Federal, State & Local Financing Programs

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Key Facts

  • Of the $135 billion spend on long-term care for older Americans in 2004, 60% was paid by government and 33% was paid out-of-pocket by consumers. Congressional Budget Office 2004
  • Medicaid is the single largest public source of funding for long-term care for impaired elders ($47 billion in 2004). Congressional Budget Office 2004
  • Only one-third of the public funds spent on long-term care for seniors pays for help at home. Most government expenditures pay for nursing home care. Congressional Budget Office 2004

Public Assistance for Seniors with a Chronic Health Condition

Public programs that offer supportive services to impaired seniors are administered principally in the U.S. Department of Health and Human Services. Some of these programs specifically target older people (Medicare, Older Americans Act) while others assist low-income people including the elderly (Medicaid, Social Services Block Grant). Each program has its own eligibility requirements, covered services, and sources of funding.

Medicaid ‚Äď Medicaid is a joint Federal/State partnership that funds health and long-term care for certain groups of people, including seniors who are poor or who use up their savings to pay for care. States develop their own rules related to eligibility and coverage within boundaries set by federal law. There are large variations in Medicaid programs among the states. States may have their own names for the program, such as “MediCal” in California and “MassHealth” in Massachusetts. A person who is eligible for Medicaid in one state may not qualify in another state.

Under Medicaid, nursing home care and home health services are mandatory benefits. States may also choose to cover Personal Care Services for people who need help with everyday tasks. Optional Home and Community Services (HCBS) Waiver programs allow states to offer a wide array of non-medical services at home to seniors who would otherwise need nursing home care.

The federal government pays about half of Medicaid expenditures nationally, and state programs pay the rest. Due to budget shortfalls, all states have taken steps to reduce Medicaid spending. Congress is considering additional cuts to Medicaid funding over the next decade.

Older Americans Act (OAA) ¬†‚ÄďThe AoA works with states and local regions to provide home and community-based services to older persons and their caregivers through programs funded under the Older Americans Act. All Americans age 60 and older are eligible for services under the OAA. Priority is given to those who are in greatest economic and social need.

The OAA authorizes grants to states and Area Agencies on Aging for planning, services programs, and for research and training projects. In FY 2003, OAA funding for these grants was $1.3 billion. Although the senior population is growing, the budget for OAA programs is not. Most OAA programs have seen flat funding or modest cuts in recent years.

Social Services Block Grant (SSBG) ‚Äst SSBG grants enable states to offer additional services to low-income and vulnerable older adults, persons with disabilities, children and families. Services can include home care, prevention of abuse and neglect, meals, adult day care, case management, legal services, and transportation. Repeated cuts to the program in the last several years has significantly reduced SSBG funding.

State Programs – Most states use their own funds to provide assistance to people who are not eligible for Medicaid, and for services that are not covered by Medicaid. These funds can come from general revenue, tobacco taxes, casino revenues, and dedicated income taxes.

Area Agency on Aging: Contact your local Area Agency on Aging to find out what programs are available in your community to help cover your health and other long-term care costs. To locate the nearest Area Agency on Aging, visit the Eldercare Locator or call 800-677-1116.

Source: Use Your Home to Stay at Home, National Council on Aging

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