This article is reprinted with permission from The News & Observer of Raleigh.

William Marshall made a good living working for a railroad company in South Carolina and draws a modest pension. But the high cost of ongoing care eventually forced Marshall, 86, to give up his home and everything he had accumulated after he developed mild dementia and had several heart attacks.

"He's middle [class]," said Marshall's daughter, Donna Jones of Cary. "He can't get any assistance whatsoever from the government."

Increasingly, middle-income retirees with chronic illness or disabilities face the same struggle when it comes to paying for long-term care, such as nursing homes, rest homes, assisted living and in-home aides.

They are too well-off to qualify for Medicaid and other public services that cover the health-care costs of people with low incomes. But they aren't wealthy enough to pay the expenses out of their own pockets, and they can't afford special private insurance for long-term care.

In the Triangle, nursing homes cost an average of $62,780 a year, according to a survey last year by the MetLife Mature Market Institute. But contrary to what many people assume, Medicare -- the federal health insurance program for people 65 and older -- doesn't pay for such long-term care. Neither do most routine health-care plans.

Marshall's railroad pension is too high for him to qualify for assisted-living care paid for by a joint state/county fund and Medicaid. So he used some of the proceeds from the sale of his house for a place in an assisted-living facility. After that money ran short, he moved into a less expensive spot at Parkway Retirement Home in Cary.

Situations such as Marshall's can have a big effect on other family members. Jones visits her father often, leads Bible services and makes sure to keep in touch with the staff and management.

But Jones, who owns her own cleaning business, has barely given a thought to her own retirement; she's tied up helping her dad.

"If something happened to me, he'd be homeless if we didn't have family here," she said.

With 70 million baby boomers at or nearing retirement age nationally, the specifics of long-term care -- who gets what and who pays for it -- are likely to take up increasing amounts of public attention and money. In North Carolina, those over 65 will increase from 12 percent to about 18 percent of the population by 2030, according to the state Division of Aging and Adult Services.

"There will be a large group of our senior population who will never qualify for public assistance, and yet will never be able to manage the costs they face on a daily basis," said the writers of "Growing Older Living with Dignity," a report released this year by a Wake County task force on aging.

"Our system fails these people utterly."

Who Qualifies for Help?

Many people reach retirement age and beyond without a calamity that requires long-term care. But for those who do suffer an injury or chronic illness that requires long-term services, the expense can be catastrophic.

"Half of people turning 65 will have no private out-of-pocket expenditures for long-term care, while more than one in 20 are projected to spend $100,000 or more of their own money (in present discounted value)," said the authors of a study published this year in the scholarly journal "Inquiry."

Out-of-pocket payments accounted for only 28 percent of the $115 billion Americans spent on nursing homes in 2004, according to a commission financed by the Henry J. Kaiser Family Foundation. Private insurance covered even less: 7.8 percent. Medicaid, by contrast, paid for 44 percent, the largest share.

But Medicaid is available only to people who are poor or disabled or who have exhausted their personal assets paying for health care. For middle-income people, it's common to have to get rid of assets, or "spend down," to qualify for such state "special assistance."

To qualify for the level of care known as assisted living through Medicaid, an individual cannot own assets, other than a home, of greater than $2,000.

Income, which you can't "spend down," is also a factor. To receive Medicaid for assisted living, an individual can have a monthly income of no more than $1,183.50. "If the person is at $1,185, it isn't like they can get the help -- they are just flat-out not eligible," said Liz Scott, adult economic services director for Wake County Human Services.

"The most difficult part of this is for people who need assisted living," Scott said.

By a quirk in the law, an individual with a slightly higher income, $1,400 to $1,500, can qualify for Medicaid-paid nursing home care, a more expensive and higher level of medical care than provided at assisted-living facilities.

"It's this whole Catch 22 about people often having to seek out a higher level of care than they need," Scott said.

William Marshall, the railroad retiree, doesn't need as much medical attention as nursing homes provide, his daughter said.

"There's nothing for people like Daddy that don't need a nursing home," Jones said. "He still has his mind, but he can't physically look after himself."

Marshall lived independently in the family home in South Carolina until about eight years ago. "He had a heart attack and then he was having anxiety attacks," Jones said. "He called the ambulance every other day."

Like many people in his situation, Marshall relied on his family to provide care, at least initially. "He moved up here with my sister, and she passed away," Jones said. "That's when I had to find him a place. I have to work. I'm working class."

One Couple's Story

Even for people who are in seemingly comfortable retirement, the possible need for long-term care can become a nagging issue: What if one partner in a marriage or relationship gets really sick?

Such thoughts sometimes cloud retirement life for Nat and Roberta Smith of North Raleigh.

"My best-case scenario is, nothing happens to us," said Roberta, 67, a retired nurse. "But that's like saying you're going to get to be 50 and never have a car accident."

The Smiths live in a leafy, '70s-era suburb and enjoy gardening, Encore classes at N.C. State University and travel. They have pension and Social Security resources and aren't by any means crying poor. But they worry that they could be wiped out if they had to pay for long-term care.

"If one of us had a stroke and needed care for a long time ..." said Nat, 66, a former lab manager in the NCSU zoology department. He stopped for a minute, thinking of their grown offspring. "Most of us don't want to be a burden on our children."

Perhaps, the Smiths said, they could convert some of their downstairs rooms into a large bedroom for whoever got ill. They could bring in home-health aides. But at $15 to $25 an hour, home health can get into real money really fast.

"You need to go ahead and make your plans, because you never know when you're going to need them," Nat said.

Experts say people such as the Smiths fit into that huge percentage of the older population -- people doing too well to be considered poor, but not nearly well enough to float through any and all perils in their senior years.

"It's a big issue, but it's also one that the legislature will need to address along with the department," said Lynne Perrin, chief of facility and community care, clinical policy and programs at the state Division of Medical Assistance. A change in eligibility levels would allow more older residents to get help from the state.

One proposal is a state program that would allow people who sign up for long-term care insurance from an approved company to keep more of their assets after private insurance runs out and they move to Medicaid.

"If you do the financially responsible thing and try to pay for your future, then we will not require you to spend down to the same levels," said Mark Benton, senior deputy director of the Division of Medical Assistance.

The legislature agreed to the partnership in concept last month, but the General Assembly and the federal government still must approve guidelines and specifics.

For couples in the Smiths' situation, no help from the government is likely to show up.

"They'll always have too much income, even though they might not have enough to pay for a year of care," said Laurie Ray, director of COPE Eldercare, a nonprofit geriatric-care management agency in Cary.

Sad Number of Choices

The Smiths exercise and look after themselves.

"We are trying ..." Roberta said.

"... to do the things that make sense," Nat said.

It's an idyllic picture, but as the Smiths know, it has its risks. Dan Daniel, managing director for the Raleigh office of the Northwestern Mutual Financial Network, laid out a scenario that's all too common.

"If I have a couple of clients in their 70s that are both healthy, most of the time they are saying they want to stay in their homes as long as possible," he said. "But if one of them gets sick, in more cases than not, the spouse is going to try to provide that care, and will do that even at the risk of his or her own health."

For now, the Smiths will continue to research long-term care choices and hope there's something available in their price range when and if they need it.

Back in Cary, Donna Jones said she has had her fill of trying to work the system after her years of dealing with long-term care for her late mother, who had Alzheimer's disease, and for her father.

"When I get to be 65 or so, I will sell my house; I will make sure my income isn't very much," she said. "That sounds awful, but what is my choice?"