The Biggest Health Care Cost Obamacare Won't Cover

Senior woman visiting with nurse in her home
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With the coming implementation of Obamacare, many Americans believe that all of our health-care needs will soon be taken care of. But the coverage mandated by the Patient Protection and Affordable Care Act doesn't address one critical type of health-care cost -- and could leaving you with a huge and expensive challenge to deal with on your own.

Many people don't realize that traditional forms of health-care insurance coverage don't typically pay for long-term care, and long-term care is increasingly becoming a key financial issue for the aging U.S. population. According to the RAND Corporation, 15 percent of those over age 70 have dementia, and dementia-care costs alone are expected to rise to $1 trillion annually by the year 2030.

To address the lack of knowledge about long-term care, the Department of Health and Human Services created a website with information on getting the care you need and protecting yourself from the financial impact of paying for that care.

Let's look at four key facts you need to know about long-term care.

1. Long-Term Care Isn't Just Nursing Home Coverage.

Decades ago, when people needed help with basic daily tasks like bathing or getting in and out of bed, they had relatively few options. If they couldn't get family members to take care of them, they often had to go to a nursing home to get the help they needed.

Now, though, a wide variety of different options are available. Home-care aides and other non-medical personnel can help you with many of your basic needs, letting you keep living in your home. Adult day services can give vital relief to family caregivers who can't provide 24-hour care. Moreover, a wide array of long-term care facilities, including assisted-living and continuing-care retirement communities, provide the services you need without the overkill of comprehensive nursing-home care.

2. Medicare Doesn't Usually Pay For Long-Term Care.

Medicare coverage is limited to very specific types of long-term care. To qualify, you must establish a need for skilled services or rehabilitative care. Even then, Medicare only pays for a maximum of 100 days of skilled-nursing care in nursing homes. Other types of covered care, including physical therapy and part-time skilled-nursing care, have their own limits on how long benefits will last.

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Most private insurance options have the same coverage limitations as Medicare, leaving Medicaid as the biggest payer for long-term care services. But Medicaid is only available to those with low incomes and assets, making it a payer of last resort for many families.

3. Most People Have Multiple Options to Pay For Care.

In order to cover long-term care expenses through insurance, you'll need to buy a specialized long-term care insurance policy. Such policies provide comprehensive coverage of most types of long-term care needs, although they have different coverage limits and eligibility requirements.

Costs can vary greatly among different types of long-term care policies, so it's important to match up your financial resources with your anticipated needs.

But insurance isn't the only way to cover costs. Reverse mortgages can help provide funding for care, although most reverse mortgages require that you continue to live in your home and so don't work well if you need to relocate to receive out-of-home care. Various types of specialized trusts can also help, such as Medicaid disability trusts that can provide money for supplemental needs beyond what Medicaid benefits cover.

4. Planning In Advance Is the Best Way to Have Your Wishes Met.

Many families face the challenge of having to guess what family members would want after a tragic health event leaves them unable to express their wishes. Doing advance planning can help avoid the uncertainties and ensure that your wishes will be respected and followed.

A strong advance care plan includes a living will or advance health care directive that tells medical professionals what types of life-sustaining care you want or don't want, such as whether to resuscitate you if you stop breathing or your heart stops beating, or whether to use mechanical ventilators or tube-feeding.

You should also choose someone to act on your behalf under a health-care power of attorney, letting a trusted individual make decisions about the specific medical situation you face. Financial provisions like establishing a trust and a durable power of attorney can make it easier for others to care for your money matters as well.

You Can Get the Care You Need

Needing long-term care is a scary proposition for anyone. By taking steps in advance, though, you can handle your long-term medical challenges much better than if you let things go until you actually need care.

You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger or on Google+.

Originally published