How to Pay and Plan for Long-Term Care

Thanks to continuing improvements in health care, the U.S. population is living longer, which also means more people requiring long-term care. As we age, the likelihood is that we will need a nursing home and/or home care assistance for some period of time. However, such care is expensive and most individuals do not have the funds to pay for it for a substantial period of time. There are a few options to help pay for long-term care, but determining the best one for you may be difficult. It is beneficial to get assistance from an attorney and other professionals who work specifically in this area to ensure you understand your choices. The first step is to dispel some common misunderstandings about long-term care coverage.

How Expensive Is Long-Term Care?

Nursing homes can easily cost $100,000 to $150,000+ per year. Private care facilities and 24-hour in-home care can be even more expensive. In many cases, a person will need care for 3 or more years. As a result, families can easily use up all their savings trying to pay for assistance.

Will Insurance Pay for Long-Term Care?

Generally, traditional health insurance policies do not pay for long-term care in a nursing facility or a home care setting. They may cover short-term care, such as in a skilled nursing or rehabilitation facility. There also may be some coverage for certain intermittent in-home services (visiting nurse, physical therapy, hospice, etc.).

The only way insurance will cover significant long-term care costs is if you purchase long-term care insurance. You can buy a separate long-term care insurance policy or a life insurance policy with a long-term care rider that allows you to use all or part of the policy’s death benefit for long-term care while you’re alive. This topic will be discussed further in a future blog post.

When Does the Government Pay for LTC?

Under limited circumstances, Medicare will cover short-term stays in skilled nursing facilities and provide certain home care services. However, it will not cover additional time in a nursing home or provide other home care services.

Medicaid does pay for long-term care for those who qualify. Individuals on Medicaid are only allowed to retain a small amount of assets and that amount varies depending on the state they live in. Income is also limited. There are different rules that apply depending on whether you want Medicaid home care or nursing home coverage.

For those who have income and assets over the limits, Medicaid planning can help preserve some of the excess. However, it is important to do this correctly and in a timely manner or risk losing that money to the government and not being able to qualify for Medicaid.

When Is the Best Time to Engage in Long-Term Care Planning?

It is best to start planning well in advance of needing care. If you wait until you or a loved one is ill and/or in need of long-term care, some payment options may no longer exist. However, even if you do need care now, consult an attorney for advice since you may still be able to preserve some assets and income.

If you want to learn more about long-term care, contact one of our attorneys. We have extensive experience with estate and Medicaid planning and can help you evaluate your choices.