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Chapt 4 1-11 Who Pays for LTC

Chapt 4 1-11 Who Pays for LTC

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Published by allenhamm
Chapter 4 of "How to Plan for Long-Term Care" by Allen Hamm.
Chapter 4 of "How to Plan for Long-Term Care" by Allen Hamm.

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Published by: allenhamm on Jun 06, 2011
Copyright:Attribution Non-commercial


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We have not passed that subtle line between childhood and adulthood until...we have stopped saying “It got lost” and start saying “I lost it.” 
— Sidney J. Harris
ources of funding for long-term care expenses are a majorconcern for our state and federal governments because long-term care expenditures could expand to the point of dwarfing ourcurrent “health care crisis.” An increase in life expectancy, the sizeof the baby boom generation,and the inflation of health carecosts are driving this expensiveproblem.With the help of financialadvisors, government analysts,and experts on aging, Americansare beginning to understandthat long-term care expensescould be the greatest risk totheir financial security. Due tonew awareness of this finan-cial and emotional risk, manyAmericans are taking action by pre-planning (as opposed to crisisplanning) to protect their families and their legacies against theimpact of long-term care.But most Americans are still confused about who pays forlong-term care. While physician and hospital care are covered byMedicare and regular health insurance, sources for payment of long-term care expenses are limited.
Who Pays for ong-Term are?
There are four sources for provid-ing or paying for long-term care:1. amily2. Medicaid (Medi-al in alifornia),the welfare program3. Personal assets4. ong-term care insurance
Some of the pros and cons of thesesources are explained below. Long-term care insurance is explained onlybriefly because an in-depth discus-sion of insurance is provided in futurechapters.At the end of this chapter, we dis-pel some myths about other sourcescommonly believed to cover long-term care and provide you with aclearer understanding of what theseprograms actually do and don’t cover.
When a loved one needed care in past decades, other familymembers took on the role of caregiver. Women—usually wives,daughters, or daughters-in-law—were the most likely care provid-ers for immediate and extended family members.But changes have occurred in our society that make it less likelythat our family will be in a position to provide our care. Familiestoday are not only much smaller, but many are also spread acrossthe globe, with two careers required to support the family’s finan-cial obligations. Even relying on a spouse for care may not be anoption due to changes in the traditional American family structure.In the future,
caregivers will be the most common providers oflong-term care services.As explained in
caring for a loved one is a necessityfor many families who failed to deliberately plan for long-term care.According to a study conducted by the National Alliance for Care-givers, the number of U.S. households providing care to adults aged
Cte 4:  Wo p fo log-Tem Ce?
 Fast Facts:
of Medicare recipi-ents mistakenly believeMedicare is a primarysource for coveringlong-term care.
Most people mistak-enly believe a MedicareSupplement policy willpay for long-term care.
of people under age65 mistakenly believe their private healthinsurance will cover thecost of long-term care.
Cte 4:  Wo p fo log-Tem Ce?
50 and older has more than quadrupled in the past 13 years. A NewYork Times report published in 2007 estimates that over 15 mil-lion adult children are providing care for their elderly parents. Theaverage caregiver is a married, middle-class woman in her late 40scaring for her mother-in-law and/or her own mother, usually in thatorder. 28% of caregivers are men. Over half of those providing careare employed full time and another 13% work part time. Accordingto another report released in 2007, these caregivers experience thehighest rates of depression among all U.S. workers.Some well-meaning children insist they will personally providefor their parents’ long-term care. This is contrary to the wishes ofmost parents, who will do almost anything to keep from becominga burden on their children.But if you decide that relying on your family
a viable optionfor your plan for care, talk seriously with your spouse and chil-dren about the type of care they can and will provide. This optionshould be put in writing by accessing your online assessment at
This will ensure that everyone’s responsi-bilities are clearly outlined in writing. It may also be a good idea tohave your family members present when developing the specificsof your plan because the need for care often has less impact on theperson in need of care than it has on the rest of the family.
MEDICaID, ThE WElFarE prraM
Medicaid provides funding for approximately 45% of all long-termcare expenses in the United States. The federal and state-fundedprogram began in 1965 to provide medical care for impov erished,elderly, blind, and disabled persons who could not afford the costof care. The lack of other payment options, especially for nursinghome care, has resulted in a large portion of nursing home residentsrelying solely on the Medicaid program to pay for their care.
Eligibility for Medicaid 
Medicaid laws have been revised many times since the creationof the program, which has resulted in a convoluted legal structureused to determine eligibility for Medicaid benefits. There arevarious “look-back periods” if you transfer assets, as well as assettransfer penalties, income caps, and waiting periods.

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