Friday, April 17, 2009

Can't Medical pay for my long term care?

Those of us who sell long term care insurance and understand the astronomical cost of having a long term care need now and in the future, have a hard time understanding why everyone with a checking account isn't lining up at our doors to get themselves a policy before they lose their health.

I attended a talk today presented by Steve Moses from the Center for Long Term Care Reform in Washington who addressed this issue. If people believe that the government will pay for their care, they will deny the risk, avoid the premiums and when they get sick, depend on getting free care at a nursing facility. (Although that's the last place everyone says they want to be.)

Although we are told that you need to "spend down" all of your assets paying for your own care before Medical will fund it, Moses pointed out that that is not necessarily true. It is true that you must "spend down" to $2,000 in the bank before being eligible for Medical, but you don't have to spend it on your care. You just can't give it away to anyone else. If you want Medical to start funding your nursing home, you can spend it on a great vacation, a new car or refurnishing your home -- thereby artificially impoverishing yourself. Moses believes this is a disincentive for people taking personal responsibility for funding their care.

Given the financial crises that states are in, the plan to depend on Medical to pay for your care is not going to be a viable one in the relatively near future. The government is already millions of dollars behind in current Medical obligations. Moses said that 25 percent of state budgets are eaten up by Medical and 33 - 50 percent of those funds go to pay for long term care. Finding the money to pay for Medical obligations now and into the future is a "fiscal black hole," said Moses. The only way that Medical will survive is to close all the loop holes and make it a true welfare program designed to help those who are truly financially destitute.

Another fact to consider is that Medical currently pays nursing homes only 70 percent of the cost of providing adequate care. So, if becoming financially destitute and receiving your care in a Medical-(under) funded facility is your plan, go for it. But if you'd like to receive your care in the setting of your choice with the best care available, you might want to start saving lots of money, setting up some good investments, or getting insurance.

No comments:

Post a Comment