Financing Long-Term Care in the United States: Who Should Pay for Mom and Dad?

This article considers the legal framework that applies when older adults need long-term care in the United States. The financial aspects of this phenomenon hit almost all affected families as an unexpected crisis, because long-term care generally falls outside the purview of Medicare, the government's health care program for older Americans. After families discover this reality, they often look to Medicaid, the government's health care program for poor people of any age, but this program has severe problems of access to quality facilities, and its financial eligibility criteria preclude coverage of most elders. The article then analyzes some impediments to obtaining Medicaid coverage of long-term costs, including questions of legal capacity to undertake asset divestment, ineligibility penalties imposed on uncompensated transfers, and mandatory recovery from the estates of Medicaid recipients. The article then turns to private long-term care insurance as a possible response to this dilemma. The article considers recent tax changes that were intended to promote the purchase of this insurance, but finds that these benefits are often illusory and that regulation of such policies is still needed to facilitate informed comparison shopping. Finally, the article examines why the financing of long-term care costs should be a private responsibility at all, especially when the financing of acute care costs has been socialized via the Medicare program.