Nearly half of all long term care services in the US are funded by Medicaid. People in need of long term care who have little in the way of assets can qualify for Medicaid assistance, although they are then limited to facilities and programs that accept Medicaid. For many Americans who have not purchased long term care insurance and have not saved an adequate amount of money to pay for long term care themselves, Medicaid is a very necessary safety net, and they have no where else to turn.
But Medicaid funding in the future is far from a sure thing, and Medicaid is facing its own financial troubles – likely to be exacerbated as the baby boomers get older and start to need long term care. There’s no way to know what the government will come up with over the next decade or two, but long term care accounts for a third of Medicaid’s total budget, so it’s a very real possibility that at least some of the Medicaid long term care program might be on the chopping block as time goes on. Long term care costs continue to climb, and the American population continues to age, which means that even more of the Medicaid budget could be devoted to long term care a decade from now, if changes aren’t made.
The Patient Protection and Affordable Care Act (health care reform) created a program called CLASS (Community Living Assistance Services and Support), which will be run by the department of Health and Human Services to provide financial assistance to people in need of long term care. However, the program won’t be federally subsidized, and will have to pay for itself through premiums collected. That means that it will need to attract enough healthy enrollees to be financially stable, and it remains to be seen if the program can do so.
The possible instability in Medicaid only serves to highlight the importance of coming up with a strategy – preferably while still young and working – to pay for future long term care services. Whether or not Medicaid will still be able to provide its current level of benefits 20 years from now is unknown. It’s more important than ever to start saving now, plan for the purchase of long term care insurance, or figure out some other way of covering potential future long term care costs.