Paying for Long-Term Care: The Best Options and Tips

The United States has some of the best long-term care services in the world, but they are also some of the most expensive. The average assisted living facility costs up to $50,000 a year, while the average nursing home stretches to upwards of $80,000 a year.

That’s a lot of money when you consider that most patients stay in nursing homes for at least 3 years, translating into a total cost of nearly a quarter of a million dollars.

It’s a huge sum of money in anyone’s book, and it’s enough to grind a lifetime of savings into dust. It can also place a great deal of stress on the care recipient’s loved ones, taking away their inheritance and potentially leaving them to cover some of the financial burdens.

How you pay for care and how much it costs depends on several factors, from health insurance care plans to the choice of care facility, services, and optional extras. With that said, let’s look at some of the ways you can keep costs down and cover those costs in the first place.

How to Pay for Long-Term Care

The following options can help you cover long-term care costs for yourself or for your loved one.

Government Assistance Programs

Older adults may qualify for healthcare benefits, helping them to cover some or all of the costs, at least for a short time. All of them have eligibility requirements that are subject to change, though. Available programs include:

  • Medicare: A federal program that covers costs for people aged over 65, as well as some individuals with serious and life-threatening conditions. It has many limitations, however, and does not cover most forms of ongoing personal care
    • Medicare Part A: Covers hospital fees after the deductible and can also cover the first few weeks in a nursing home and the last few months in a hospice
    • Medicare Part B: Covers some preventative health care services, as well as doctor costs and outpatient care
    • Medicare Part D: Covers prescription drugs
    • PACE: The Program of All-Inclusive Care for the Elderly is available to individuals over the age of 55 who live in qualifying areas. It can cover some of the costs of many health services, including nursing home care
  • Medicaid Programs: Medicaid services can cover some costs of long-term care for low income individuals. Eligibility differs based on location
  • Department of Veterans Affairs: The VA can help to cover costs for people who qualify for veterans’ benefits

Out of Pocket

Even with government programs on your side, you may still need to pay out of pocket for your chosen care options. Here are a few of the options available:

  • Long-Term Care Insurance: Many private insurance companies offer some kind of long-term care policy. While expensive, these insurance plans can cover the costs associated with long-term care needs, including a stay in a nursing facility
    • The extent of the cover provided, as well as the cost of the policy, will depend on a number of factors, including the policyholder’s age and health status
  • Life Insurance Policies: Your life insurance policy may cover you for home health services and nursing home stays. You may be covered for serious and life-threatening conditions, with payments made while you are still alive. If you have a whole life or universal life policy, you can also cash the policy early and use the money to fund your long-term care
  • Reverse Mortgages: A reverse mortgage is available to all homeowners over the age of 62. It swaps a major home equity share for a large cash sum and can be used to cover home care services.
    • Note that one of the requirements of these mortgages is that you remain in your house and maintain it to a high standard, which means you can’t drop everything and spend the next few years in a nursing home
  • Sell Up: Patients with sizeable assets should consider selling these assets to pay for an extended stay in a nursing home or assisted living facility. They can also move into a senior living community, where they will get the benefits of regular social interaction and personal care without losing their independence
    • It can be hard to let go of your home if you have lived there for many years, but it’s important to approach the situation rationally rather than cling onto something that would benefit you more if you let it go.
  • Retirement Funds: The average senior has over $100,000 in their retirement fund but, when you add their savings and their assets, this figure rises considerably. Once they combine this sum with some financial assistance programs provided by the federal government, as well as a reverse mortgage, life insurance policy, or long-term care policy, they will be set for the rest of their life!

How to Keep Costs Down

Your first step should be to arrange a family meeting, make sure everyone is on the same page, and look at the options you have. What does the physician recommend, what does the care recipient want, and are there any concessions you can make to keep costs down?

Most of the time, it’s the family members who want the best and the most expensive care, ensuring their loved ones are properly cared for, while the patient strives to minimize costs and to cling onto their independence.

It’s important to consider all options and focus on the long-term, as well as the short-term. Can you really afford to spend over $200 a day on a nursing home? And what about the optional extras that may accrue, as not everything is included in that price.

As desperate as you are to cling onto your own freedom, it might make more sense to let your loved one move into your home, to move into theirs, or to bring them closer to you. That way, you can provide part-time care, and use an array of personal care and health care services to fill in the gaps. You’ll lose some of your free time, but you’ll get to spend more time with the person you love and won’t be asked to handle any tough financial obligations.