Paying for Long-Term Care: An Overview

Your golden years can be a time of reflection and relaxation, but getting older comes with plenty of challenges, too. As you age, you may find it more difficult to get around your home, prepare meals and do other things you were once able to. Thankfully, long-term care options, such as assisted living and home care, are available to lend a helping hand. This guide includes information about average costs for different kinds of care along with several ways to pay for the care you need.

It's normal to be concerned about long-term care costs if you're not sure how you or your family will pay for the services you need. Fortunately, paying out of pocket isn't your only choice. The following options may cover some or all of the cost of certain kinds of care:

• Long-Term Care Insurance
• Medicaid
• Medicare
• Private Health Insurance
• Programs of All-Inclusive Care for the Elderly (PACE)
• Veterans Benefits

Long-term care insurance is a special type of insurance that reimburses seniors a daily amount for the services they need. It covers several types of personal and custodial care, including:

• Nursing care at home
• Services at an adult day care center
• Assisted living and nursing home care

Long-term care insurance prices can vary depending on several factors, such as:

• The maximum amount the policy pays per day
• The maximum number of days or years the policy will pay
• Your age at the time of purchase
• Your choice of optional benefits 

• Some policies will pay care costs for as long as you live
• Allows you to choose as much or as little coverage as you'd like
• Ideal for people with significant assets they want to protect

• Certain conditions, such as war injuries and drug/alcohol addiction, may disqualify you
• Many policies have limits on how long or how much they'll pay
• There could be a waiting period before your policy can be used
• Insurance companies may raise your policy's premium

If you have limited assets and are low-income, Medicaid can be used to pay for assisted living, nursing home care, adult foster care or care in your own home. Some of the services it covers include:

• Help with activities of daily living, such as personal hygiene, shopping, eating, housekeeping and mobility
• Home modifications, such as wheelchair ramps, lowered counters and shower grab bars
• Non-emergency transportation
• Adult day care/adult day health care
• Durable medical equipment and supplies
• Transitional services
• Respite for family caregivers
• Personal emergency response system

Long-term care Medicaid has strict eligibility requirements. In addition to meeting income and asset limits, you must:

• Be 65 years or older, disabled or blind
• Be a resident of the state where you're applying for benefits
• Have a functional need for long-term care

 

• Non-applicant spouse's income doesn't count toward your eligibility
• Can self-direct your own care/choose your preferred caregiver in some states
• Your primary home is exempt from the asset limit

• Does not cover room and board costs for assisted living
• Must have very low income and assets to qualify
• May not cover certain kinds of care/services in some states

Medicare is an entitlement program that pays benefits to people who are 65 years of age or older, permanently disabled or in the end stages of renal disease. Unfortunately, Medicare doesn't pay for assisted living, adult day care or other kinds of non-medical care.

However, Medicare does cover the full cost of an aide if you require skilled nursing or home health care. Services that are covered include:

• Part-time skilled nursing
• Physical, occupational and speech therapy
• Durable medical equipment and supplies
• Medical social services
• Osteoporosis drugs for women

• Eligibility isn't dependent on income or assets
• Ideal for seniors who need skilled nursing services
• Personal care included if you need home health care
• Some Medicare Advantage plans may cover additional care services compared to regular Medicare

• Nursing home coverage is very limited
• Doesn't cover 24-hour care at home
• Has out-of-pocket costs to consider
• Must be at least 65 years old or have specific health conditions to qualify

Private health insurance is a good option for seniors who need medical service. Much like Medicare, however, private health insurance usually doesn't pay for most types of long-term care. Some plans will cover skilled nursing and other medically necessary care, but only for a limited time.

In contrast, life insurance can be used to pay for long-term care in several ways. For example, you can get a tax-free advance on death benefits and use this to pay for care while you're still alive. You can also sell the policy to a third party or surrender it to the provider and get money for the cash value the policy has accrued. Policies vary widely, so check the terms to learn what yours allows you to do.

 

• Best for people who need skilled nursing
• Different coverage levels to choose from
• Covers a wide range of medical services

 

• Not ideal for people who only need personal care
• Has out-of-pocket costs and deductibles to meet
• Only pays for short-term skilled nursing

PACE is a government program that allows you to get long-term care in your home instead of moving to a nursing home or assisted living facility. Seniors gain access to an interdisciplinary team of physicians, nurses, dietitians, therapists, social workers and other health care professionals. Services include:

• Primary care
• Dentistry
• Hospital care
• Care at home
• Transportation
• Nutrition counseling
• Physical, occupational and speech therapy
• Prescription drugs
• Lab and X-ray services

To qualify for PACE, you must:

• Live in the service area of a PACE organization
• Be age 55 or older
• Be able to live safely in the community
• Qualify for a nursing home level of care

• Open to people who are eligible for Medicaid and Medicare benefits
• Covers nursing home care when necessary
• Covers a wide range of medical services

• You pay a monthly premium for care and prescription drugs if you don't qualify for Medicaid
• PACE availability varies by location
• Application process can be lengthy

If you're a veteran, you might be able to get home health care, assisted living or live-in home care through the VA. Participants in the VA health care program receive:

• 24/7 nursing care
• Help with daily activities
• Pain management
• Family caregiver respite

The VA also offers Aid & Attendance and Housebound benefits. These benefits are extra pensions paid on top of your already existing pension. The money can be used to pay for care in assisted living or another setting of your choosing. To receive Housebound benefits, you must be considered permanently disabled and highly unable to leave your home. To receive Aid & Attendance, you must meet at least one of these criteria:

• You are bedridden, meaning you must stay in bed when not receiving treatment
• You need help to perform activities of daily living
• You are a nursing home patient
• You are visually impaired

 

• Special consideration given to people with service-connected disabilities
• Can get care in the setting of your choice
• Surviving spouses of veterans may be eligible

• May need to cover co-pays for some services
• Must be highly disabled for Housebound benefits
• Cannot receive Housebound and Aid & Attendance benefits at the same time

With so many long-term care providers out there, it can be hard to pick the best one for you. Call 1-800-748-4024 to learn about your options and find out how to choose the right provider to meet your needs.