Most of your clients don't realize that Medicaid is a huge payer of long-term care costs, especially for Nursing Homes. In fact, Medicaid pays almost 2/3rds of LTC costs around the country. When planning for LTC, knowing where the dollars for care are going to come from is very important. Because Medicaid is a joint state/federal program, the fiscal problems problems of an individual state can have huge impact on Medicaid programs.
A state in good fiscal situation may offer extensive Medicaid benefits for long-term care, including home care benefits. On the other hand, for states that aren't doing well fiscally the impact on the Medicaid long-term care care benefit can be substantial. I live in Illinois, which has the unfortunate reputation as the most fiscally challenged state in the country with huge looming pension holes. Since pensions (including an automatic 3% compound rate) are constitutionally protected by the state, the only way to balance the Illinois state budget is to either increase taxes or cut spending.
In Illinois's case, the Illinois governor has proposed a 12% cut in Medicaid spending in 2016 that includes LTC providers and nursing homes. Since Illinois is already pays nursing facilities the second lowest Medicaid reimbursement rate in the country, it is no surprise that the caregivers are unhappy.
What's the impact of these cuts on seniors? It means that many better facilities will be forced to no longer accept Medicaid patients, forcing those patients into lower cost nursing homes. You can search the Illinois Health Care Association website to find how many Medicaid beds are in the members facilities. Manorcare of Hinsdale has 202 nursing home beds, but only 18 of those are available for Medicaid patients.
How can someone avoid Medicaid nursing home care? Through owning LTC Insurance. According to this recent AHIP Study by Lifeplans,, buyers of LTC Insurance can really help avoid Medicaid spend down. This chart shows the dramatic decline in Medicaid spend down for policy holders.
Conclustion - with many people believing that Medicare will pay for LTC and Medicaid struggling in many states, the need to plan for LTC has never been greater.
