The next time you receive your annual Social Security statement, read it closely. You’ll see that the government suggests individuals plan ahead with insurance.
It is a common misconception that Medicare and health insurance will provide long-term care coverage when it becomes a necessity. Individuals also believe that Medicaid will cover all of their long-term care needs. In reality, it is quite the opposite. It surprises many when they learn that Medicare and most health insurance plans do not cover long-term care services, and Medicaid only provides services to those with low incomes. However, there are many government incentives and programs in place that are designed to encourage long-term care planning.
President Obama, in order to study long-term care financing and to propose solutions, created a federal commission after long-term care was eliminated from the Affordable Care Act (ACA). The commission concluded that the best option for preparing for an unexpected need for long term care is through long-term care insurance. A statement within the report submitted to Congress by the commission read, “Given the unpredictable, catastrophic nature of extensive long-term care services and support costs, insurance, not savings, is the most efficient and effective means of preparing for their possible occurrence.”
State governments also are trying to plan for the tidal wave of aging Baby Boomers. For example, if the Minnesota state government were to include coverage for long-term care through Medicare, Medicaid, and other health insurance plans, it could have detrimental effects on the state’s sustainability. “The cost to the state threatens to become “unsustainable,” said former Minnesota Lt. Governor Prettner Solon at the state’s Own Your Future kickoff event. This is because the number of Minnesotans over the age of 65 will grow by 107% from 2010 to 2030. In addition, there is a 70% chance that the individuals over the age of 65 will need long-term care. If Medicaid were to serve all individuals with insufficient income, by 2030, more than 325,000 elderly would be in need of service. This alone would cost the state of Minnesota $5 billion. Other states face a similar future.
Considering the immense growth in the aging population along with the number of individuals without resources, Medicaid will be strained to provide necessary services to all of those individuals in need. Thus, the government creates tax incentives and programs in order to encourage people to purchase long-term care insurance by themselves. In short, the responsibility for long-term care planning is in the hands of the individual, and one of the best ways for many to prepare for this potential unexpected necessity may be through long term care insurance.
PHOTO CAPTION: The next time you receive your annual Social Security statement, read it closely. You’ll see that the government suggests individuals plan ahead with insurance
