How to Pay for Long-term Care Expenses

The cost of long-term care can be tremendously expensive and it can quickly deplete the funds and savings of the patient and his family.

Some people are fortunate and may never need long-term care, however, the number of Americans currently receiving some form of long-term care, and the projected number of patients in the future are continuously increasing.

This reality is pushing people to rethink their financial plans and figure out a way how to pay for long-term care for themselves or their loved ones when they need it.

Ways to Fund Long-term Care

Personal Savings Most common resource, also called “self-insuring”

Combination of patient’s savings, contributions from family members

Medicare Short-term coverage

Medicaid For low income, legally destitute families

Not all are eligible for benefits

Long-term Care Insurance Private coverage Will pay expenses not generally

covered by traditional and public health care programs

Coverage includes live-in caregiver, private duty nurse, stay in assisted living facility, etc.

1. Personal Savings

While there are various ways to fund long-term care expenses, getting it from one’s own pockets seems to be the most common resource. Of course the funds involved in this strategy can be a combination of the patient’s personal savings plus his or her family’s additional monetary contributions.

Personal resources include:

Bank savings Earnings from stocks and bonds Pensions Income from small business Real Estate (when an owned property is rented out to tenants)

Unfortunately, not everyone is able to save and generate the huge amount needed for his or her long-term care needs in the future. And since the cost of long-term care is very expensive, paying it from personal funds may not really be the most effective strategy.

2. Medicare

The common misconception is that Medicare pays for the cost of long-term care, but in reality, it doesn’t cover much. Medicare covers:

Short-term recovery. For example, a stroke patient’s expenses in a nursing facility can be covered, but once the patient is better, or when the allotment runs out, the coverage stops

3. Medicaid

Medicaid, unlike Medicare, is only available to people who have low income and very limited resources.

Medicaid beneficiaries are usually:

Families who have depleted their savings A patient who has used up all his personal funds in long-term

care expenses People who have exhausted the benefits of their health insurance

but still need continuous care and physical assistance

However, having low income alone does not automatically qualify a patient for Medicaid benefits. Each state runs its own Medicaid program, so each will also have their own criteria in assessing eligible beneficiaries.

4. Long-term Care Insurance

Long-term care insurance is a private coverage sold by a lot of insurance companies.

LTC insurance will pay for:

Daily custodial care or care for patients who are not capable of performing activities of daily living (ADLs), such as bathing, dressing, transferring from one place to another, walking, eating, toilet functions, and the like.

Cost of nursing homes, a live-in or visiting caregiver, a therapist, a private duty nurse, or a housekeeper and companion

Other ancillary expenses such as home modification for the disabled, additional ramps for a wheelchair, railings for a staircase, etc.

These health care needs are the types that traditional health care and public programs do not generally cover.

When buying long-term care insurance, it is important to:

Buy a policy early in one’s life. The earlier it is bought, the better since premiums naturally get higher the older a person gets

Study the policy that best suits your risks and premium paying capacity

To learn other alternative ways of paying for long-term care, visit http://www.infolongtermcare.org.