COST OF NURSING HOME CARE
The world's population is aging at a faster rate than ever before and people are living longer year after year. So, now more than ever, it's extremely important to ensure our elderly population receives the medical or living care they require. However, that care can be expensive, and often not all expenses will be covered by medical government programs.
If you or a loved one are considering lone-term care, it will prove very helpful to speak with someone who can help you understand your financial situation in the matter. Read more below to see how we can help you.
PLANNING FOR LONG-TERM CARE
The world’s population is aging at a faster rate than ever before and people are living longer. Every day until 2030, over 10,000 Baby Boomers will turn 65, and 7 out of 10 of them will require long-term care in their lifetime. Here are some statistics (all are "on average") you should consider:
Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years
Women need care longer (3.7 years) than men (2.2 years)
One-third of today's 65 year-olds may never need long-term care support, but 20 percent will need it for longer than 5 years
According to the Genworth Financial Cost of Care 2020 Survey, the average monthly cost of a one-bedroom unit in a Pennsylvania personal care residence or assisted living residence is $4,550. For a private room in a skilled nursing facility, the median monthly cost is $11,268. If you are looking for care for yourself or a loved one, you must understand how you are going to pay for it.
Many people believe – wrongly – that Medicare, Social Security or Medicaid will pay for their long-term care needs. Medicare will pay for long-term care only if you require “skilled” services, meaning a short stay in a skilled nursing facility, hospice care, or the costs associated with home health care. Even then, they’ll only cover these costs for a maximum of 100 days. Since the majority of long-term care is non-skilled assistance (helping with eating, moving around, bathing, etc.), it may be safe to assume that Medicare will not cover your long-term care needs. And if you do meet their requirements, once that 100-day window closes, you’re on your own for 100% of the costs incurred.
What is Medicaid for Nursing Homes?
Medicaid is a federal program for people with low income and few assets. It is a significant source of long-term care coverage for aged persons living in nursing homes in the United States. Medicaid is administered by each individual state in accordance with guidelines created by the federal government.
Pennsylvania’s Medicaid program covers children, pregnant women, parents, seniors, and individuals with disabilities, as well as other adults who are eligible for federally assisted income maintenance payments.
The Affordable Care Act (ACA) extended Medicaid eligibility to non-elderly adults with incomes at or below 133 percent of the federal poverty limit (FPL) —during 2022, that is $36,990 for a family of four. States that choose to participate in this expansion receive enhanced federal matching payments. Pennsylvania opted to expand its Medicaid coverage during 2015.
Medicaid is paid by both the state and federal governments. The federal government matches a state’s Medicaid spending at a rate that varies based on a formula that determines each state’s financial stability. This match allows states to expand other programs and respond to changes they face, whether it be population shifts, economic change, crisis and disaster, or public health emergencies. Medicaid accounts for almost 10% of federal spending and is often the second largest item in state budgets after education. The federal funds receive by the state are the highest line item on the individual state’s budget.
While 78% of Medicaid funds are spent on the care of elderly and people with disabilities, this group only comprises about 30% of the beneficiaries of the Medicaid programs. Medicaid is a signficant payer for long-term care services in institutions including nursing homes. Note that in order to received Medicaid funds for its residents, a nursing home must be licensed for Medicaid. Not all nursing homes are so licensed. If you are considering a nursing home for a loved one who may be eligible for Medicaid benefits, you should check to see if the nursing home is licensed for Medicaid.
Regardless of how the money is spent, Medicaid is a lower cost than private insurance due to the set payment rates to providers. Due to Medicaid accounting for around 20% of health care spending, the program is able to enter into agreements with the providers for a cost much lower than private insurance pays.
As of February 2021, approximately 3.1 million people were enrolled in Medicaid in Pennsylvania. Medicaid covers 1 in 6 adults, 1 in 3 children, and 2 in 3 nursing home residents in Pennsylvania. Pennsylvania’s Medicaid program has spent upwards of 30 BILLION dollars on health care services and, following the country’s model, the majority of these expenses are in long-term or managed care.