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Updated June 15, 2022
Who Pays for Long-Term Services and Supports?
Long-term services and supports (LTSS) refers to a broad
addition, 2020 spending in other categories reflect the net
range of health services and other types of assistance that
effect of any changes in LTSS utilization and costs related
are needed by individuals over an extended period of time.
to the pandemic, as well as relevant regulatory and statutory
The need for LTSS affects persons of all ages and is
changes made during the COVID-19 public health
generally measured by limitations in an individual’s ability
emergency. LTSS spending for other public programs (e.g.,
to perform daily personal care activities such as eating,
Veterans Health Administration [VHA], Children’s Health
bathing, or dressing. The probability of needing LTSS
Insurance Program [CHIP]) was 5.7% in 2020.
increases with age. As the U.S. population aged 65 and
older continues to increase in size, and individuals continue
It is important to note that the eligibility requirements and
to live longer post-retirement, the demand for LTSS is
benefits provided by these public programs vary widely.
expected to increase. In addition, advances in medical and
Moreover, among the various public sources of LTSS
supportive care may allow younger persons with disabilities
financing, none are designed to cover the full range of
to live longer (see CRS In Focus IF10427, Overview of
services and supports that may be desired by individuals
Long-Term Services and Supports).
with long-term care needs. Some Medicare spending is
similar to Medicaid LTSS spending in that both payers
CRS analyzed data from the Centers for Medicare &
cover stays in institutional settings, such as nursing homes,
Medicaid Services (CMS) National Health Expenditure
as well as visits by home health agencies, although the
Accounts (NHEA) to examine personal health expenditures
service type and scope of coverage differ.
for LTSS by payer. This analysis includes Medicare post-
acute care spending for home health and skilled nursing
In the absence of public LTSS funding, individuals must
facility (SNF) care in an expanded definition of LTSS
rely upon private funding. In 2020, private sources
spending. This is due to NHEA data providing expenditures
accounted for 27.7% of LTSS spending. Out-of-pocket
by care setting (e.g., home health, nursing home, residential
spending remained the largest component, at 13.5% of total
care), which do not distinguish whether care provided in a
LTSS spending. Second was private insurance (7.8%),
given setting is for post-acute or LTSS. Using this
which includes both health and long-term care insurance.
definition, total U.S. spending on LTSS is a significant
Other private funding, which largely includes philanthropic
component of all personal health care spending. In 2020, an
contributions, comprised 6.5% of LTSS spending.
estimated $475.1 billion was spent on LTSS, representing
14.1% of the $3.4 trillion spent on personal health care.
Figure 1. Long-Term Services and Supports (LTSS)
Spending, by Payer, 2020
NHEA data for LTSS expenditures include payments made
(in bil ions)
for services in nursing facilities and in residential care
facilities for individuals with intellectual and developmental
disabilities, mental health conditions, and substance abuse
issues. LTSS spending also includes payments for services
provided in an individual’s own home, such as personal
care and homemaker/chore services (e.g., housework or
meal preparation), as well as a wide range of other
community-based services (e.g., adult day health care
services). However, the NHEA data underestimate the total
costs of providing LTSS because they do not capture LTSS
provided by family members, friends, and other
uncompensated caregivers. This report provides
information on spending among the primary LTSS payers.
Who Pays for Long-Term Services and Supports?
LTSS are financed by a variety of public and private
sources. Figure 1 shows LTSS spending by payer for 2020.
Source: CRS analysis of National Health Expenditure Account
Public sources paid for the majority of LTSS spending
(NHEA) data obtained from the Centers for Medicare & Medicaid
(72.3%). Medicaid and Medicare are, respectively, the first-
Services (CMS), Office of the Actuary, prepared December 2021.
and second-largest public payers, accounting for 60.4% (not
Notes: Analysis includes Medicare post-acute care spending in an
shown) of all LTSS spending nationwide in 2020. In
expanded definition of LTSS spending. Percentages may not sum to
response to the pandemic, NHEA data included a new
100% due to rounding.
category of spending for federal COVID-19 pandemic
assistance, which was 6.3% of total LTSS spending. In
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Who Pays for Long-Term Services and Supports?
Over the past 20 years, the share of public LTSS spending
Other Public Payers
has increased (from 64.3% in 2000 to 72.3% in 2020),
Of all LTSS expenditures in 2020, a relatively small portion
primarily due to Medicare funding. For 2020, increased
of the costs are paid for with public funds other than
public LTSS spending reflects the new category of federal
Medicare or Medicaid. Collectively, these payers covered
COVID-19 pandemic assistance and net effect of the
5.7% of all LTSS expenditures in 2020, totaling $26.9
pandemic in general. Over the same period, the share of
billion. Of this total, $15.1 billion, representing 56.3% of
private LTSS funding, primarily related to out-of-pocket
other public funding, was for LTSS provided in residential
spending, has decreased from 35.7% to 27.7%.
care facilities for individuals with intellectual and
developmental disabilities, mental health conditions, and
Medicaid
substance abuse issues. Spending in this category also
Medicaid is a means-tested health and LTSS program
includes $7.0 billion (26.1%) for LTSS paid for or operated
funded jointly by federal and state governments. Medicaid
by the VHA, $4.0 billion (14.9%) for state and local
funds are used to pay for a variety of health care services
subsidies to providers and temporary disability insurance,
and LTSS, including nursing facility care, home health,
and $747 million (2.8%) for state programs modeled after
personal care, and other home and community-based
Medicaid and federal and state CHIP funding for nursing
services. Each state designs and administers its own
facilities and home health.
program within broad federal guidelines. Medicaid is the
largest single payer of LTSS in the United States; in 2020,
Out-of-Pocket Spending
total Medicaid LTSS spending (combined federal and state)
Out-of-pocket spending was 13.5% of total LTSS spending
was $200.1 billion, which comprised 42.1% of all LTSS
($64.0 billion) in 2020. Expenditures in this category
expenditures. In 2020, Medicaid LTSS accounted for 34.1%
include deductibles and copayments for services that are
of all Medicaid personal health care spending, which
primarily paid for by another payment source as well as
represented about 5.4% (4.4 million) of the enrolled
direct payments for LTSS. Under Medicare, there are daily
population who received Medicaid-covered LTSS in
copayments for SNFs after a specified number of days and
FY2019 (the most recent year for which data are available).
no copayments for home health services. In addition, some
private health insurance plans provide limited SNF and
Medicare
home health coverage, which may require copayments.
Medicare is a federal program that pays for covered health
Moreover, private long-term care insurance (LTCI) often
services for older adults (aged 65 and over) and for certain
has a waiting period for policyholders that requires out-of-
younger individuals with disabilities. Medicare covers
pocket payments for services for a specified period of time
primarily acute and post-acute care, including skilled
before benefit payments begin. Once individuals have
nursing and home health services. Unlike Medicaid,
exhausted their Medicare and/or private insurance benefits,
Medicare is not intended to be a primary funding source for
they must pay the full cost of care. With respect to
LTSS. These post-acute Medicare benefits provide limited
Medicaid LTSS, individuals must meet both financial and
access to personal care services both in the home care
functional eligibility requirements. Individuals not initially
setting and in SNFs for certain beneficiaries. While
eligible for Medicaid, and not covered under a private LTCI
Medicaid SNF and home health benefits are available to
policy, must pay for LTSS directly. Eventually, they may
eligible beneficiaries for as long as they qualify, Medicare
spend down their income and assets to meet the financial
benefits are generally limited in duration. In addition,
requirements for Medicaid eligibility.
Medicare SNF and home health benefits include coverage
of rehabilitation services that will, presumably, prevent a
Private Insurance
decline in the beneficiary’s physical condition or functional
Private health and long-term care insurance plays a much
status. In 2020, Medicare spent $86.6 billion on SNF and
smaller role in financing LTSS; 7.8% of total LTSS
home health services combined, which was 18.2% of all
spending ($36.9 billion) was funded through these sources.
LTSS spending, under the expanded definition. These
Similar to Medicare LTSS funding, private health insurance
expenditures include Medicare Parts A and B and estimated
funding for LTSS includes payments for some limited home
Medicare Advantage (Part C) payments attributable to SNF
health and skilled nursing services for the purposes of
and home health care. Of total Medicare LTSS spending in
rehabilitation. Private LTCI, on the other hand, is purchased
2020, half was paid for home health services and half was
specifically for financial protection against the risk of the
paid for SNF services ($43.3 billion, respectively).
potentially high costs associated with LTSS. In addition,
there are a number of hybrid products that combine LTCI
Federal COVID-19 Pandemic Assistance
with either an annuity or a life insurance policy. The
In 2020, for the first time, federal funding included
Medicaid Long-Term Care Insurance Partnership Program
COVID-19 pandemic assistance from the Paycheck
offers a LTCI policy that is linked to Medicaid eligibility.
Protection Program (PPP) Loans and the Provider Relief
Fund, which enabled federally certified LTSS providers
Other Private Funds
(e.g., home health agencies and nursing facilities) to cover
Other private funds accounted for 6.5% of total LTSS
expenses and recuperate lost revenue resulting from the
Spending ($30.7 billion) in 2020. These funds include
pandemic. This assistance represented $29.9 billion, or
philanthropic support through individuals or philanthropic
6.3% of all LTSS expenditures in 2020.
fund-raising organizations, as well as support obtained from
foundations or corporations.
Kirsten J. Colello, Specialist in Health and Aging Policy
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Who Pays for Long-Term Services and Supports?
IF10343
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