How to Pay for Long-Term Care

It’s uncomfortable to think about, but eventually, many seniors will need long-term care in some capacity. Here, Douglas Lauenstein an elder law and nursing home planning attorney at The Lauenstein Law Firm describe ways to cover the costs of this care.

Personal Funds and Private Financing Options

You may be able to self-fund your long term care expenses.  This is possible if you are independently wealthy or you are able to save enough money through a generous pension plan, Social Security payments and retirement funds. This method will allow you to avoid much of the red tape associated with public long-term care funding. It is also an option for those who may not qualify for long-term care insurance due to a pre-existing medical condition. However, many of us are not in a financial position to fund their long-term care out-of-pocket. For those individuals, there are several other private financing options.

Long-term care insurance is one option for funding your care as you age, albeit one that is not received warmly by financial experts. This type of financing is advisable for those who are relatively young and healthy, and wish to protect themselves from an unforeseeable health tragedy in the future. This may not work for older adults who are already ill or may have preexisting conditions because the premiums will be too costly.

A reverse mortgage is more accessible option for senior adults, specifically those who own their own home. A reverse mortgage allows a homeowner to turn the ownership value of their property into regular, tax-free income, which can be used for any purpose, including long-term care. It does not need to be paid back until the property is sold, is no longer the main residence of the owner, or when the owner passes away.  Reverse mortgages are expensive and should be reviewed with your elder law attorney and financial advisor before signing any contract.

Some life insurance policies include an “accelerated death benefit” clause, which provides the policyholder cash advances, subtracted from the amount the beneficiaries of the policy will receive upon the policyholder’s death. These payments can serve as a possible avenue to finance long-term care. Similarly, a life settlement occurs when a life insurance policy is sold back to the insurance company, which then becomes taxable income for the former policyholder. This settlement may also be used to support the individual seeking care as they age.

Medicare and Medicaid

Medicare is federal health insurance with a narrow scope for those over 65, those under 65 with serious disabilities and individuals of all ages with late-stage kidney failure. While Medicare may cover part-time or short-term care needs, it does not pay for long-term care. At times, Medicare may pay for part of a one hundred-day nursing home residency, but only for people with eligible concerns.

Medicaid is a broader federal health care program, which is only provided to those with limited resources and income. It covers much of one’s long-term care, but is only attainable to those who do not exceed a specific income and asset thresholds. Oftentimes, those who do not qualify will “spend down” their long-term care costs out-of-pocket, and apply for Medicaid once they have become eligible under the threshold.  Medicaid is also called Medical Assistance for long term care.  An elder law attorney can absolutely help when planning and applying for Medical Assistance for long term care.

Older Americans Act Programs

The Older Americans Act establishes programs which help provide in-home personal care, meals and transportation to adults over 60 that are disabled or extremely ill, live in rural areas, or are of a minority group.

While the prospect of funding long-term care can be daunting, that there are several avenues available to mitigate the costs. Douglas Lauenstein is an elder law attorney and believes all seniors deserve proper care so that they can age respectably and comfortably. If you are seeking legal representation, or would like to know more about your rights as a senior citizen, contact us today!

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