You may not be factoring long-term care costs into your financial planning efforts right now, but perhaps you should. An estimated 12 million Americans require some sort of long-term care each year. Long-term care can constitute a number of different types of services, ranging from help with housework and grocery shopping to direct support with personal tasks such as dressing, bathing, and eating. When long-term care is necessary, the average person uses these types of services for approximately three years. Long-term care can be prohibitively expensive, and if you haven’t planned for it, the sudden onset of these requirements can be difficult to manage. It doesn’t have to be that way. Here are five things you need to know about paying for long-term care costs, so you can start planning accordingly.
1. Medicare and Long-term Care
Medicare is a common way people 65 and over pay for some types of long-term care. However, the types of long-term care Medicare covers are limited by time and type. For instance, Medicare will only cover skilled services or rehabilitative care required in a nursing home for a maximum of 100 days. Medicare will also cover long-term care for patients at home and receiving skilled health or other skilled in-home services. However, in general, Medicare provides long-term care coverage for a relatively short period. In addition, Medicare won’t pay for the non-skilled assistance forms of long-term care, and this is what makes up the bulk of long-term care services.
2. Medicaid and Other Types of Government Support
For people under age 65, Medicaid may be an option to cover some or all of the costs related to long-term care. However, to qualify for Medicaid, a patient’s income must meet certain requirements. Medicaid eligibility can also vary from state to state, so you should determine your state’s eligibility requirements, as well as what type of long-term care coverage it provides. Additionally, other public programs can assist with the cost of long-term care. For example, the Older Americans Act and the Department of Veterans Affairs will also pay for long-term care services, but only under certain circumstances and for specific populations.
3. Long-term Care Insurance
Long-term care insurance is a type of insurance designed specifically to cover the support and services people require due to aging or health issues. While the coverage can vary, long-term insurance often covers requirements that include in-home custodial and personal care, as well as the type of personal long-term care people require in nursing homes and similar facilities. This insurance typically reimburses the policyholder a daily set amount to cover the gamut of long-term care services. When purchasing a long-term care policy, you usually can select from a range of benefits and options designed to get you the services you need, where you need them. More and more insurance companies are offering long-term care policies, so check to determine whether yours does, and how much it would cost.
4. Hybrid Policies for Long-term Care Coverage
Another way to ensure you have some sort of long-term care coverage is to add that coverage on to some other sort of insurance policy, For example, many insurance companies include the option of long-term care coverage in the life insurance policies they offer; for an additional cost above the standard premium, your life insurance policy may be able to help mitigate the high costs of long-term care, should you ever need it. You may be able to add this type of coverage to an existing life insurance policy, so contact your insurance company to see if it’s available.
5. Other Long-term Care Options
Outside of public programs and private insurance plans, there are other options to pay for long-term care. For example, you can opt to pay your long-term care costs out of pocket with personal savings. However, long-term care over time can be prohibitively expensive, and over time could wipe out all the funds you had set aside for retirement and other important expenses. You should definitely consider purchasing some sort of insurance or check your eligibility for public programs before you tap your savings account for this form of care.
Another option to consider is to turn to a close relative or trusted individual for support. In many cases, a person you know may be able to provide the exact type of long-term support needed without having to resort to an outside agency or insurance. Individuals may be willing to provide this type of support due to their relationship with you, or in some cases do so in exchange for housing. However, in this instance, it’s important to ensure that the person is trustworthy and capable of providing the type of long-term care necessary.
Start Thinking About Long-term Care Today
If you don’t think about your long-term care until you need it, your options to pay for care could be extremely limited. If you want to ensure you and your loved ones are covered in the event you suddenly need the support that long-term care provides, you should start planning for it now. Talk to a trusted financial advisor and see what your options are for obtaining some type of long-term care coverage. The sooner you start planning, the better prepared you’ll be in the event you actually need it.