The recent nationwide debate about whether or not Medicaid should continue to receive funding should have had special resonance for people of retirement age.
Here are 9 things you might not know about Medicaid and your chances of needing it in the future:
1. You Have a High Percentage Chance of Winding Up on Medicaid
About 70% of people who turn age 65 will need some type of long term care in their lifetime, according to the U.S. Department of Health and Human Services.
However, very few of us are ready to pay for that care. In fact, a full 64% of all nursing home residents are covered by Medicaid.
2. Long Term Care is Even More Expensive than You Think
Genworth found that Americans underestimate the cost of long term care by a full 50%.
Costs vary dramatically nationwide, but Genworth’s study estimates the medical annual cost of long term care to be:
- $92,378 for a nursing home (private room)
- $82,125 for a nursing room (semi-private room)
- $45,760 for homemaker services
- $46,332 for an in home health aide
- $43,539 for assisted living
- $17,680 for adult day care
3. Even Well Prepared Retirees End Up on Medicaid
Long term care costs are so high that it is common for retirees who have hundreds of thousands in retirement savings to spend everything they have left on healthcare and still need Medicaid in the years before they die.
The total costs incurred by an individual will vary depending on the length of time long term care is required.
According to the Center on Budget and Policy Priorities, the bulk of entitlement program spending goes to the middle class. These are not programs that are for the poor. Fifty eight percent of all entitlement spending (Social Security, Medicare and Medicaid) goes to payments to the middle 60% of the U.S. population.
4. Need for Services Will Double and U.S. Not Prepared to Fund these Costs
As baby boomers retire, record numbers of retirees are expected to require long term care services and also qualify for Medicaid.
The Bipartisan Policy Center says that the number of Americans needing long term support is expected to more than double by 2050. In 2010 there were 12 million needing support. By 2050 that number will be 27 million.
This increased demand for services will completely strain the system. The Bipartisan Policy Center says, “States will not be able to sustain spending for long-term services and supports as baby boomers begin to need these services and supports.”