Medicare and Long Term Care

June 14, 2012
Parsippany, NJ

The myth that Medicare covers long term care (LTC) is one of the most pervasive and dangerous impediments to proper retirement planning. As long as people believe that Medicare pays the bill for LTC, they are likely to ignore the very effective planning solutions actually available, such as long term care insurance. After all, why should one plan for (and pay for) solutions if he or she believes they are already taken care of?

Although bashing the government might appear to be replacing baseball as the national pastime, there IS a government resource that I highly recommend to set the record straight. I'm referring to Medicare.gov's long term care link: http://www.medicare.gov/longtermcare/static/PayingOverview.asp

This site will compare and contrast all the possible ways to pay for care, and the trade-offs involved. However, when using the site, consider the fact that -- as with any government website -- it can only run on current information. Therefore, what is there today will not necessary represent the future LTC scenario for today's 50-year-old visitor -- who likely won't need LTC and any then-government program benefits to pay for LTC for decades. But there's a way to easily get beyond this issue. The site makes it clear that government programs today cannot be counted on to provide the kind of long term care most people want. One need only review the recent history of the Medicare to realize that the program is most likely not going to add coverage for LTC before those pre-retirees need care.

Although the information provided on this website is useful and accurate, it may also be confusing. For example, the site explains: "A study by the U.S. Department of Health and Human Services says that people who reach age 65 will likely have a 40 percent chance of entering a nursing home." I find this statement, while accurate, somewhat misleading. Here's why: Many, many people will enter a nursing home for short-term post-acute rehabilitative care that lasts a few days or weeks. That's the kind of care that IS covered by Medicare. But it's definitely NOT the kind of care that worries most people. Here's the killer fact, again, quoted verbatim from the web site: "About 10 percent of the people who enter a nursing home will stay there five years or more."

What I find almost amusing, if it weren't so tragic, is this: the government itself is telling people on its website (and, again, I'm quoting): "While there are a variety of ways to pay for long-term care, it is important to think ahead about how you will fund the care you get. Generally, Medicare doesn't pay for long-term care. Medicare pays only for medically necessary skilled nursing facility or home health care. However, you must meet certain conditions for Medicare to pay for these types of care. Most long-term care is to assist people with support services such as activities of daily living like dressing, bathing, and using the bathroom. Medicare doesn't pay for this type of care called 'custodial care.'"

Wow, I couldn't have said it better myself! Is it time for you (or your family, or your clients) to consider private long term care insurance to pay for future custodial care when the need arises?