How Does One Pay for Long-Term Care?

Pay for long-term care
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Navigating how to pay for long-term care is important financial planning.

If you search our blog posts over the years (more than 3,000 of them), then you will find that I cover the subject of long-term care.

A lot.

Life tends to have a distinct arc.

Babies come into the world completely dependent on others.

As children grow, they become more independent.

Lastly, those who enter older age have bodies in decline.

This decline leads to a need for the help and support of others.

Need proof?

Check out the official government website for the Administration for Community Living, as managed by the U.S. Department of Health & Human Services.

There you will find plenty of official attention-getting government statistics regarding long-term care.

According to a recent SGE article titled “How to Pay for Long-Term Care,” few families are equipped to provide around-the-clock care or cover the costs of long-term care.

Take time to plan how you will pay for long-term care.
Several options exist to pay for long-term care.

Because long-term care costs are expensive and will be necessary for most aging Americans, it is essential that you have discussions and make plans now for how you will pay for long-term care later should you need it.

Although long-term care insurance is a good option for many, it is not available for those who already require assistance with daily living activities (think bathing, dressings, using the toilet, transferring to or from a bed or a chair, caring for incontinance, and eating).

Certain health problems may lead to denial of coverage such as having a stroke or being diagnosed with AIDS, cancer, dementia, or Parkinson’s Disease.

Age is also a factor.

Those who are over age 85, but healthy, may not qualify for coverage.

In addition to private long-term care coverage, there are a few other options to pay for long-term care.

Some private health insurance plans or employer-sponsored plans cover basic long-term care costs like medically necessary skilled care if they are needed for a short time.

Hybrid life insurance and long-term care policies allow for benefits to be used for long-term care with the remaining funds available as the life insurance death benefit.

Some options allow you to purchase a long-term care rider or a deferred long-term care annuity.

Asset-based long-term care insurance is a type of whole life insurance policy allowing for death benefits to be used for long-term care costs.

Options to pay for long-term care other than insurance include private pay.

You can utilize your savings or a health savings account.

You may even choose to take out a home equity loan or a reverse mortgage.

With a reverse mortgage, you can borrow from the equity of your home while you are alive without owing principal or interest.

After you (the homeowner) moves or dies, the loan balance is due in full.

Typically, the lender takes ownership of the house.

If you qualify, you may be eligible to have certain state and federal government benefits help pay for long-term care.

For example, the Department of Veterans Affairs (VA) provides benefits for those who qualify.

While Medicare only pays for 100 days (2o days fully and 80 days partially) of nursing home care for individuals who need rehabilitative care of skilled services, skilled home health or other care may be covered in some instances.

For individuals who meet income and other eligibility requirements, the state Medicaid programs can pay for long-term care.

As noted above, because long-term came is so expensive, it is essential to develop a plan now to pay for long-term care later.

Do not put your head in the sand on this important personal responsibility.

I have seen too many families wait until they are in crisis mode.

It is not pretty.

Reference: SGE (Dec. 4, 2021) “How to Pay for Long-Term Care”

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