Paying for Care: Medicare, LTC Insurance and More

Happy Friday to our SCT Family!

We are delighted to bring you our latest article chock full of pertinent and timely information.

This article was written exclusively for you, by our dear friend Hazel Bridges, of Thank you Hazel!

Most seniors want to age in place, surrounded by the home and memories they hold dear. Unfortunately, sometimes life has other plans. Whether an illness, disability or death of a spouse, unexpected life changes can prompt a move into a nursing home or assisted living facility. When that happens, seniors and their family must be prepared to pay for care.

A nursing home or assisted living facility is more than a place to live. In assisted living, seniors have a private dwelling but receive hands-on assistance with the activities of daily living. This may include managing medications, bathing, dressing and housekeeping, among other non-medical tasks. While assisted living facilities don’t provide skilled nursing care, they have resources to help residents obtain needed medical care.

Seniors who require a higher level of care can turn to nursing homes. At nursing homes, on-site medical care is available 24 hours per day, 7 days a week. While many seniors only require short-term nursing care, nursing homes can be a permanent home for seniors with progressive conditions including Alzheimer’s disease or Parkinson’s disease.

Both assisted living and nursing homes offer community services and enrichment activities. Services such as shared meals and recreational activities ensure these facilities meet residents’ social and emotional needs, as well as physical needs.

Of course, these services come at a cost. According to, nursing home expenses average $82,128-$92,376 nationwide while assisted living averages $43,536 annually.

Many families expect Medicare to cover expenses associated with assisted living or nursing home care. However, Medicare’s benefits don’t cover custodial care. Custodial care includes personal assistance with the activities of daily living as well as low-level nursing care. Families can learn more about custodial care and Medicare at The Motley Fool.

Medicaid, on the other hand, does cover custodial care for qualifying patients. However, patients using Medicaid have fewer options for care, as not all facilities accept Medicaid payment. Medicaid is also a means-tested program. In other words, seniors must meet low-income requirements and few countable assets to receive benefits. Families planning to use Medicaid to pay for long-term care should research eligibility levels in their state and plan how they’ll spend down to quality for Medicaid.

Outside of Medicare and Medicaid, families must turn to private pay options. One choice is to purchase long-term care insurance, an insurance policy designed to close the custodial care gap left by health insurance. Individuals can purchase a standalone long-term care insurance policy or purchase a policy that combines life insurance and long-term care. Combination policies are more popular than traditional long-term care thanks to the increased flexibility they offer consumers.

Long-term care insurance is a smart choice for individuals who expect to need care during the senior years. These include adults with existing health conditions, lifestyles that increase disease or disability risk, or a family history of longevity.

Life insurance policies are one option: Seniors can borrow money from a life insurance policy, settle it for a cash payout, or, in the case of terminal illness, request an accelerated death benefit from the insurer. Real estate is another savvy option: Seniors can sell a home they don’t intend to return to or apply for a reverse mortgage if one spouse will remain at home — just be careful to weigh the pros and cons of this major financial decision.

Seniors who are financially secure and anticipate minimal long-term care needs may opt to self-insure instead. Self-insurance refers to paying for care out of one’s personal income and assets; while it requires more planning ahead, it eliminates the risk of spending thousands on an insurance policy that goes unused. Seniors may use retirement income to fund long-term care or strategically tap into their assets.

No matter what families choose, planning ahead is essential when it comes to long-term care. When families know how they’ll pay for assisted living or nursing home care before it’s needed, they can make choices that ensure the highest quality of life during their loved one’s later years. To weather this life change with grace, start talking with your financial planner today.

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