It Costs How Much? How to Pay for Long-Term Care
“It’s going to cost how much!?” That is, more often than not, the response we get when discussing the monthly cost of long-term care for loved ones with their family. As with most things in the world right now, the cost of care keeps going up. This is in addition to rising costs for insurance premiums, prescriptions, specialty doctor visits, and the list goes on and on. It is certainly not surprising that individuals and families are struggling to find ways to pay for care, even as the level of care needed continues to get more complex as well. So, let’s break down what the options are.
We usually try to break the options down into two main categories: private pay and Medicaid. Obviously, paying for care is a lot more complicated than just those two options. But most individuals will fall within a spectrum of these two, and your financial and healthcare planning will largely determine when and how you access funds from either set of options.
For Medicaid, you need to qualify both physically and financially. Financially, individuals need to have spend down the majority of their assets to $2,000. There are several other requirements and potential loopholes, but that is the most basic issue. Physically, residents accessing Medicaid funding need to require assistance with ADLs (activities of daily living) or have a dementia diagnosis. So, just because you qualify financially does not mean you will qualify physically and vice versa. This is where it is very important to start planning as early as possible for the possibility of long term care in the future. We will touch on this more shortly.
Under the category of private pay, there are several buckets from which you may plan to pull these funds. Some of the most common are:
Savings
Retirement accounts
Pensions
Annuities
Proceeds from the sale of real estate or your primary home
Long-term care insurance
Depending on your net worth and whether you served during wartime, veterans can access a benefit called Aid and Attendance. Another option that has been utilized more recently is converting a life insurance policy to long-term care payments. Whether you are working with an estate planning attorney, your financial advisor, or a placement advisor, they should be able to outline what some of the options are and help you determine if you qualify for certain benefits.
This is just a very brief look at what some of the payment options are for long-term care, and there are generally a number of resources available in your community to help you navigate what this looks like for you individually. We encourage you to start planning as soon as possible, whether you are an older adult who is looking into your options or a younger adult who is starting to plan their career and life path. Early planning is crucial in relieving stress and anxiety when facing a decline in our health or changes for someone we love and care for.
In a future article, we plan to discuss how both potential residents and families can work with care providers to discuss cost and quality of care. And how both parties can come to the conversation with reasonable expectations.
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