Paying for Long-Term Care

Long term care can be really great for those that might need more assistance. There are a variety of services that are provided at home, in facilities, or even out in the community. Some of these services might be:

  • Home-based care such as home health aides
  • Community-based care like an adult day care
  • Facility-based care like an assisted living facility or nursing home.

However, the downside to this great care is that it can be pretty expensive. People in the United States spend billions of dollars per year on a multitude of Medical services. How they’re able to pay for such services depends on a variety of circumstances, such as their financial situation and the types of services they require. Most often, people rely on various sources for payment, such as:

  • Personal funds
  • Government health insurance programs, such as Medicare or Medicaid
  • Private funding options like long-term care insurance

Now let’s take a look these options in a little more depth.

Personal Funds

Many people start out by paying for long-term care with their own money. They could use personal savings, a pension or other retirement fund, income from stocks and bonds, or proceeds from the sale of a home.

Many home-based care options are paid for out-of-pocket using personal funds. At first, family and friends will often give personal care and other services, like transportation, for free. But as needs increase, it may be best to make use of paid services.

A lot of older adults will also pay out-of-pocket to be able to participate in adult day service programs, meals, and other services based in the community. Community based programs are often provided by local governments and non-profit groups, and they help elders be able remain living in their own homes.

Professional care, which is given in an assisted-living facility or senior retirement community, is almost always paid for out of personal funds, though in some states Medicaid might foot part of the bill for those who meet financial and health requirements.

Medicare and Medicaid

Government insurance programs like Medicare or Medicaid are also another way to fund long-term care. Medicare is a federal health insurance for those 65 and up, younger people with certain disabilities, and all those with late-stage kidney failure. Medicaid is a federal and state health insurance program for those with both limited income and resources.

Veterans’ Benefits

This is yet another source of payment for long-term care, and it might help those veterans with disabilities and their spouses to pay for personal care and homemaker services given at home. Those disabled or aging veterans with long-term care needs might be able to get help from the U.S. Dept. of Veterans Affairs (VA). The benefits from this will pay for care in VA nursing homes and certain services at home.

Long-Term Care Insurance

This pays for a lot of different long-term care types. Exact coverage is dependent on the policy you buy and what services it covers. You can buy nursing home-only coverage or a comprehensive policy that has both home care and facility care. Many companies sell long-term care insurance, and it is a good idea to shop around and compare different policies.

Getting long-term care insurance can be a good option for younger, relatively healthy people who are at low-risk of needing long-term care. The costs go up for those who are older, have health issues, or want additional benefits.

Reverse Mortgages

This is a special type of home loan that allows a homeowner to convert part of the ownership value in the home into cash. Unlike the more traditional home loan, there is no repayment required until the borrower sells the home, no longer uses it as a main residence, or dies.

There aren’t any medical or income requirements needed to obtain a reverse mortgage. The amount of the loan is tax-free and can be used for any expense, including for long-term care. If those care costs are higher than the borrowed amount, you don’t have to sell your house, but doing so could provide enough funds to repay the loan.

There are many other options you have when considering how to pay for long-term care than we have time to explain them all, so be sure to do your research, weigh your options, and make the best decision that’s right for your situation.