The Facts: What Medicaid Pays for Long-Term Care

People often confuse Medicaid for Medicare, another popular government-sponsored program. However, these programs are very different in what they are designed to do.

Medicare is the national health care assistance program provided by the federal government. Its function is to make sure that affordable health care is available to all seniors and disabled people younger than 65.

On the other hand, Medicaid is a program run by the individual states—along with some federal assistance—and it varies considerably from one state to another. Medicaid’s main function is to provide assistance to those who have very few assets. One of those areas that many people need assistance with is health care, and so Medicaid picks up the tab for health care costs that many seniors simply cannot pay for on their own.

Medicaid is a wonderful provision to make sure that those with few means receive the care they need even when they cannot afford to pay for it themselves. However, Medicaid does have its limitations, and one area that is draining Medicaid of its precious resources is long-term care.

In fact, according to the Centers for Medicare and Medicaid Services, in 2001, Medicaid paid for almost 40% of the annual long-term care bill in this country.

So what is long-term care according to the definition put forth by Medicaid? It is generally custodial care that is provided when a person needs assistance for activities of daily living, which include eating, bathing, dressing, continence, toileting, and transferring. Skilled care on the other hand, which is paid for to some extent by Medicare, is for situations in which you are expected to get better as a result of the care. It is often referred to as short-term rehab, and includes IVs, administering medications, changing dressings, and physical and speech therapies. Once a patient’s progress stops, the skilled care reverts to custodial care.

Medicare will not pay for long-term care if it is not accompanied by the need for skilled care, and so the burden falls on Medicaid to pay for the ongoing costs of custodial care.

Although Medicaid will pay for long-term care, there are severe restrictions on the qualifications for assistance. First and foremost, Medicaid is a program designed to help those who are impoverished. In order to qualify for long-term care assistance through Medicaid, a person must spend practically all of his own assets before Medicaid will begin to pick up the tab.

Medicaid, in general, is not set up to provide care in a home setting. Usually the care must be provided within a residential facility, meaning that a person has to give up much of his independence in order to qualify. Much of the individual’s ability to control the kind of care received is also lost, because the state will determine where and how the care is administered since it is paying for the care.

The skyrocketing costs of long-term care are placing many state Medicaid programs under extreme pressure, and much needs to be done to help make sure that this vital program for those who have few means will be able to continue to serve those who need it most. As a result, both state and federal governments are encouraging most Americans to take the responsibility for their own future long-term care needs. Getting more information on the important issues surrounding long-term care and how it affects us all is a good place to start.

Duane Lipham is a Certified Long-Term Care (CLTC) consultant.