Paying for long-term care may seem like an overwhelming feat. There are a number of ways to do it.
The realization that you or your loved one needs long-term care can be overwhelming, especially when you consider the logistics and the cost. The cost of long-term care can be staggering and many wonder how they will ever be able to pay for it.
The cost of senior care varies depending on the type, the location, and the required services. In the United States, the average cost of eldercare is around $3,500 per month. Adult day health care may cost just under $2000 per month, and nursing home facilities can get radically more expensive, costing on average close to $9000 a month.
Fortunately, there are many options for you and your family to manage the costs of the care that is needed.
How can you pay for long-term care?
You can get financial assistance from many resources. Here are some of the most useful ones in no particular order:
Long-term care insurance
This is specialized insurance that can help pay for long-term care and services. This kind of insurance can protect your savings and monthly earnings or those of your loved ones.
There are many different variations of long-term care insurance out there. So, it is best to conduct thorough research, keeping in mind the type of care and services needed, before buying the insurance.
When it comes time to file a claim, it is often helpful to hire an agency to assist you, as the documents can be difficult to understand and there are sometimes hidden obstacles that can prevent you from getting your settlement.
Medicaid is a program run by states and is mainly funded by the federal government. This program provides services related to healthcare to individuals with low-income.
In order to benefit from this program, you have to be eligible for it. The eligibility criteria and the services provided usually vary from state to state. So, knowing the specific state-related details is important.
You can visit the official website of Medicaid for their contact details and general information.
Medicare is a program run by the federal government. It provides medical care to seniors over 65 years of age, individuals under 65 who have disabilities, and people of any age who have late-stage renal failure.
It is important to mention Medicare on this list because people often confuse it with Medicaid. The important thing to know is that Medicare does not generally cover the costs of long-term care. But it can be a great help for a short-term stay at medical-related centers like rehabilitation centers and skilled nursing homes.
You can find more information about Medicare on their official website.
If you are a United States military veteran, the U.S. Department of Veterans Affairs (VA) may provide you or your spouse with long-term care in case you are eligible.
The eligibility process is not so simple, and there could be a waiting list to go through. You can find further information on their official website.
Amidst other options, there is always an option to pay for long-term care with your personal funds. It is one of the simplest ways involving little to no complications as compared to other options on this list.
Personal funds may include savings, monthly income, or support from the family. Many seniors work even while getting long-term care and can afford to pay for the care with their own income.
If you or your loved one owns a home, you can opt for a reverse mortgage. This is a special type of home loan that allows you to convert the value of your home into cash.
The unique thing about reverse mortgages is that you don’t have to make repayments until you sell the property, stop living there or pass away.
There are usually no special eligibility criteria for reverse mortgages, except that you have to be 62 or older. And you can use this tax-free loan to pay for your long-term care expenses without any restriction.
Life insurance is a viable option to get cash to pay for your long-term care. While choosing the life insurance policy, make sure it has the option for ‘accelerated death benefit’ or ‘life settlement option’.
You can receive tax-free cash withdrawals through ‘accelerated death benefit’. The cash that you withdraw will be deducted from the amount that your beneficiaries receive when you pass away.
‘Life settlement option’ is to sell your life insurance policy at the current value. This money can be helpful in paying for your long-term care.
You can pay for your long-term care by entering an annuity contract with an insurance company. The insurance company may send you an annuity if you make the agreed payment to them.
An annuity is a regular series of payments that are made over a specified time period. Furthermore, there are two types of annuities known as immediate annuities and deferred long-term care annuities.
Using a trust
Using a trust to pay for your or your loved one’s long-term care is another useful option. You can transfer the assets to a trustee and that trustee will in turn manage your assets.
After transferring the assets to a trustee, you will not have control over the money, but you can submit bills to them to get money for your expenses.
The federal government runs a program called Social Security that can provide you with retirement income if you have paid into the program. If you have worked legally throughout your life, you have most probably paid into Social Security already.
There are some eligibility criteria for this program which you can find here.