Americans spend well over $100 billion each year on nursing home care alone, and this says nothing of the billions spent on home and community based services. Of this amount, Medicaid is the major provider of coverage, which comes as no surprise considering the options are quite limited. When consumers of long-term healthcare are presented with the options of paying out-of-pocket, purchasing expensive long-term healthcare insurance, and applying for ALTCS, or Arizona Medicaid, they typically choose to apply for Medicaid/ALTCS if possible.
With rising healthcare costs, and a growing national deficit, policymakers and legislators are routinely considering ways to reduce the strain on Arizona Medicaid. So far, much of their approach has been aimed at providing more Americans with the ability to purchase long-term care insurance. Congress has passed two pieces of legislation in the recent past that may help to accomplish this goal, each of which takes a different approach.
Deficit Reduction Act of 2005 & Long-Term Care Partnership programs
One of the lesser-known provisions of the Deficit Reduction Act (DRA) of 2005 permits states to create Long-Term Care Partnership programs. These programs incentivize long-term care insurance by helping those who purchase long-term care insurance obtain ALTCS eligibility without spending all of their assets first. So when individuals with a qualified insurance policy run out of coverage and apply for Arizona Medicaid, they can exclude a portion of their assets equal to the amount of benefits their insurance paid. The goal of this program, of course, is to encourage people to purchase long-term healthcare insurance instead of relying solely on Medicaid programs, such as ALTCS, to cover the costs of their long-term healthcare.
A CLASS Act
More recently, Congress passed legislation called the CLASS Act. CLASS has not yet been implemented, but it will provide Americans with an alternative to private long-term healthcare insurance by 2012. Those who opt into the CLASS program will pay premiums between $150 and $250 a month; and after paying into the program for a minimum of five years, they will be eligible for financial assistance of approximately $50 a day for long-term healthcare. Rather than try to offer an incentive for people to purchase long-term care insurance, CLASS actually provides an alternative to private insurance, in the form of an optional public insurance program.
What these programs mean for us today
As it now stands, neither of these programs has firmly taken root. The Long-Term Care Partnership program may bring long-range benefits, as more young and healthy people exercise the foresight to plan ahead for long-term healthcare. For those who are already in immediate need of care, however, the program has no real utility. The same goes for CLASS; it may provide an alternative to long-term care insurance in the distant future, but it has no present value to those in immediate need of long-term healthcare. Moreover, with benefits of only $50 per day, CLASS seems to be more geared towards helping cover the costs of in-home care, as the cost of nursing home care exceeds $200 per day.
Long-term care insurance may indeed provide an alternative to Arizona Medicaid for long-term healthcare expenses, but unless there is some serious insurance reform, it will only be available to younger people in relatively good health. For those in need of more immediate care, paying out-of-pocket and relying on Medicaid remain the only options. If long-term health care is becoming a concern for you, it is a good idea to speak with an Elder Law attorney about ALTCS planning.