Americans are living longer than ever.
With that longer life span comes increasing reliance on long-term healthcare services.
And costs associated with in-home care services, nursing homes, and other residential facilities are on the rise.
The primary payer for long-term care is Medicaid, the joint federal and state program designed to help Americans with limited incomes pay medical costs.
"Government programs such as Medicaid and the like may not necessarily be around going forward to provide assistance," said Money Crashers finance expert David Bakke.
Bakke told Healthline that Medicaid is projected to run out of money in the year 2030, or perhaps as early as 2026.
"Medicaid will certainly have a challenge when it comes to handling the strain of long-term care for seniors and retirees," he said. "You could make the argument that already the needs of the elderly aren't being met in a satisfactory fashion under the current system. In fact, 37 percent of long-term care costs are currently being met with out-of-pocket funds."
According to Bakke, some states are putting the onus on providers to keep care costs under control.
The realities of long-term care
Melissa Benjamin is a home care worker in Colorado and a leader in the Home Care Fight for $15. She's in the trenches of home care services every day.
In addition to our aging population, she believes other factors are fueling the Medicaid crisis.
In an interview with Healthline, Benjamin said there's already a shortage of home care workers, and she expects it to get worse. As more experienced workers age out of the workforce or look for employment elsewhere, fewer workers are willing to take up the slack.
"It's no longer a viable career," said Benjamin. "Low pay and lack of benefits keep people from choosing this type of work."
The worker shortage is creating a care gap that forces difficult choices. When family members shoulder more of the care burden, it's often at the expense of their own employment. Placing a loved one in a facility isn't always the best option for them or for the family budget.
Although Medicaid covers both types of care, in-home care is often less expensive by several thousand dollars a month.
"It's one reason I fight for home care. I believe by making home healthcare a viable career, we can keep more people in their homes and save the states money in the long run," said Benjamin.
For some people, nursing home care is a must. But Benjamin believes many others can be happier and healthier being cared for in their own homes.
"In Colorado, about 10,000 people become seniors every day," she said. "That's a strain, and it's true all around."
Then there's the gender gap.
At 37 years old, Benjamin is already concerned about her own healthcare needs as she ages.
"A higher percentage of home care workers are women. We make less, have fewer benefits, and pay less into Social Security. Often, women who cared for their husbands are left alone and needing care themselves. Plus, we live longer, so that time is more challenging."
In Benjamin's experience, long-term care insurance policies can save the day. The key is to sign up when you're younger and rates are at their best.
Unfortunately, when rates rise, many aren't able to keep paying the premiums. That can result in having to sell off assets to apply for Medicaid.
"I've held the hands of people in facilities as they cry. They want to go home, but their home has been sold to pay for facility care," she said.
Planning for long-term care
Seniors, soon-to-be seniors, and caregivers can't start planning soon enough. It's a complicated issue and there's no one-size-fits-all solution.
As alternatives to insurance and government programs, Bakke recommends a health savings account when applicable, a home equity line of credit, and in some cases, a long-term care annuity.
"In some instances," said Bakke, "you might be better off foregoing long-term care insurance and paying for whatever costs are left over out of pocket, because of the high cost of paying for insurance coverage in that area."
According to the Kaiser Family Foundation, most seniors can't afford the out-of-pocket costs of long-term care.
Jennifer FitzPatrick, author of "Cruising through Caregiving: Reducing the Stress of Caring for Your Loved One," would like to see more public education about long-term care and Medicaid.
"There really needs to be a paradigm shift so older adults and their families are not counting on Medicaid because of misunderstanding," said FitzPatrick, who has worked as a gerontologist and geriatric social worker for more than 25 years.
"I'd love to see Medicaid encourage more people to consider long-term care insurance, which covers much more than Medicaid can," FitzPatrick told Healthline. "I wish I saw more being done so caregivers and older adults weren't in crisis."
FitzPatrick recommends consulting with a certified elder law attorney.
Benjamin and Fitzpatrick agree that consumers have a lot more options when using private funds than they do when using Medicaid.
"It's important also for families and older adults to know that often when they do use a Medicaid benefit for a nursing home, for example, they aren't getting as much choice," said FitzPatrick. "Sometimes patients and caregivers are dissatisfied with the nursing home options available for a direct Medicaid admission."
Americans are optimistic. We tend to underestimate the risk of needing long-term care.
The U.S. Department of Health and Human Services estimates that half of seniors over age 65 will have a health problem and need assistance for two years or less.
One in seven will need assistance for more than five years. Those turning 65 now can expect $138,000 in future long-term care costs. In many cases, costs will be much higher.
Having a long-term care policy is a good idea, if you can afford it. Most can't.
As of 2014, fewer than 8 percent of Americans have private long-term care insurance.
Medicaid was never meant to cover long-term care for so many.
"I can't count the number of caregivers who have incorrectly assumed that Medicare or Medicaid would pay for assisted living or indefinite home care services," said FitzPatrick.
By Ann Pietrangelo