Since 1965, nearly 90% of all long term care (LTC) expenses have been paid for primarily by government agencies such as Medicaid.
For many there is a belief that relying on public assistance such as Medicaid will lead directly to poor care in a nursing home during a LTC medical issue, and many resent the idea of relying on public assistance.
This being the case, why don’t most people believe they need long term care insurance (LTCI?) For decades insurance companies and insurance brokers have been telling anyone that will listen that financial ruin awaits those that go without LTCI and need care. State and federal government agencies have been trying for years through tax incentives to get the general public to buy LTCI. Media runs spots on television and print strongly suggesting the importance of long term care planning. Despite the constant warnings, it is a rare day when someone actually takes the financial threat seriously.
The public does not take the threat of financial ruin seriously because they rarely hear of stories of financial ruin in relation to LTC. And the reason they don’t hear these tragic stories is because Medicaid pays most of the claims for long term care.
Qualifying for Medicaid is not nearly as difficult as it should be. With over thirty trillion dollars in national debt, qualifying for Medicaid in the future will not be nearly as easy as it is today. For higher income individuals, the days of hiring a Medicaid planning attorney to assist with qualifying for assistance will likely be a distant memory. For the affluent, spending key money for a few months at the nicest medical facility, then flipping the legal switch to have Medicaid pay the bills will also be a distant memory.
At some point the national debt will dictate who does and does not qualify for Medicaid. Rules will change for the simple fact that as a nation we cannot afford the luxury of paying for long term care for the middle class and affluent. Medicaid will either exclude the middle class and well to do entirely, or will force them to pay/re-pay Medicaid from the equity in their home.
The smart money will buy Long Term Care Insurance (LTCI) today while young, healthy, and wealthy enough, protecting themselves from possible financial ruin down the road.