In 2050, more than a fifth of the population in the United States will be 65 years or older.1 This means more people will be limited physically and cognitively, which also means that more and more people will need assistance and likely end up in nursing homes. Nursing homes, which are basically 24-hour senior care facilities, vary in terms of cost and services provided. Nursing homes are licensed by its residing state as providing a certain level of personal and nursing care to its residents.
Knowing that there is a high probability that you or one of your loved ones will end up in a nursing home, it is critical to understand how to finance the cost of supporting someone who is living in a nursing home. Private or public support can be pay for nursing homes. Major payers for long-term services and support are Medicaid and Medicare, as they pay for two thirds of the total cost.2 They are also funded by private insurances, federal and state programs for the elderly, and private donations.
Medicare pays to cover short-term (3 months or less) rehabilitative care for those recovering from acute conditions, while Medicad and private long term insurance covers long-term care (3-5 years for private insurances, indefinitely for Medicaid).1
Most people do not prepare for their long-term care needs, which is a growing problem in the United States as more and more people require long-term care. This may end up in families and beloved ones covering the cost if the supported is not eligible for Medicaid or Medicare and not supported by private insurance. Therefore, it is critical to start thinking early in terms of retirement and possible long-term care needs for you and your spouse. The more prepared you are, the less you’re going to have to face when you retire.
- Congressional Budget Office, Rising Demand for Long-Term Services and Supports for Elderly People (June 2013), http://www.cbo.gov/sites/default/files/44363-LTC.pdf
- Congressional Budget Office, Dual-Eligible Beneficiaries of Medicare and Medicaid: Characteristics, Health Care Spending, and Evolving Policies (June 2013), www.cbo.gov/publication/44308
- Mark Diamond, National Speaker and Senior Advocate