For millions of Americans, the time will come when we'll need help caring for ourselves. Everyday tasks like getting dressed and preparing meals will become nearly impossible. Some sort of long-term care will be needed - whether it's adult day care, assisted living, or nursing home care.
How will you - or your elderly parent or spouse - pay for it?
Pay the Bill
Depending how much assistance is needed and the type of facility, long-term care may cost $100 or more per day. And the need for care could last for years. Here are some options when finding a way to pay for your needs.
Medicare & Medicaid
Don't make the mistake of thinking Medicare and Medicaid will pay for long-term care. Generally, they won't.
Medicare only pays for short-term medical care in a nursing home and only under special circumstances. Medicaid is available only if you meet very strict financial requirements - if you have too much money or assets you don't qualify.
Also, Medicare doesn't cover assisted living, adult day care, and other services. Medicaid coverage for these types of care is very limited, too.
Long-Term Care Insurance
You can buy long-term care insurance to help pay for your care. Usually, you pay for this insurance long before you actually need it, and once you begin collecting benefits, you stop paying premiums.
There are dozens of different types of policies and coverage, so you should talk to an insurance professional or long-term care ombudsman in your state for more details. Keep in mind though:
- You're taking a gamble. You may pay premiums for insurance you may never need or use
- You have to pay premiums for a long time, so if you later can't afford premiums and drop the insurance, you've wasted all that money
- Premiums may increase any time, possibly making it unaffordable. It's a concern for many people approaching retirement age
It may sound strange, but your life insurance policy could be an answer. You may be able to get additional coverage or a rider where you're paid all or part your policy limit if you need long-term care.
If you own your home or have a lot of equity in it (it's worth more than what you owe), you might consider a reverse mortgage. It's a loan against your home, you don't have to make monthly payments, and you can use the money any way you want.
Of course, you can also tap into your personal savings and investments to pay for your care, too. In fact, you may need to.
You can make plans for long-term care needs without buying insurance you may never need. Through estate planning, you can pass your property and assets to your children and grandchildren now, or over time. That way you may meet the financial requirements and be eligible for Medicaid assistance.
This can get tricky, and there are some time limits involved, so it's a very good idea to talk to an attorney or financial advisor about the best course for you.
It may not be pleasant to think about right now, but long-term care is something that should be looked into before the need actually arises. Take some steps now to make sure you or a loved one is well-taken care of tomorrow.
Questions for Your Attorney
- Can I buy long-term care insurance for my mother? Does she have to sign anything? What if she has dementia and can't?
- How can I pass my assets on to my children and still have enough money to take care of myself?
- Are there any tax problems to worry about or any tax advantages when it comes to long-term care insurance?