Saving for care in the future

Starting in January there could be a new deduction on your pay stub. Lots of us haven't been saving for our senior years, so the government wants to nudge us into socking away more money. WHYY reports on another of those little-known provisions in the new health law.

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Mary: Hi, how are you?
English: I'm doing well, how are you doing today?
Mary: No too bad.
English: Looks like you're up and around.
Mary: As long as I can move, I'm all right, everything hurts but still …

Chat with Mary Pellak in the morning, and there's little sign she's suffering from anything but the aches and pains that come with age.

Mary lives in Ridley Township, Delaware County, with her son and daughter-in-law.

Mary: I love it. What else can I ask for?

Tom: We make sure that she takes her meds, and she is fed.

Mary's son, Thomas Pellak …

Tom: She's capable of doing everything else herself. A little bit slower than it was six years ago, but she can still do everything herself.

Thomas Pellak says his mother, who has dementia, will eventually need 24-hour nursing care.

Mary has dementia, and Tom says she's begun to forget the basics when to stop eating, even how old she is.

Mary: About 82 or 84.

Tom: Mom is actually 86, not 82 or four. That goes along with the program, she had dementia.

She also has what many older Americans say they want: help to live a home when they can no longer care for themselves.

But many middle-income Americans do not finish their lives at home with family. They end up in a nursing home, on Medicaid having spent down all of their assets.

Of Pennsylvanians in nursing homes, nearly 70 percent are on Medicaid. Not Medicare, Medicaid which also provides health care for the poor. These Medicaid costs are overwhelming in Pennsylvania and in many states.

Prushnok: Virtually no one who should have long-term care insurance has long-term care insurance.

Ray Prushnok is Pennsylvania's deputy secretary of aging. He says the program is voluntary, that is both employers and individuals can opt out. But beginning next year, workers who don't opt out will automatically be enrolled, and a portion of their paycheck will be set aside.

Prushnok: And when you need help getting out of bed and getting into a chair, or you need help bathing or with other basic needs, you would qualify for the benefit after having been vested in the program, which takes five years.

The federal government is still deciding how much to ask people to contribute, but Prushnok is excited about how the benefit pays out.

Prushnok: It puts the control directly in the consumer’s hands, and they'll be given basically what amounts to an ATM card, that they can spend it wherever they choose.

Seniors can stockpile the money to make a big purchase, such as widening doors for a wheelchair. Prushnok says right now most people haven't saved for home renovations or nursing care.

Prushnok: Medicaid will more often than not pay for that care, but that's after you've depleted all of your assets. You've spent down all of your resources that you've saved up for over your entire life; these things that you'd worked so hard for and that you hoped to pass along to your children.

Mary Pellak and her husband Peter did more than most to prepare even while raising six sons on a truck driver's salary. Their son Tom says his dad left $125,000 for Mary.

Tom: It wasn't a lot, it might sound like a lot to some people, but in the real world of taking care of the elderly, it's not, it goes so fast. You know her money would be gone four years ago if she went into a nursing home or assisted living.

Elder law attorney Neil Hendershot says the Pellaks are in some ways a throwback to the 1950s and ‘60s when …

Hendershot: Your insurance for your long-term care was a loving family.

He says the use of Medicaid by the middle-class is the new normal.

Hendershot: The target audience was those who were abandoned, unfortunately by society, but the ethic came to be: We will intentionally abandon our elders so they can get Medicaid benefits and the government will pay for them.

On average, the new benefit will pay out about $50 a day, while a nursing facility might cost $200 a day.

Hendershot: It will not cover the costs, but it's a wake-up call that people have to do their own planning, and the government is simply not going to take care of every one.

The health law tries to shift some responsibility back on us. Experts say it could prepare young workers mentally for end-of-life decisions and start a national conversation.

Mary Pellak had a head start on savings and her son there to help, still her money is running out.

Mary: Years ago you didn't think about those things. You know, you just went about your business, and that was it. I had six sons. I had a lot to do.

Auto-enrollment for the long-term care program begins in January.