Paying for Long Term Care

Last Updated
February 28th, 2011

When it comes to paying for long term care services, mamy people incorrectly think that Medicare or standard health insurance will provide coverage. Planning ahead is essential as costs for a nursing home can be $50,000 per yeah and assisted living and home care services can reach $30,000 or more depending on the setting, scope and duration of care.

The United States very much needs a new way to finance long-term care and supportive services so that people can live as independently as possible
and can afford solutions to help them live fully. Following are current ways people pay for senior housing and services. 

1. Private Pay

This is essentially self-insuring where you use your accumulated savings and other income such as investment income and Social Security to pay for housing and service options. It’s your money, and you self-direct it.

2. Long-Term Care Insurance

Long-term care insurance may provide a high level of coverage depending upon the policy benefits but it can get expensive particularly for older adults.
As a general rule, the sooner you enroll, the lower your premiums will be. Some states, such as Minnesota, have a Long-Term Care Partnership Plan, where you can preserve some of your assets while still qualifying for Medicaid by purchasing a state-endorsed long-term care insurance policy.

3. Medicare

Medicare may cover short-term rehabilitation provided in a nursing home or in the home after a major medical condition or event requiring a hospital stay, but it doesn’t provide longer term housing or supportive services.

4. Medicaid

Medicaid covers long-term care only for those who meet strict state-specific financial eligibility requirements. Personal investments and assets must be
almost completely exhausted before Medicaid can be accessed. Medicaid also limits the provider options.

Table of Government Coverage for Long Term Care

5. Reverse Mortgages

A reverse mortgage is a type of loan that gradually converts the built-up
equity in a person’s home into money. The payments are tax-free, there are
no health requirements, and the loan doesn't have to be repaid until the
owner moves or dies. Heirs can then sell or refinance the property. Your
state commerce department can help you determine the pros and cons of
this for your particular situation.

For more extensive third-party information, we recommend this site from the U.S. Department of Health and Human Services:
www.longtermcare.gov.