Long term care (LTC) is defined as the provision of help with daily activities, such as bathing, shopping, and food preparation, over an extended period of time. Most Americans recognize they will need long term care services sometime in the future, whether after a surgery or in old age. However, the vast majority of Americans are uninformed about the realities of the industry. The risk of needing long term care increases exponentially as we age. According to the Survey of Income and Program Participation (2003), 54 percent of the individuals needing long term care are above the age of 65. Many individuals wrongly believe Medicare will cover the costs of long term care; in reality Medicare only covers 100 days of long term care. Medicaid, on the other hand, will pay for long term care. However, you are only eligible for coverage by Medicaid if you are in a lower income bracket. If you spend down your assets, which many elderly are forced to do, you will eventually be eligible for Medicaid coverage.
There are two forms of LTC providers: for-profit and non-profit. The for-profit providers are primarily large chains, whereas non-profit providers are typically independently run homes. Non-profit homes often provide higher quality care, and for that reason have costs higher than the lower reimbursement rates Medicaid offers. For that reason, Medicaid patients are excluded from non-profit homes and are forced to choose a for-profit home to provide their long term care. However, even if you are able to afford non-profit of long term care (which can cost $5000-$10,000 per month), your care will most likely still be sub-par. In 2008, 92% of facilities had some form of deficiency and 26% of facilities were deemed to be putting their patients in harm or jeopardy.
These deficiencies can result in problems – ranging from inadequate feeding, inadequate toileting of residents, bed sores, untreated physical pain, and untreated psychological disorders such as depression. Due to poor regulation and a lack of both transparency and money to monitor facilities, nursing home conditions are poor. With more than half of households predicted to be unable to maintain their pre-retirement living standards after retirement (National Retirement Risk Index) and the future prospects of the Social Security system in doubt, every American needs to take their future into their own hands. Although there are no definitive solutions to the problem, I do have several pieces of advice.
First, educate yourself. Often LTC needs to be found immediately and people are unaware of the options. Research nursing homes in your area before you are responsible for finding your own or a loved one’s LTC provider. Second, be aware of your finances. Understand the costs involved in LTC and plan your expenditures accordingly. Social Security checks and Medicare are not going to be able to pay for your LTC costs. Start personally putting money away for your retirement. Many employer-offered 401(k)’s have modest balances, and employees lack defined-benefit pensions. If you are looking to invest in order to fund your retirement, make sure you choose a safe investment with high liquidity. When it comes to retirement costs for you and your family, you want to know the money will be there and that you will be able to access it when it is needed.