Page Reviewed / Updated - May 2016
Prior to a discussion of who pays for long-term care, it is helpful to clarify what long-term care is and is not. For the purposes of this article, we are focused on the aging, elderly, and individuals with disabilities. Our definition of long-term care is any care provided to an individual that is of a personal nature, such as assistance with dressing, grooming, or bathing, or care that is medical in nature. For example, care provided by doctors and nurses. Long-term care can be provided at home, in an assisted living facility, in a nursing home, or in an adult day care center.
Unfortunately, there is not a simple answer to this question. Who pays largely depends on the income and assets of the individual in need of care and the severity of the care they require. It is perhaps easiest to address this question by breaking it down into the smaller questions that follow. It is also helpful to understand that very rarely does a single source pay for care; it is much more common for the cost of care to paid for by multiple sources.
For low income elderly individuals and families with limited assets, the cost of medical care is largely covered by Medicare or Medicaid for those who meet the Medicaid eligibility limits. Often times, the poor do without medical care, forego their prescription drugs, or simply receive medical services in the emergency room and are unable to pay their medical bills. In fact, many medical bills resulting in bankruptcy filings are discharged.
However, Medicare does not pay for personal care in long-term care situations. State Medicaid programs will pay for personal care when it is provided in a skilled nursing facility (or nursing home). Depending on one's state, there are Medicaid waiver programs available that provide assistance for personal care outside of nursing homes. Using a waiver, one can receive care at home, in adult day care, or in assisted living residences.
There are also several veterans' long-term care assistance programs and some state assistance programs for individuals that do not qualify for Medicaid. Despite these programs, very often families with limited means bear the full burden of providing personal care themselves.
For medical care, Medicare is the primary source of funds. Low and middle income families often have Medicare Supplemental insurance which provides additional assistance for Medicare co-payments and other gaps.
Personal care is not covered by Medicare. Veterans' benefits do provide some assistance for low to middle income families such as the Aid and Attendance Program. Medicaid, however, is not as much of a factor as the vast majority of families in this income level do not qualify. Many states provide assistance to individuals that do not qualify for Medicaid with the objective of keeping them out of the program. Since Medicaid is a very expensive program, states offer personal care or financial assistance programs designed to prevent or delay Medicaid enrollment. In the long term, this can be less expensive for the states.
Middle to higher income families typically can afford better health insurance. Therefore, a higher percentage of their medical care is paid for by their insurance programs. This might include Medicare, Medigap, or Supplemental Insurance, as well as other private insurance. Individuals with middle or higher incomes do not qualify for Medicaid.
Most of the state-based or veterans’ programs that provide personal care assistance have income limits and / or asset limits. Therefore, higher income families rarely have personal care paid for by these programs. However, many middle and higher income individuals have long-term care (LTC) insurance. Most LTC insurances provide a daily allowance for personal care. Those without LTC insurance often pay out of pocket for home care aides or assisted living.