New Report Examines Medicaid’s Critical Role in Providing Long-Term Care Coverage for Older Americans

Report Offers Policy Solutions To Address Unpredictable and Potentially Catastrophic Costs Of Long-Term Care

Webinar on October 21st to Review Findings

WASHINGTON, D.C., October 14, 2020 – With healthcare and long-term care costs rising at much higher rates than wages or salaries, it is becoming more difficult for Americans to afford the costs of long- term care. These unpredictable costs, combined with low levels of savings, mean many older American families find themselves forced to spend down their assets so they are eligible for long-term care coverage under Medicaid.

At the same time, the rules governing access to long-term care coverage through Medicaid are complex and vary widely from state-to-state. For most families, navigating this process is complicated and burdensome at a time when they likely are experiencing a health crisis.

A new report from the National Institute on Retirement Security (NIRS), Accessing Long-Term Care Coverage Through Medicaid: The Safety Net For Seniors Facing Unmanageable Costs, examines the complex rules and multiple pathways for receiving Medicaid coverage across the nation. The report focuses on the long-term care needs of older Americans and their options for accessing care. It also reviews an innovative long-term care social insurance program in Washington State that is projected to reduce Medicaid expenses and offers policy solutions to address the rising costs of long- term care.

This report is authored by Izidora Skračić, NIRS research intern, Tyler Bond, NIRS research manager, and Dan Doonan, NIRS executive director. Download the report here. Register here for a webinar on Wednesday, October 21, 2020, at 2:00 PM ET to review the findings and respond to questions.

“Today, few individuals, employers, or governments have a plan in place to finance seniors’ long-term care needs, even as the cost of services is increasing,” said Dan Doonan, NIRS executive director. “Already, we know that retirement income and savings often are woefully inadequate to cover what can be prohibitively expensive long-term care costs.”

“As a result, too many older Americans are forced to spend down their savings so they can qualify for long-term care under Medicaid. This is an expensive, overly-complicated, and inhumane approach. We hope this report provides state and federal policymakers with new ways to think about providing long-term care as the nation ages,” Doonan explained.

The report offers four policies to address the unpredictable yet potentially catastrophic costs of long- term care needs:

  1. Long-term care proposals should provide universal coverage based on need. Washington State is piloting a social insurance program to provide coverage for long-term care costs, and this could serve as an example for other states or even a federal program.
  2. The programmatic bias toward institutional care over home or community-based care should be eliminated. HCBS costs less than institutional care and is generally preferred by beneficiaries and their caregivers.
  3. A stronger focus on healthy aging for all should include the integration of healthcare and social services and accountable care systems focused on long-term health.
  4. The ability of older adults to remain in their communities and live independently should be facilitated by public policy.

The report considers an innovative social insurance program in Washington State to address the challenge of long-term care needs. Under the program that launches in 2022, Washington residents will pay 58 cents of every $100 into the long-term care trust fund. After ten years, residents can claim up to $100 a day in benefits, with a lifetime cap of $36,500. While a lifetime cap of $36,500 may seem small, it could go a long way for the many older Americans with more manageable long-term care needs. Importantly, Washington State expects to reduce Medicaid costs with this program.

Long-term care (LTC) comprises a broad range of paid and unpaid care assistance that people need when experiencing difficulties completing self-care tasks. Some 69 percent of seniors will require some type of long-term services and supports. Long-term care insurance surged in popularity in the 1990s, but insurance companies exited the market in large numbers in the 2000s. The number of insurers selling long-term care policies shrank from over 100 in the 1990s to less than 15, currently covering only seven million Americans.

The National Institute on Retirement Security is a non-profit, non-partisan organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers and the economy as a whole. Located in Washington, D.C., NIRS’ diverse membership includes financial services firms, employee benefit plans, trade associations, and other retirement service providers. More information is available at Follow NIRS on Twitter @NIRSonline.