The first wave of baby boomers will hit 65 in 2011. This dynamic generation, born between 1946 and 1961, is well-known for tackling societal trends, setting new precedents and virtually changing entire cultures. Now, as baby boomers approach senior citizen status, they face their biggest challenges yet: confronting an overloaded Social Security system, fewer pensions, high medical costs, an impending doctor shortage and a potential long-term care financial crisis. As this generation ages, it is inevitable that boomers will encounter health problems – some of them serious – and many will require long-term care.
By 2030, the National Center for Health Statistics estimates there will be 70+ million baby boomers age 65 or older in the U.S., and at least 6.4 million of them will need long-term care. This tidal wave of boomers will flood – and likely bury – this country’s long-term care system. To prepare for this torrent of seniors needing long-term care, MSBA, at the request of its Elder Law Section, is joining its sister bars in co-sponsoring a proposal to alleviate some of the financial pressure accompanying long-term care.
Long-term care is expensive, very expensive. It may be provided at home or in an institutional setting. Long-term care is not covered by Medicare. Currently, eligible people may receive long-term care coverage under Medicaid, but they must be impoverished to be eligible. Those who require custodial care must spend down and try to give away their lifetime savings to become eligible for Medicaid. This is the situation that confronts baby boomers, and over six million are expected to be affected.
To address this situation, the New York State Bar Association (NYSBA) and its sister bars submitted a Resolution to the American Bar Association’s House of Delegates in February, proposing a “Compact for Long-Term Care”, an alternative to financing long-term care to ease the financial burden borne by today’s senior citizens. On January 22, MSBA’s Board of Governors voted to support and co-sponsor the following Resolution:
“[T]he ABA urges all federal, state, territorial and local legislative bodies and government agencies to develop and assess innovative long-term care programs such as the Compact for Long-Term Care as a reasonable and fair solution to long-term care financing.”
The thrust of this measure is legislation creating a private partnership between the government and citizens who need long-term care “wherein the individual would pay a fair share of long-term care services and the government would provide support based on that individual effort.” Jointly, they will seek alternatives to Medicaid by exploring innovative methods to finance long-term care.
One of these approaches is the Compact for Long-Term Care, which “presents a reasonable and fair solution to long-term care financing as an alternative to Medicaid and long-term care insurance,” explains Jason A. Frank, Chair of MSBA’s Elder Law Section.
“It is intended to serve as a model for discussion of alternative means of financing long-term care,” he adds. “The Compact represents a step toward fairness and reform whereby citizens in need of long-term care can pay, from their income and assets, a fair share of the cost in exchange for government support.”
Through this resource, an individual, when diagnosed with a chronic illness, pledges to use a defined amount of his or her existing assets to pay for long-term care, rather than going the current route of spending down or giving away assets to qualify for Medicaid benefits. Therefore, private dollars will be used in the initial stage of chronic illness. Participants will become eligible for a subsidy paid by the government to cover 90 percent of their long-term care costs once the pledged amount is depleted.
Ultimately, this legislation, if enacted, would assuage the financial burden placed on senior citizens and their families as well as the financial stress placed on the Medicaid system because it discourages Medicaid planning and transfers of assets prior to eligibility. Moreover, this proposal would allow more chronically-ill individuals to remain at home, a preference of most people, as they would have adequate assets. So the government would be investing fewer dollars in subsidies as home care is less costly than institutional care.
“Our most vulnerable citizens should not have to virtually bankrupt themselves to obtain needed services, as Medicaid now requires,” asserts Frank. “Even with impoverishment as a condition precedent to obtaining Medicaid, the current system faces collapse. This proposal is a good starting point for necessary discussion to address the growing and inevitable crisis of paying for long-term care.”
The legal profession considers the Compact proposal a “model for financing long-term care to deal with the burgeoning costs of Medicaid.” MSBA is joining NYSBA and its sister bars in backing this proposal
"as a necessary step toward fairness and reform whereby citizens in need of long-term care can pledge, and actually pay, a fair share of the cost in exchange for eventual government support.”