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Long-Term Care Insurance and Assisted Living – Keystone Elder Law – Mechanicsburg, PA

The is the first in a series of articles which will explore how Pennsylvania’s long-term care regulations have been interpreted by both private insurance companies and state agencies in a manner that can be detrimental to consumers. Regulations can be obstacles for owners of long-term care insurance who seek to make claims to enter a licensed care facility to receive help with their activities of daily living which, in some cases, may relate to dementia.  Observations within these articles are not theoretical, but involve examples of cases which have been reported to the Pennsylvania Department of Insurance with varying results.

Industry estimates suggest that fewer than ten percent of Americans own long-term care insurance. This compares with ninety percent of Americans preferring to receive care at home.  The fact that these articles will focus on the regulation of Pennsylvania’s long-term care facilities, and not the provision of home care, is an irony that should not be lost on the reader.

Unfortunately, Pennsylvania’s long-term care policy makers have done little to promote the sale of long-term care insurance for future home care of aging baby boomers. Instead of enabling the Insurance Department to become a stronger advocate to help senior consumers benefit now from the value of the investment they made over several decades in long-term care insurance premiums, Pennsylvania’s regulations have been obstacles to payment of some claims for care in licensed facilities. In addition, regulatory effort apparently was wasted in 2010 to invent a homey-sounding category of long-term care that it is comparatively unique to Pennsylvania.  The poor response from licensed care facilities and a lack of consumer interest over the last five years invites present criticism.

It would be easy to digress, as in Alice in Wonderland’s rabbit hole, through a maze of long-term care issues related to the challenge of providing affordable care for aging seniors. Home care is recognized as a preferred option.  However, my focus will be to establish a background to understand how Pennsylvania’s regulations have created confusion and obstacles for consumers.

Just what is a long-term care facility? Is it a licensed facility that provides assisted living care for dementia?  In Pennsylvania, such terms are defined by governmental regulations in a manner that differs from ordinary conversation, regulations of other states, and the intentions of contract terms of long-term care insurance policies.  This article will deliberately capitalize terms to emphasize regulatory distinctions.

Long-term care is generally categorized by insurance companies and licensed by most states as either skilled nursing care or intermediate custodial care for assisted living. In Pennsylvania, intermediate custodial care is further categorized and licensed as either an Assisted Living Residence or Personal Care Home.  It is in this unique distinction that the problem with long-term care insurance occurs.

Governmental regulations can have unintended consequences. Such has been the case in Pennsylvania since July 16, 2010, when a new category of licensed care facility was created by Pennsylvania law.   The enabling regulation (Title 55 Chapter 2800.1.b) says “assisted living residences are a significant long-term care alternative to allow individuals to age in place. Residents who live in assisted living residences that meet the requirements in this chapter will receive the assistance they need to age in place.”

Since most people would prefer not to leave their home, using the term “age in place” as a label to describe a long-term care facility could be an oxymoronic example of government intelligence.   The Chapter 2800 regulations define an Assisted Living Residence as a facility which can “develop and maintain maximum independence, exercise decision-making and personal choice.” To apply the term “independent” to a long-term care facility is at best idealistic, especially when done in anticipation of subsidizing the cost.

Companies who employ home care workers to help aging persons with activities of daily living in their own homes offer an ideal aging in place solution. However, financial limitations can cause a person to seek care from a facility as care needs increase.  The cost of home care can be more than double the cost of care of a similar level of care provided in a facility.

Over the last half of the twentieth century, Continuing Care Retirement Communities (CCRCs) emerged as a long-term care option for the most affluent ten percent of Americans who chose to age in place. Ideally, CCRC applicants choose a retirement community which initially enables their independent lifestyle, then eventually supports them to “age through the system” as their need for higher care levels occurs as a natural result of the aging process.

Pennsylvania has a large number of well managed licensed facilities where quality care is provided.   However, many Pennsylvanians cannot afford the cost of care in any long-term care facility.  Therefore, Medicaid assistance is presently available for care in a nursing home, but not an Assisted Living Residence or Personal Care Home.

When the 2010 Assisted Living law was enacted, advocates suggested that Pennsylvania should earmark federal Medicaid funds to pay for care in Assisted Living Residences as a better option than care in a nursing home. Neither the Rendell nor Corbett administrations made such Medicaid funding a priority.  Long-term care expenses are budget-busters.

Compliance by established and licensed personal and assisted living care facilities with the Assisted Living Residence licensing requirements would require expensive building modifications. There was no renovation subsidy offered, no proof that renovations would result in improved care, and renovations were not requested by consumers.

Consequently, only three percent, or fewer than 35 of the more than 1,250 Pennsylvania intermediate or custodial care facilities, became licensed as Assisted Living Residences.  The failure so far of the Assisted Living Residence model in Pennsylvania can be described charitably as was Ford Motor Company’s production of the Edsel:  “The aim was right but the target moved.”

An unintended consequence of Assisted Living Residence regulations as related to long-term care insurance will be discussed in next week’s article.

By Dave Nesbit, Attorney