those who are candidates for reverse mortgages, about 5.2 million are either already receiving Medicaid or are at financial risk of needing Medicaid if they were faced with paying the high cost of long-term care at home. This economically vulnerable segment of the nation’s older population would be able to get $309 billion in total from reverse mortgages that could help pay for long-term care. These results are based on data from the 2000 University of Michigan Health and Retirement Study. “

“There’s been a lot of speculation about whether reverse mortgages could be part of the solution to the nation’s long-term care financing dilemma,” said NCOA President and CEO James Firman. “It’s clear that reverse mortgages have significant potential to help many seniors to pay for long term care services at home.”

Elder care professionals who provide services in the private sector for those who can afford to pay for from private funds, have a vested interest in raising the level of awareness of the American public about the various private funding resources available to pay for our services, the importance of planning ahead before a crisis occurs, and the undesirable consequences that await if we continue to hold on to the “Mythology of Long-term Care” .

Bob O'Toole, the editor of this blog,can be reached at bob@elderlifeplanning.com