Poll Suggests Medicare Should Pay for Long-Term Care

Many people, maybe even you, move into retirement with a quiet confidence that Medicare will be there if they ever need help with daily living as they age. It feels like a reasonable assumption — after all, Medicare is the backbone of health coverage for older Americans. And you wouldn’t be alone in that belief. Polling consistently shows that most Americans expect Medicare to cover long-term care needs, making it one of the most widespread — and most costly — misconceptions in retirement planning.

Medicare and Medicare Supplement insurance will not pay for long-term custodial care, the type of care most people eventually need. Custodial care means help with activities of daily living, such as bathing, dressing, or eating, or supervision due to memory impairment. Health insurance and Medicare typically pay for skilled care only for a short period, and only while you are improving. Medicaid will pay for custodial care, but only after you have spent down nearly all of your assets.

A Widening Gap Between Expectation and Reality

According to the federal government, 56 percent of Americans turning 65 today will need some form of long-term care during their lifetime, based on needing help with at least two activities of daily living or supervision due to cognitive impairment. That is a sobering number for anyone without a plan in place.

Despite the size of this risk, two-thirds of people age 40 and older say they have done little or nothing to prepare for the costs of aging and extended care, according to past polling from the Associated Press-NORC Center for Public Affairs Research. The same polling found that a majority of Americans over 40 believe Medicare should carry a major role in paying for ongoing living assistance, support that has grown over the past decade and now spans both major political parties.

The confusion is understandable. Medicare's own website is direct about the limits of coverage: it does not pay for long-term, or custodial, care if that is the only type of care you need, and most nursing home stays fall into that category.

Medicare was designed for short-term acute care and short-term rehabilitative stays in a rehab or long-term care facility.

Medicare was never designed to pay for long-term care." — Valerie VanBooven, a registered nurse and author who writes on aging and caregiving.

Government Already Plays a Major Role, Just Not Through Medicare

While many people want the federal government more involved in long-term care funding, both federal and state governments already play a significant part, primarily through Medicaid rather than Medicare.

Most states participate in the federal Long-Term Care Partnership Program, established after the 2005 Deficit Reduction Act. The program allows consumers who purchase a qualifying Long-Term Care Insurance policy to protect a portion of their personal assets, equal to the dollar amount of benefits their policy pays, while still being able to access Medicaid if they exhaust those benefits. The intent is not to push more people onto Medicaid, but to reward those who plan ahead so they are not forced to spend down everything they own.

Most states still require individuals to spend down the vast majority of their assets to qualify for Medicaid long-term care benefits without this protection, which is the core reason financial planners encourage people to consider Long-Term Care Insurance well before retirement.

The federal government, along with many states, also offers tax deductions for Long-Term Care Insurance premiums for individuals who qualify.

What People Who Already Own Coverage Are Experiencing

People who hold Long-Term Care Insurance policies are actively drawing on those benefits. The American Association for Long-Term Care Insurance (AALTCI), a national consumer education and advocacy organization, projects that long-term care insurers will pay out more than 100 billion dollars in claim benefits over the coming decade.

That money pays for care in private homes, assisted living communities, and skilled nursing facilities, dollars families do not have to pull from savings or retirement accounts. Without that coverage, the responsibility for arranging and often providing that care typically falls to spouses or adult children.

"Too many people fail to plan for aging the way they plan for retirement. Taxpayers are not in a position to pay for everyone's long-term care. With advances in medical science, more people are living longer, and more people require extended care, either at home or in a facility," said Matt McCann, CLTC, a nationally licensed long-term care planning specialist.

Without a plan in place, the family becomes the default caregiver. Women provide the substantial majority of unpaid caregiving for aging loved ones, according to caregiving researchers.

What Financial Experts Are Telling Consumers

Personal finance voices across the political spectrum encourage people to address long-term care well before they retire, rather than relying on government programs to cover the cost.

Suze Orman, the personal finance author and television host, has long urged consumers to plan for long-term care, recommending most people consider coverage in their 40s or 50s while they are healthy enough to qualify and premiums are more affordable.

Ramsey Solutions, the financial advice organization founded by Dave Ramsey, recommends most people obtain Long-Term Care Insurance around age 60, balancing affordability against the rising odds of needing care, since the large majority of claims do not begin until policyholders are in their 70s or 80s.

Both perspectives point to the same conclusion: waiting until you need care is waiting too long. Long-Term Care Insurance is medically underwritten, meaning you must qualify while healthy. A change in your health can close the door on coverage entirely.

The Bottom Line for Your Retirement Plan

If more people planned for long-term care the way they plan for retirement, the financial pressure on federal and state budgets, and on individual families, would ease considerably. Most people who purchase Long-Term Care Insurance never exhaust their benefits, which means their savings stay intact and Medicaid never enters the picture.

Mandating long-term care coverage remains unpopular with the public, but planning for it voluntarily, as part of a broader retirement strategy, can mean the difference between protecting your assets and depending entirely on family or government assistance.

Have you reviewed how a long-term care need would affect your retirement savings? Use the LTC News Cost of Care Calculator to see what care costs in your area, visit the Long-Term Care Insurance Learning Center to compare your options, or search the LTC News Caregiver Directory to find care providers near you.

Frequently Asked Questions About Medicare, Medicaid, and Long-Term Care

Does Medicare pay for long-term care?
No. Medicare does not pay for ongoing custodial long-term care when that is the only type of care you need. Medicare is designed to cover medical treatment, hospitalization, and limited skilled nursing or rehabilitation services under specific conditions.

What is custodial care?
Custodial care is assistance with everyday activities known as Activities of Daily Living (ADLs), such as bathing, dressing, eating, toileting, transferring, and continence. It can also include supervision for someone living with dementia or other cognitive impairments.

How much long-term care does Medicare cover?
Medicare may cover short-term skilled nursing or rehabilitation services after a qualifying hospital stay, but only for a limited period and only if you are improving. It does not provide ongoing coverage for long-term assistance with daily living.

How likely am I to need long-term care?
According to the U.S. Department of Health and Human Services, about 56% of Americans turning age 65 today will require long-term services and supports during their lifetime due to physical limitations or cognitive impairment.

If Medicare doesn't pay, who does?
Long-term care is typically paid for through personal savings, Long-Term Care Insurance, family caregiving, or Medicaid for those who meet financial eligibility requirements.

Will Medicaid pay for long-term care?
Yes, Medicaid covers long-term custodial care for eligible individuals. However, most people must first spend down a significant portion of their assets before qualifying for Medicaid benefits.

What is the Long-Term Care Partnership Program?
The Long-Term Care Partnership Program allows policyholders with qualifying Long-Term Care Insurance policies to protect assets equal to the amount of benefits their policy pays out while still being able to qualify for Medicaid if their insurance benefits are exhausted.

How does Long-Term Care Insurance help protect assets?
Long-Term Care Insurance helps pay for care services at home, in assisted living, memory care, or nursing facilities. This can reduce or eliminate the need to spend retirement savings on care expenses and may help preserve assets for a spouse or heirs.

When is the best time to purchase Long-Term Care Insurance?
Most people obtain coverage between ages 47 and 67. Buying earlier generally means lower premiums and a better chance of qualifying medically. Waiting until health problems develop can make coverage more expensive or unavailable.

Why can't I wait until I need care to buy coverage?
Long-Term Care Insurance is medically underwritten. Once you develop certain health conditions, you may no longer qualify for coverage. Planning ahead while healthy is essential.

What happens if I do not have a long-term care plan?
Without a plan, the cost of care is often paid from retirement savings, investment accounts, or home equity. In many cases, spouses and adult children become the primary caregivers, creating emotional, financial, and physical strain on the family.