Magazine article Insight on the News

Long-Term Care Financing Traps Seniors in a Squeeze Play

Magazine article Insight on the News

Long-Term Care Financing Traps Seniors in a Squeeze Play

Article excerpt

It often is at the moment when an elderly patient is about to be discharged from the hospital that he or she first faces the prospect of having to pay the total long-term expenses of either nursing-home or homecare services. This easily can come to $50,000 or more a year -- at a time when the primary objective for any patient and family should be excellent care and emotional support, not a desperate fight to preserve one's income and savings.

It widely is known among older Americans, their families and their friends that a long-term illness could wipe out a patient's savings. Long-term care includes many different support services aimed at helping chronically ill patients either in their homes or in a nursing home. Medicare does not pay for long-term care. The only government assistance for the expense of long-term care is the health insurance for the poor, Medicaid.

Tragically, some families would rather risk substandard facilities for their loved ones rather than choose the Medicaid option. As a former investigator for the New York State Attorney General's Medicaid Fraud Control Unit, I have seen firsthand many victims of the system. One elderly woman, who was not poor enough to qualify for Medicaid, was exhumed from her final resting place to determine whether she had been starved to death by the operator of an illegal nursing home whose monthly fees were less than half of its licensed competitors. Unfortunately, this case is not an isolated example of a family under duress resorting to underground providers of care to shield a loved one's assets. Long-term care, whether at home or in a nursing home, often can wipe out the life savings of a chronically ill patient in one year or less.

Under current eligibility rules for Medicaid coverage of long-term nursing care, a recipient usually may not have assets in excess of $2,000. This has led many Americans to manipulate the Medicaid system by transferring assets to heirs and beneficiaries in an effort to avoid spending their life savings on nursing-home care. Some Americans, desperate to preserve an estate, have taken extreme measures such as divorce or spousal refusal, whereby one spouse refuses to pay for the long-term care needs of the other. Some have been able to use loopholes in the Medicaid system to transfer part of their life savings before they apply for Medicaid.

Others have stopped saving and simply spend all of their income without regard for the future. In effect, some people are using Medicaid as their long-term care insurer, while others who do not game the system are systematically impoverished as they pay privately for their own care. …

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