This is a retirement concern that most of us don’t want to face. At some point, her 4 out of 5 older Americans will need assistance with daily activities such as bathing, dressing, using the toilet, and preparing meals.
Paying for such long-term care presents retirees with difficult choices. Medicare coverage is very limited. Private long-term care insurance policies are complex and expensive. Medicaid, which covers low-income people, pays for long-term care only when a patient’s assets are nearly exhausted. And many turn to their families for help.
In Washington, D.C., policymakers and lawmakers have long agreed on the need for a government-backed solution, but not on how to pay for it, said a senior researcher at the Urban Institute.caring for parents: The inspiring story of a family seeking new solutions to America’s most pressing health crisis. ”
“This is a clear and pressing issue, and there is a lot of interest among politicians in things like public programs, until we start talking about paying to make it happen.” Mr Gleckman said. “We have to raise payroll taxes.
Several states are now acting on their own. Washington in July WA Cares Foundation, It is a public long-term care insurance system. California is considering a similar plan. Minnesota and several other states are considering options.
State-sponsored long-term care insurance programs have several implications, including rules for compulsory enrollment, how benefits can be transferred when people move, and how public plans and subsidized commercial policies are coordinated. poses a difficult problem.
But states that are moving forward see their programs as essential as a means of addressing the needs of aging populations and curbing the ballooning Medicaid spending on long-term care.
“Increasingly, it’s overwhelming the national budget,” Gleckmann said.
many Americans will need help
Most people will need some help with their daily needs, but it’s impossible to predict the intensity and duration.
According to the association’s survey, four out of five people aged 65 will need some level of long-term care for the rest of their lives. Boston University Center for Retirement Studies.
Researchers found that one-fifth of retirees need no support, but about one-quarter need severe and expensive care.
“The data reveals the magnitude of the risks,” said Anqi Chen, research economist and deputy director of savings research at the center. “Some may ignore the fact that they may need care later in life, and this will require funds from family and savings.”
Many Americans appear to be in denial about long-term care. Research by Associated Press-NORC Center for Public Relations and Research 49% of Americans People over 40 expect Medicare to pay for long-term care. In fact, the program covers only 100 days of his stay in a skilled nursing home after admission. The survey also found that 69 percent of her respondents had little or no plans for long-term care needs, and only 16 percent were confident they would have the money to pay for that support. It turns out.
The need for critical long-term care can be economically devastating. According to the latest statistics from leading long-term care underwriter Genworth, the median annual national cost for a private nursing home unit in 2021 was $108,405. annual survey Regarding the cost of nursing care.
Not all long-term care is provided in nursing homes. Many of them can be prepared at home, which can save you a lot of money. Costs also vary greatly depending on location. And much of the labor is provided by unpaid family and friends. AARP estimate There will be 38 million family caregivers in the United States in 2021, providing an estimated $600 billion in unpaid care.
“For uninsured families, the question is whether they can afford to buy care or whether they have available family caregivers,” Chen said. “And is that reasonable to expect from a family?”
Insurance may seem like a smart way to protect yourself from these unknown risks. But the private long-term care insurance business has struggled over the past decade.
The idea of public-private solutions is not new. Ten years ago Mr. Gleckmann Long-Term Care Financing Project, brought together policy experts from a wide range of political leanings. The group agreed on a framework that would combine national universal government programs with efforts aimed at revitalizing private policy markets.
Washington state approach
With no action taken at the federal level, Washington state is pursuing its own program. Over time, nearly all residents will contribute their premiums through a mandatory payroll tax, making the benefits universal.
In July, most workers in the state will begin paying a 0.58% payroll tax on their wages to fund the program. From 2026, participating residents will be able to claim benefits if they demonstrate a need for assistance in three or more activities of daily living. The maximum lifetime benefit is $36,500, adjusted annually for inflation. It is designed to cover at-home nursing care for about one year. (Ten years of contributions are required to receive benefits, but those nearing retirement will be able to receive partial benefits based on years of contributions starting in 2026.)
Ben Veghte, director of the Washington State Department’s WA Cares Fund, said the program’s primary goal is to provide relief to middle-class families who are forced to deplete their savings to receive long-term care through Medicaid. It is said that social and health services;
“This gives families more room to deal with the caregiving needs of their loved ones,” Begté said.
The program is expected to reduce state Medicaid spending, which the Washington government expects to account for 8.9% of the total budget from 2023 to 2025. Without WA Cares, this figure would jump to 10.9% by the end of this decade and 17.6% by 2045.
Washington is weighing some complex issues, such as who will be exempt from participation. Bills Approved by the State Legislature in 2019 Created an exemption for residents with private insurance. The state then added a deadline to apply for its waivers, prompting more than 480,000 people to rush to buy insurance to avoid the tax. They overwhelmed insurance companies that still sell long-term care insurance in the state.
These applications had to be submitted by the end of 2022, but did not require buyers to maintain or prove they were still insured.
“I’ve been concerned that people will just buy insurance and stop buying it,” said John Mangan, vice president of state affairs. “It’s really counterproductive.” At the American Life Insurance Companies Council. “When people drop private insurance and don’t get covered by public plans, they’re completely uninsured. is not.”
Currently, out-of-state workers commuting to Washington can apply for exemptions from the program. The same applies to spouses of military personnel. (All federal employees, including military personnel, are also exempt.) Persons with temporary nonimmigrant work visas, such as seasonal farm workers, can apply for an exemption. Some disabled veterans who can obtain care through the Department of Veterans Affairs are exempt.
Perk portability poses another challenge. The program’s financial model assumes participation by state residents only. The committee recommended several options for ensuring that people enrolled in the program can receive benefits if they move.
Questions also remain on some issues, such as how complementary private policies will work with public programs.
“The journey so far has been difficult at times, but companies want to ensure that people, especially women, who are often carers, can stay and return to work,” said the company’s president. Chief Executive Officer Rachel Smith said. Seattle Metropolitan Chamber of Commerce.
California and Minnesota Take Action
Legislators in several other states have introduced bills to consider or enact public long-term care insurance programs. Minnesota is considering several options, including two aimed at making private insurance more affordable.
But apart from Washington, the most important plans under development are those in California. The state is considering the financial feasibility of several public insurance program options, with legislation expected in 2024.
“If California moves forward, it will be very interesting because California is a huge state,” Beguete said. “It really could cause dams in the rest of the country to burst.”
Like Washington, California will fund its program through a payroll tax, but the state is considering a “progressive” tax regime featuring contribution caps and exemptions for low-income residents. Another difference is that taxes may be split between the employee and the employer.
California is considering various benefit designs, some of which are significantly larger than Washington. For example, one option provides benefits of up to $110,400 annually for up to two years for home services and residential facilities.
“The reality for us is that by the beginning of the next decade, 25 percent of the population will be 65 or older, and that number will be about 8.4 million in California,” said acting insurance commissioner Michael Solar. said. at the California Department of Insurance. “It is not an option for us for seniors in California to leave to support themselves.”
