Paying for Long-Term Care: Know Your Options

Published July 21, 2022

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The decision to move yourself or a loved one into long-term care can be a difficult one, and determining how to pay for long-term care can add unnecessary stress to a phase of life that’s already full of transitions. Understanding the costs you may encounter and developing a proactive plan to afford long-term care can help ease the burdens that accompany it.

What Is Long-Term Care?

Simply put, long-term care is a catch-all term for care administered to help aging seniors go about their daily lives. According to the National Institute of Aging, “The most common type of long-term care is personal care—help with everyday activities, also called ‘activities of daily living.’ These activities include bathing, dressing, grooming, using the toilet, eating and moving around—for example, getting out of bed and into a chair.”

The level of care needed depends on the person. For example, long-term care solutions can incorporate transportation services, home health care, senior companion services, housekeeping and similar services.

How Much Does Long-Term Care Cost?

The costs of long-term care can vary widely depending on the person receiving care, their health conditions, the type of care needed, and where they live. The U.S. Department of Health and Human Services reports that long-term care can cost upwards of $3,628 per month in an assisted living home and $7,698 per month for a private room in a nursing home. For those who require specific services or assistance, rates can top $20.50 an hour for a health aide and $20 an hour for help with tasks such as grocery shopping and cooking.

Simply put, long-term care is costly, however, specific pricing can vary greatly depending on your geographic location and the level of care required. That’s why it’s so important to think ahead to how you’ll pay for senior care.

What is the Best Way to Pay for Long-Term Care?

When it comes to financing care, there are many ways to fund care or offset costs. Below, we explore some ways to pay for long-term care.

Long-Term Care Insurance

Long-term care insurance is a type of insurance specifically designed to fund the costs of daily living services. Typically, the insured must still be in good health to qualify for this type of policy. Some of the downsides are that long-term care insurance can be costly, and many policies only pay out for a limited amount of time, typically two to five years. Depending on life expectancy, funding may run out long before it’s no longer needed.

Personal Funds

Seniors who have the personal wealth to cover long-term care may be able to liquidate assets or tap into cash reserves. This can include money from personal savings accounts, stock portfolios, a pension or the sale of a property. For many seniors, personal assets may help offset some costs, but it’s typically not enough to cover expenses completely.

Medicare and Medicaid

Medicare and Medicaid may help finance costs associated with long-term care. However, these options only go so far: Medicare primarily covers healthcare services like doctors’ visits, while Medicaid contributes to certain aspects of long-term care. Not every person is eligible for these programs, so you’ll need to determine if you qualify.

Government Programs

Beyond Medicare and Medicaid, there are alternative forms of government assistance and support that you may wish to explore, including:

  • Program of All-Inclusive Care for the Elderly (PACE) – The PACE program provides medical and social services to seniors who qualify. PACE is comprehensive and provides a full care team to participants.
  • State Health Insurance Assistance Programs (SHIPs) – These programs work in tandem with Medicare. SHIPs connects Medicare participants and their families with local representatives who can answer questions about coverage and help with complaints and appeals.
  • Department of Veterans Affairs – The U.S. Department of Veterans Affairs offers healthcare benefits and other long-term programming for veterans of the armed services. The range of services is fairly comprehensive for those who are eligible.
  • Social Security Disability Income (SSDI) – SSDI programs are among the largest federal programs for individuals living with disabilities and require financial support. Supplemental Security Income (SSI) is a component of this programming, and helps provide eligible individuals with income for their basic needs.

Life Settlements

Perhaps one of the most compelling solutions is to turn to an asset you may not have realized you have. Selling your life insurance policy–known as a life settlement–is a growing solution for funding long-term care or offsetting some of the costs. If you are 65 or older and own a life insurance policy of $100,000 or greater, you may be able to sell your policy for an immediate lump-sum cash payment. Any policy type may qualify–including term.

Your eligibility and the amount you can earn from selling your policy depends on a variety of factors, including age, health conditions and policy type. Finding out how much your life insurance policy is worth only takes a few minutes, and can be done over the phone or online.

Who Needs to Plan for Long-Term Care?

While it may be hard to prepare for the unexpected—such as accidents or injuries—certain risk factors can increase the likelihood that long-term care will become a necessity. According to the U.S. National Institute on Aging, factors that contribute to the need for long-term care include:

Old age: As you grow older, your health and ability to perform daily tasks may decline.
Gender: Statistically speaking, women require long-term care more often than men due to the fact that they live longer on average.

Marital status: Single individuals are more likely to need support than married people.
Lifestyle: A poor diet and lack of regular exercise may increase the need for care.
Health conditions and family history: Any pre-existing conditions or illnesses may worsen with age.

Unfortunately for many who find themselves unprepared, the cost of long-term senior care services can be challenging—and quite burdensome for those who end up shouldering the cost. Planning for the future can mean saving loved ones from the difficult financial stress of paying for care. Smart planning and knowing your options to fund care can make all the difference when it comes to a smooth transition into long-term care.

If you or a loved one is in need of cash to fund long-term care or a policy is no longer needed, selling your life insurance policy is a valuable option to consider. There is no cost to find out if you qualify, and there’s no obligation to sell if you do. Speak with the Coventry Direct team now to learn more about selling your life insurance policy.

Editorial Disclaimer: Coventry Direct, a member of the Coventry group of companies, educates policyowners and insureds interested in learning about life settlements. Resources and publications are researched, written and updated by in-house experts to reflect the most up-to-date industry knowledge.

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