Long-Term Services and Supports:
Who Pays? What's Covered?
Coverage and Payment for Long-Term Services
Many Americans believe that the insurance they have will cover the cost of long-term services. Unfortunately, it probably won’t.
Long-term services insurance is rarely provided as a workplace benefit (these services are not covered under standard health or disability policies), and only about 10 percent of adults have private long-term care insurance. Medicare coverage for long-term care is very limited.
Today, most people who need long-term services rely on their own savings and other assets to finance care. If those resources are depleted, most will turn to Medicaid, the joint state-federal insurance program for low-income individuals.
Costs for long-term services can be high. In 2009, the national average cost for one year of nursing home care in a semi-private room was more than $72,000. Home care is also expensive. Average charges in 2009 for adult day services were $67 a day; for homemaker services, $19 per hour; and for home health aides, $21 per hour. Expenses at these levels can quickly exhaust an individual’s finances. As a result, many individuals do deplete their resources and qualify for Medicaid, which pays for 40 percent of long-term service costs.
With health reform, in 2011, working adults will be able to sign up for a new voluntary long-term services insurance program, the Community Living Assistance Services and Supports program (CLASS). This will be an important new coverage option. For more information about CLASS, see our section on Long-Term Services and Health Reform.
Who Pays for Long-Term Services and Supports?
The estimated total cost of long-term services is $177.6 billion.
Medicare covers short-term care in a skilled nursing facility following a hospital stay and provides limited coverage for skilled care at home. It does not cover help with daily activities like dressing and bathing.
Medicaid covers nursing facilities for those who meet financial and functional ability criteria and home health for those who qualify for nursing facility care. States also have the option to pay for home- and community-based services; those services can be limited.
Private Insurance covers care through separate long-term care policies. Coverage varies greatly across policies.
Self-Pay is when consumers pay these costs out of their own savings and other resources. As noted above, most people do not purchase private insurance coverage for long-term services.
Other Sources includes coverage through other state programs and private charities.
To learn more about the different payers and what they cover, go to one of the following pages: