Senior Insurance Blog

How Do You Pay for Long-Term Care? Here Are 6 Options

How Do You Pay for Long-Term Care? Here Are 6 Options

Over 70% of us will need some kind of extended care after we’re 65. Extended care could mean a nurse coming to your home to care of you, a stay at an assisted living facility, or even a longer stay nursing home.

If your stay ends up lasting more than a short time, you’re officially in long-term care.

And long-term care is expensive! As in $7,000 per month expensive! That’s almost $84,000 per year. Way more than the average salary.

But I think I know what you’re thinking… “I’ll never be in a nursing home!”

And who can blame you? You feel just as young as you did when you were in your 20s!

But we don’t just need extended care because of old age.

You could break your hip after slipping on a patch of ice. You could slowly forget when to take your medication or that you left the stove on.

Accidents happen, and whether it’s a freak accident or the onset of Alzheimer’s, you’ll need someone who’s skilled in medical care to take care of you.

And Medicare? They don’t pay for extended care after the first 100 days.

So how will we pay for long-term care?

Option #1: Use Your Savings

If you’re able to put away savings for your retirement AND long-term care, you are blessed.

We can’t forget how expensive long-term care is. According to national averages (prices change depending on your state),

  • A private room in a nursing home costs $83,585 per year.
  • A home health aide costs $43,680 per year.
  • An assisted living facility costs $40,150 per year.

Here are 2 charts that show the average length of stay for nursing home residents. This is taken from the American Association for Long-Term Care Insurance.

As you can see, there’s a good chance you could stay in a nursing home for over 2 years.

Are you able to put nearly $200,000 in savings in case of this unexpected need?

If you are, using your savings could be a real option. If you can’t, let’s move on to the next option.

Option #2: Rely on Family to Take Care Of You

We see this quite a lot – individuals don’t want to pay for any long-term care insurance, because their family can take care of them for free!

If you have a family member who would be able to do this, talk with them about the option. Make sure they’re committed and will be able to help if the need arises.

If your family members have families of their own or live a good distance away from you, you should likely consider one of the other options in this list.

Before we get into statistics, we’d like you to consider the following questions:

  • Do you want your family to give up their own lives to take care of you?
  • Would you rather have someone who has been properly trained to take care of you?
  • Do you really want your children to help you do private things like dressing and using the bathroom?

Those are very realistic questions to ask yourself, because you’ll have to deal with the answers should a family member take care of you.

There are also some important statistics to consider, such as the 32% of adults who say caring for an aging parent is stressful (Pew Research Center).

Taking care of a family member is also reported to cause health issues, and the family caregiver experiences such extreme stress that they lose an estimated 10 years off their own life (National Academy of Sciences).

Depression is also another concern, as 40-70% of family caregivers have clinically significant symptoms of depression (Zarit).

Before it’s too late, consider if this really is your last resort. It’s not an ideal situation for anyone involved, especially if you need care for a longer period of time.

Option #3: Go on Public Aid (Medicaid)

Losing your home to the nursing home isn’t unheard of. In fact, it’s fairly common for individuals who didn’t have a back-up plan.

If you don’t have any way to pay for a stay at a nursing home, you will have to sell your house, your car, and any other assets you own. Then, you will end up on state aid, called Medicaid.

If you have assets to protect, you don’t want to rely on this option. You could lose everything you’ve worked for.

Option #4: Use Long-Term Care Insurance

Long-term care insurance is an insurance policy that pays for your stay in a nursing home. Over the years, this type of insurance has actually died off a bit, because the companies don’t make any money off of it. Most companies have stopped selling it altogether.

That should give you an idea of just how expensive long-term care really is – the insurance companies don’t want to pay for it, either!

If you are young, very healthy, and well-off, you could consider a long-term care insurance policy. However, the reality of the situation is that you can’t even buy long-term care insurance if you’re over the age of 85.

Even if you’re younger, the cost of this kind of insurance is sky-high after you reach about 60 years of age.

Even worse, it’s nearly impossible to even be accepted if your health isn’t in great shape.

While it’s the perfect option for those in their 40s-50s, it’s likely not a realistic option for the rest of us.

Option #5: Use Short-Term Care Insurance

Short-term care insurance is just like long-term care insurance, except the benefit period is shorter (up to 1 year of coverage).

While you’d rather be covered for your entire stay, 1 year of protection is far better than having no protection at all. That could be a benefit of around $85,000!

You can purchase short-term care insurance up to age 89, the health questions are very simple and easy to pass, and best of all? It’s affordable, and especially so if you get it while you’re still 65-70.

Another great thing about short-term care insurance is that it rarely, if ever, has any rate increases.

Option #6: Use Life Insurance with a Long-Term Care Rider

This option is truly a diamond in the rough. If you enjoy knocking two birds out with one stone, you’ll be partial to life insurance with a long-term care rider.

This basically means that you can purchase a life insurance policy, but if you end up in a nursing home, you can use your benefits to pay for it, which is pretty awesome.

The big draw of this 2-in-1 policy is that you know you’re going to use the money, one way or another. Other insurance policies don’t have that same luxury – even if you have car insurance, there’s no guarantee you’ll ever make a claim.

At least with this hybrid, you know that the money you put into it will eventually pay off.

There you have it! Here’s a quick summary.

There are 6 main ways to pay for long-term care:

  1. Use your savings
  2. Rely on family to care for you
  3. Go on public aid
  4. Use long-term care insurance
  5. Use short-term care insurance
  6. Use life insurance with a long-term care rider

Are you ready to explore your own options? Give us a call, and we’ll have a specialist take care of you.

 Contact Us Today

Medicare is confusing. The more you seek out information, the more overwhelmed you feel. You're definitely not alone.

We work with your best interest in mind, so while the decision will always be up to you, you’ll be empowered with knowledge that you can really understand and get behind.

At Medicare Allies, you aren’t just another transaction or a number in a system. You are an individual, and we will continue to develop a relationship with you and be there for you when you need us in the future.

So don't be shy – let us serve you.

 Chat With Your Agent