A person’s senior years should be a time to enjoy life. They’ve worked long enough and taken care of their families. The twilight years should be about taking care of themselves and relaxing.
Unfortunately, this is not always feasible or affordable for older adults. Some seniors have to worry about medical expenses and long-term care costs.
In this article, we discuss the various options for paying for long-term care.
How to Pay for Long-Term Care
Seniors need assistance late in life. Many have chronic illnesses and are no longer as strong and healthy as they used to be. Many will eventually need long-term care, even when staying home. They will need people to help with household chores, grocery shopping, and sometimes personal care.
So, how do the elderly pay for this service? Here are some options:
Personal Funds
The primary purpose of a retirement fund is to have money after retirement. These savings are preparation for the future and can be used if one needs assistance in old age. Other sources of personal funds are personal savings, income from investments, stocks, or bonds.
However, personal funds will not last forever, especially after retirement. It’s best to supplement personal funds with other options for paying for senior care.
Government Programs
The U.S. government has at least three programs that could help seniors with long-term care: Medicare, Medicaid, and Veterans Affairs (VA). They will not completely pay for all of a person’s needs, but they are a good place to start.
Let’s take a look at what these programs can do:
Medicare
Medicare is medical insurance for retirees in the United States—people 65 and older or under 65 with medical conditions. Any American citizen who receives Social Security and Railroad Retirement Board benefits is eligible for Medicare. Those who are not eligible may still sign up for Medicare within three months of turning 65.
Medicare covers the following:
● Hospital visits
● Doctor’s office visits
● Diagnosis
● Medications
Medicaid
People who can’t afford to get insurance can be covered by Medicaid, which is a joint federal and state program. The program covers any American who doesn’t have the financial means to pay for insurance or medical expenses. They must take a financial means test yearly to prove that income and assets qualify.
Medicaid covers the following:
● Doctor’s office visits
● Hospital expenses
● Medical expenses
● Care expenses
● Long-term care costs, including in-home care
Veterans Affairs
The VA is exclusively for previous members of the U.S. military. The government insurance is quite comprehensive as it covers custodial care for those injured on active duty.
The Geriatrics and Extended Care program provides services to seniors who need complex assistance and daily support.
The VA pays for the following services:
● 24/7 nursing and medical care
● Physical therapy
● Personal care
● Comfort care
● Caregiver support
Program for All-Inclusive Care for the Elderly (PACE)
PACE provides comprehensive medical and social services to the elderly. Qualified individuals may opt for in-home care and long-term care for people with Alzheimer’s disease.
PACE is a community-based program, meaning seniors must connect with their local office to enroll. There is a monthly charge. It is voluntary and can be used in tandem with Medicare and Medicaid.
State Health Insurance Assistance Program (SHIP)
This national program is available in every state. It is a supplementary care program that provides one-on-one counseling to those with Medicare.
National Council on Aging
The National Council on Aging (NCOA) is a non-profit organization founded in 1950 to advocate for the cause of the elderly. The organization has various programs designed to help seniors cope with aging and maintain their finances.
The organization’s BenefitsCheckUp program helps seniors figure out how to pay for long-term care. The program will connect them to benefits programs that will help pay for care, medicine, food, utilities, and other forms of assistance.
Private Financing
This refers to a private insurance mechanism for health and medical care. It requires regular payment of a premium to be eligible for coverage when the time calls for it.
The system has been available since the 1980s, but it has yet to catch on. A survey indicates that people are not inclined to pay for insurance because they underestimate its future needs.
But there are multiple options under private financing for long-term care.
Private Financing Alternatives for Long-Term Care
The U.S. doesn’t have a national program that covers long-term care, which should increase demand for private insurance. Medicaid and other government-sourced programs spent over $230 billion on long-term care. However, Medicaid only provides financial support to people with zero to low income. Medicare doesn’t provide such coverage.
While people are still working, it’s ideal to shop for private options they can use in the future. Here are some of the options available:
Long-Term Care Insurance
Paying for senior care is not cheap. Long-term care insurance only requires a monthly premium that is relatively affordable.
The premium differs according to the policy and age—premiums are lower for those who apply when they are younger. Many insurance companies offer long-term care coverage, and some even have employer-sponsored programs.
Reverse Mortgage
Seniors who own their homes can take advantage of reverse mortgage or the process of taking out a home loan using part of the ownership value of the house.
This is only ideal if the house is fully paid for. If there is an existing mortgage, the cash from the loan will be used to pay for i
Life Insurance Policy With Long-Term Care
Some life insurance policies integrate long-term care into the coverage. An accelerated death benefit in the policy may also allow for a tax-free advance, which will be deducted from the amount given to the beneficiaries in the future.
Another way to get money off the policy is to sell it, which is an option available to men who are 70 years old and above and women 74 and older.
Plan How to Pay for Long-Term Care While You Are Young
It takes proper planning to be financially comfortable in old age. Long-term care costs can be expensive. Fortunately, there are multiple options seniors can use to pay for them.
While there is no national program for long-term care costs, many federal and state programs can help with hospital and medical expenses. For those who have insurance, seniors can take out loans that could help them spend for their long-term care.
Resources
National Institute on Aging. Paying for Long-Term Care. NIA.NIH.gov. https://www.nia.nih.gov/health/paying-long-term-care. Accessed 26 April 2023.
Kagan, J. (2023, January 9). What Is Retirement Planning? Steps, Stages, and What to Consider. Investopedia. https://www.investopedia.com/terms/r/retirement-planning.asp. Accessed 26 April 2023.
Securian Financial. Long-Term Care and Government Benefits: What You Need to Know. Securian.com. https://www.securian.com/insights-tools/articles/long-term-care-government-benefits.html. Accessed 26 April 2023.
