Is Self-Reliance an Illusion?

By Linda Anderson, CELA

There’s a lot of talk about how divided we are as a nation. Racial, socioeconomic, and political affiliations are just a few of the flash points. Here’s something we often overlook as we’re demonizing the other: we have a few important things in common. No matter our race, gender, class, or political affiliation, we all going to age, and we're all going to die.

Among the arguments is who should pay for the long-term care expenses of the middle class. Self-reliance and personal responsibility are keystones for individual success and are offered as the easy solution to this problem. We must all be self-reliant. But what if circumstances are beyond what one person can manage? Does self-reliance mean you must lose everything before help arrives? Many of us will experience an acute or chronic long-term illness that require expensive long-term care for months, years, or even decades. How and who pays for this care remains a political football that requires each of us to challenge ourselves to design a plan for aging that is based on not only your goals, but on your resources. Resources are not only your nest egg and life savings, but the unpaid caregiving of family and friends.  Many of us fail to realize the important role that Medicaid has in paying for long-term care and do not identify this as a possible resource.

No client ever arrived at my office and asked to be placed in a nursing home and to be qualified for Medicaid. Rather, I see people struggling with the realization that they are now faced with finding good care (a whole other topic!) but also how to spend their precious nest egg only to realize that there is no way that they can possibly assume personal responsibility for this type of care. People who scrimped and saved their whole lives are now facing the prospect of financial ruin because a loved one’s brain is ravaged by Alzheimer’s disease, but the doctors say he could live another 15 years. Where I live, memory care costs around $14,000 per month. Fifteen years of this means a bill of more than $2.5 million. Unless you’re independently wealthy, there’s no way to save for this.

Many are opposed to the idea of qualifying for Medicaid. In their minds, welfare programs are for “others” who were not able to take care of themselves with a judgment that they should have done more for themselves. Why couldn’t they manage their household on a budget, avoid debt or save for a rainy day? But, only until they experience long-term care costs of $10,000 a month, do they appreciate that these expenses require many of us to move beyond self-reliance. 

The fact is that Medicaid was established for various categories of people including those that require long-term care. The complex Medicaid program was designed with rules to protect spouses, disabled children, siblings who share a residence and many others who find themselves needing Medicaid.  The fact is that accepting care from a Medicaid provider does not mean settling for a lower quality of care. Federal regulations ensure that facilities do not discriminate based on source of payment.

Today’s long-term care realities make self-reliance little more than a mirage for all but the ultra-wealthy. Not even long-term care insurance can solve this problem. Just a few decades ago, many companies were selling long-term care insurance. Today, just a few companies offer these policies.  For those lucky enough to have existing long-term care insurance, policy holders are contacted frequently informing them of substantial increases in annual premiums.  For those who are interested in obtaining a stand along long-term care policy or a hybrid product (annuity or life insurance with a rider for long-term care), many realize they are priced out of the marketing or do not meet the medical underwriting requirements.  Unfortunately, the goal of self-reliance can not be met with financial products in many cases. We need to understand that it is not possible for many to buy insurance and take care of these expenses on your own. 

So, as we continue the political discourse about Medicaid and Medicare, we must recognize why these programs were established. Back in 1965, we determined that there was an efficiency in handling certain problems that were too big to expect individuals to manage on their own. That there was a value to having a safety net because there are some problems that are so big that a caring society would never expect individuals to be able to navigate them on their own. Paying for long-term care is one of those problems.  It is critical that we, as a society, have an honest conversation about who exactly is going to pay for the chronic illness for middle class with the existing tidal wave of aging Baby Boomers that are aging. We also know that there is an additional tidal wave expected relating to dementia care. The data shows us that the number of people projected to have Alzheimer’s Disease is going to more than double by 2050. Before we continue to slowly erode the safety nets of Medicare and Medicaid, we need to understand why these programs were established in the first place. In fact, if your parents or grandparents are still alive, ask them what they remember hearing about the poor house.

Linda Anderson is a Certified Elder Law Attorney and founder of Anderson Elder Law, a Life Care Planning Law Firm in Media, Pennsylvania.