Long-Term Care and the Lesbian, Gay, Bisexual and Transgender (LGBT) Community
How would you pay for long-term care expenses, such as long-term care in your home or community, or an assisted living facility or nursing home? Would you use your existing assets or draw down funds from your retirement plan? Have your family and friends chip-in? Spend down in an attempt to qualify for Medicaid? It’s a pressing question for anyone over 40, and it’s an especially important question for members of the Lesbian, Gay, Bisexual, and Transgender (LGBT) community because they may face obstacles in this area other members of society may not.
The Federal Government does not acknowledge gay marriages.1 As a result, surviving spouses of a gay marriage, domestic partnership, or civil union are not eligible for Medicaid's spousal impoverishment provision. Spouses in LGBT marriages, domestic partnerships, or civil unions are also not able to access a deceased spouse’s social security, IRAs, and other retirement benefits like surviving spouses in traditional marriages may. Even issues like inheritance law and federal pensions can be more complex for same-sex couples.
Planning for long-term care for members of the LGBT community can be further clouded by lack of family support, isolation, and discrimination issues. Because of these unique obstacles, long-term care insurance can be an especially important tool for LGBT people.
The need for long-term care planning is real
Don’t think you’ll ever have any long-term care expenses? Hopefully you won’t. However, the lifetime probability of becoming disabled in at least two activities of daily living is 68% for people age 65 and over.2 About 44% of those reaching age 65 will enter a nursing home at least once.3 Many more of us will likely use other types of home and community-based long-term care services.
The truth is that for many of us, long-term care is simply a natural part of living a long life. As we celebrate our longevity it makes good sense to consider planning for our potential long-term care needs. With life expectancies increasing, it’s likely many people will need long-term care in the future.
Long-term care defined
Long-term care is defined as the day-to-day care that a patient (generally, but not always, older than 65) receives in a nursing facility or in his or her residence following an illness, injury, or cognitive impairment. The goal of long-term care services is to help you maximize your independence and functioning at a time when you may not be fully independent.
Long-term care can be surprisingly expensive. Costs vary widely by region, but the most recent New York Life Insurance Company Cost of Care Survey from 2014 showed that the average annual cost of a private room in a nursing home was $95,706 per year. The same survey showed that the hourly cost for in-home care services from a home health aide averaged $22 per hour.
Many people believe either their current health care coverage or Medicare will pay for the expenses associated with long-term care. Neither assumption is true. Health insurance doesn’t cover long-term care and Medicare covers only the first 100 days of care in a skilled nursing facility following a hospital stay of at least three days. Medicaid will pay for nursing home care and some home and community-based care but Medicaid is available only to certain low-income individuals and families who fit into an eligibility group that is recognized by federal and state law. Many people who need long-term care may never qualify for Medicaid.
So if you should someday need long-term care, what are your options? There are three primary ways to pay for long-term care:
- Pay for it yourself out of pocket: This could mean selling off assets, employing a reverse mortgage (which is the act of obtaining a loan against the value of a home’s equity in exchange for giving the lender the right to sell the home in the future), borrowing from a retirement or investment account, or maybe tapping into your 401(k) or savings. Or you could set aside a considerable portion of your assets into a rainy day fund specifically for potential future long-term care needs.
- Medicaid: If you have assets and are not eligible for Medicaid, you can “spend down” your assets to try to become eligible for Medicaid, but Medicaid eligibility varies by state 4 and involves an often complex set of triggers. Remember, Medicaid is designed to help pay for care for individuals who are low income and unable to otherwise pay for care. Medicaid is not an entitlement designed to pay for all of America's long-term care needs. States continue to tighten Medicaid eligibility rules and increase asset “look-back” periods in an effort to cut down on Medicaid costs. Medicaid also limits the number of beds in a facility that may be used by Medicaid patients and typically provides only limited coverage for in-home care or assisted living centers. If you have assets and you have the option of paying for your care with personal funds, assets, or insurance, planning to use Medicaid to pay for your potential long-term care needs may not be the best idea.
- Long-term care insurance: Long-term care insurance transfers all or part of the responsibility of paying for long-term care to an insurance company. With long-term care insurance in place you know you have a pool of benefit dollars available that may be used to pay for care. This allows your retirement and financial plan to function as planned and helps you control how, when, and where you receive care. Long-term care insurance provides a variety of benefits that make it easier to manage your long-term care needs. New York Life’s policy provides coverage for nursing home care, assisted living facility care, and home and community-based care. Our policies' benefit options are extremely flexible and can be tailored to add to an existing pool of financial resources. You can also create a long-term care insurance plan with a larger benefit pool.
Increasingly, financial professionals consider long-term care insurance to be an essential part of a well-rounded financial and protection plan, as important as life insurance, home insurance, and car insurance. Unfortunately, only a relatively small percentage of older Americans have purchased long-term care insurance.5
In planning for long-term care, the LGBT community may face several challenges that others do not.
- Medicaid: Medicaid eligibility rules 6 afford married couples some protections that are not available to married gay couples. For example, Medicaid in some cases allows a married individual to qualify for Medicaid while their spouse retains a home, household goods, a car, burial funds, and some level of assets. This is called the spousal impoverishment provision.7 Married LGBT Americans, as well as those in a domestic partnership or civil union, on the other hand, are treated as individuals by Medicaid. This means that they are not eligible for the spousal impoverishment provision. As a result, a partner in an LGBT couple attempting to qualify for Medicaid assistance would have to meet Medicaid's more stringent individual financial eligibility standards.8
- Social Security: Widows and widowers may receive Social Security benefits, while surviving same-sex partners do not.
- Retirement Plans and Estate Taxes: Unlike surviving heterosexual spouses who may designate inherited retirement accounts for tax-free growth until they reach age 70 ½, "non-spouse" beneficiaries must start drawing down a minimum amount of funds the year the original account holder dies.9 Higher net-worth same-sex couples may also be subject to inheritance taxes on estate assets that don’t apply to surviving heterosexual spouses.10
- Family Support: The LGBT community may have a more limited family support network, since lesbians and gays may be less likely to have children. As a result, there may be fewer immediate family members around to help with care and care coordination.
- Isolation: A high proportion, nearly 80%, of gay and lesbian seniors live without a life partner or significant other, while the majority of married people live with a partner.11 Members of the LGBT community are also up to ten times more likely to be without a caretaker should they need care.12
- Discrimination: Unfortunately, discrimination doesn’t end as LGBT people age. Many caregivers are not trained or willing to work with the LGBT community. As a result, some LGBT individuals have shared stories of experiencing isolation and harassment while in long-term care settings.13
Purchasing private long-term care insurance to help pay for long-term care may give the LGBT community more choices for care, which may help lessen the impact of these challenges.
There may be some changes coming that would remove several of the obstacles facing the LGBT community. A 2010 report prepared by Service and Advocacy for Gay, Lesbian, Bisexual and Transgender Elders (SAGE) calls for senior LGBT people to have the same access to benefits as other members of society.14 The report has been endorsed by groups such as AARP and the American Society of Aging.15 This may represent the first step towards extending Medicaid and Social Security benefit protections provided to traditional married spouses to the LGBT community.
What to look for in an LTCi policy
If you have the available assets, a long-term care insurance policy may be the best way to ensure you have an array of options and more control over your potential future long-term care needs. Many people wait until their 50s or later to purchase a long-term care policy, but the earlier you buy a policy the less costly the premium.
Here are some key features individuals in the LGBT community should consider when selecting a long-term care policy.
- The option to receive home and community-based care.
- The option to utilize a company-provided care coordinator.
- The option to utilize an informal caregiver training benefit. This benefit pays for the training of an individual to provide informal care within a policyholders’ residence. This may include a spouse or domestic partner.
- Perhaps most importantly, always consider the financial standing and reputation of the carrier behind the policy you are considering. New York Life is particularly well-suited to providing long-term care insurance. Our financial strength, mutuality, history of stability, reputation for integrity, knowledgeable agents, and our quality product make us an ideal long-term care insurance provider. We are committed to serving the insurance and financial planning needs of all communities.
A New York Life agent will be happy to discuss your long-term care needs in a free, no-obligation consultation. Click here to find an agent near you.
1Defense of Marriage Act of 1996. http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=104_cong_public_laws&docid=f:publ199.104.pdf
2 NAIC . A Shopper’s Guide to Long-Term Care Insurance. 2009. Page 7
3 NAIC . A Shopper’s Guide to Long-Term Care Insurance. 2009. Page 7
4 Center for Medicare and Medicaid Services. https://www.cms.gov/MedicaidEligibility/02_AreYouEligible_.asp
5 Span, Paula. “A New Long-Term Care Insurance.” New York Times. 24 Mar. 2010. Web. http://newoldage.blogs.nytimes.com/2010/03/24/a-new-long-term-care-insurance-program/
6 Medicaid eligibility rules vary from state-to-state. Contact the Center for Medicare and Medicaid services, or your state’s department of Medicaid for eligibility information.
7 Center for Medicare and Medicaid Services. https://www.cms.gov/MedicaidEligibility/09_SpousalImpoverishment.asp#TopOfPage
8 Services and Advocacy for Gay, Lesbian, Bisexual and Transgender Elders (SAGE) and Movement Advancement Project (MAP), coauthors. LGBT Older Adults and Long-Term Care Under Medicaid. September 2010.
9 Services and Advocacy for Gay, Lesbian, Bisexual and Transgender Elders (SAGE) and Movement Advancement Project (MAP), coauthors. Improving the Lives of LGBT Older Adults. March, 2010.
10 Services and Advocacy for Gay, Lesbian, Bisexual and Transgender Elders (SAGE) and Movement Advancement Project (MAP), coauthors. Improving the Lives of LGBT Older Adults. March, 2010.
11 Bennett, Jessica. “Invisible and Overlooked.” Newsweek. 17 Sep. 2008. Web. http://www.newsweek.com/2008/09/17/invisible-and-overlooked.html
12 Bennett, Jessica. “Invisible and Overlooked.” Newsweek. 17 Sep. 2008. Web. http://www.newsweek.com/2008/09/17/invisible-and-overlooked.html
13 Bennett, Jessica. “Invisible and Overlooked.” Newsweek. 17 Sep. 2008. Web. http://www.newsweek.com/2008/09/17/invisible-and-overlooked.html
14 Services and Advocacy for Gay, Lesbian, Bisexual and Transgender Elders (SAGE) and Movement Advancement Project (MAP), coauthors. Improving the Lives of LGBT Older Adults. March, 2010.
15 Services and Advocacy for Gay, Lesbian, Bisexual and Transgender Elders (SAGE) and Movement Advancement Project (MAP), coauthors. Improving the Lives of LGBT Older Adults. March, 2010.
The purpose of this material is solicitation of insurance. An insurance agent may contact you. Long-term care insurance is issued on policy form series ILTC-5000 and INH-5000 with a state identifier, where applicable and edition date. These policies may have exclusions and limitations.