Most
elderly people lack necessary funds, resources to cover nursing home
care Kaiser Foundation study finds
Most elderly people
do not have assets that would enable them to pay for one year of
nursing home care according to a recent study by the Kaiser
Foundation. The study revealed that two-thirds of elderly people
living in the community have resources equal to less than one year
of the cost of nursing home care ($70,000). The majority of elderly
people in this range have very low asset levels; 57% have assets
below $5,000, less than the cost of one month of nursing home care.
A considerably smaller share (19%) of elderly people living in the
community have assets equal to three or more years of the average
cost of nursing home care.
Asset levels are
substantially lower for elderly people who have characteristics
associated with nursing home use (Figure 2). Elderly people who have
no spouse, are older, are female, and have functional or cognitive
limitations are much less likely to have assets equal to three or
more years of nursing home care.
These risk factors for nursing home entry are closely related. For
example, the likelihood of being without a spouse rises dramatically
with age, particularly for older women.
Nearly nine out of ten women
age 85 and older do not have a spouse The likelihood of having a
functional limitation and/or cognitive impairment also rises with
age, increasing from 14% for elderly people age 65-74 to 34% for
those age 85 and older.
The vast majority
of elderly people at high risk for nursing home use do not have
assets to cover one year in a nursing home. Among the 1.0 million
elderly people at high risk of nursing home use—no spouse, age 85
and older, and needing help with functional limitations or cognitive
impairments—84% have asset levels below one year of nursing home
cost.
For three quarters of elderly people in this range,
asset levels are less than $5,000. A small share (7%) of elderly people at high-risk
of nursing home care have assets sufficient to cover 3 years of nursing home costs.
A relatively small
number (71,011) of elderly people with assets equal to 3 or more
years of nursing home costs are at high risk for nursing home use
The number of elderly people who have high levels of assets declines
rapidly when examining combined risk factors for nursing home use,
including no spouse, age 85 or older and functional/cognitive
limitations. As a result, only 1% of elderly people with these asset
levels are at high risk for nursing home care. .
Conclusion
Most elderly people
living in the community do not have assets, excluding home equity,
sufficient to finance a nursing home stay of one year or more.
Furthermore, relatively few of the 6.6 million elderly people who
have assets equal to or greater than three years of nursing home
care are at high risk for using nursing homes. Rather, the one
million elderly at high risk-- because they have no spouse, are age
85 and older, and have functional or cognitive limitations--tend to
have few assets, and 84% have asset levels that would be exhausted
within one year of nursing home care. These high-risk elderly are of
the World War II generation, most of whom have not accumulated
substantial liquid assets. Future generations may be able to
generate more wealth.
However, these
findings suggest that proposals that assume significant reductions
in Medicaid spending in the short-term by lengthening the look-back
period beyond three years or tightening asset transfer rules may
fall short of expectations.
This brief was
prepared by Barbara Lyons, Kaiser Commission on Medicaid and the
Uninsured, Andy Schneider, Medicaid Policy, LLC, and Katherine A.
Desmond, Consultant.
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