How will your aging parents pay for long-term care once they need it? The answer depends on whether it’s delivered at home or in a facility, the kind of care they need, and their financial resources. Most people give little thought to this financial question until they need care. They assume, incorrectly, that health or disability insurance will cover what they’ll need, but most policies like that limit or even exclude long-term care benefits. The main options for many families are either government benefits or private financial resources to cover the in home care their loved ones need.
Your parents may prefer to age in place at home or may realize that assisted living or a skilled nursing facility is more appropriate. No matter what kind of home care solutions meet their needs, you need to assess what support they qualify for, and what resources they can tap into. There are two main categories: public or government-funded benefits, and private financial resources.
Government programs
There are several state and federal programs that will help eligible seniors with the cost of long-term health care. The National Institutes of Health’s National Institute on Aging (NIH NIA)’s website suggests the following public agencies as possible resources for paying for long-term care in a facility or at home:
- “Medicaid: Medicaid is a combined federal and state program for low-income people. This program covers the costs of medical care and some types of long-term care for people who have limited income and meet other eligibility requirements. Eligibility and covered services vary from state to state. …
- To learn more about Medicaid, visit gov, call 877-267-2323, TTY: 866-226-1819, or contact your state health department. For a state-by-state list, visit Medicaid’s State Overviews page.
- Program of All-Inclusive Care for the Elderly (PACE): Some states (including California) offer PACE, a combined Medicare and Medicaid program that provides care and services to people who otherwise would need care in a nursing home. PACE covers medical, social service, and long-term care costs. It may pay for some or all of the long-term care needs of a person with Alzheimer’s disease. PACE enables most people who qualify to continue living at home instead of moving to a long-term care facility. …
- To find out more about PACE, contact Medicare at 800-633-4227 or visit Medicare’s PACE page. You can also search for local programs by state or ZIP code through the National PACE Association.
- Department of Veterans Affairs: The U.S. Department of Veterans Affairs (VA) provides coverage for long-term care at a facility or at home for some veterans. If your family member or relative is eligible for veterans’ benefits, check with the VA or get in touch with the VA medical center nearest you. There could be a waiting list for VA nursing homes. …
- To learn more about VA healthcare benefits, call 877-222-8387, or visit the Veterans Health Administration website or the Veterans Affairs Caregiver Support page.
Personal or private funds for paying out-of-pocket
Many seniors pay with their own money, or out of pocket, for in home care. Professional caregiving in venues like continuing care retirement communities, assisted living facilities, board & care homes and nursing homes retirement communities is almost always ‘private pay’. Sources for this personal or private funding include personal savings, stocks and bonds, a pension or other retirement fund, or the results of the sale of a home. According to the NIH-NIA website, there are several other options for privately financing long term care:
- “Long-term care insurance: This type of insurance covers services and support for people needing long-term care, including help with the activities of daily living, as well as palliative and hospice care. Policies cover a wide range of benefits in a variety of settings, including the person’s home, an assisted living facility, or a nursing home. The exact coverage depends on the type of policy and the services it includes. … The cost of a policy is based on the type and amount of services, how old you are when you buy the policy, and any optional benefits you choose. … Someone who is in poor health or already receiving end-of-life care services may not qualify for long-term care insurance.
- Reverse mortgages for seniors: A reverse mortgage is a special type of home loan that lets a homeowner convert part of the ownership value in their home into cash without having to sell the home. Unlike a traditional home loan, no repayment is required until the borrower sells the home, no longer uses it as a main residence, or dies. There are no income or medical requirements to get a reverse mortgage, but you must be age 62 or older. … If you are thinking about a reverse mortgage, talk to an expert.
- A reverse mortgage can be complicated, and other borrowing options may be available. These might include a home equity loan or refinancing an existing mortgage to lower the monthly payments. Like a reverse mortgage, these options can free up cash for covering long-term care expenses.
- Visit the Consumer Financial Protection Bureau website or call 855-411-2372.
- Life insurance policies for long-term care: Some life insurance policies can help pay for long-term care. … Policies with an “accelerated death benefit” [also called living benefits] provide tax-free cash advances while you are still alive. The advance is subtracted from the amount your beneficiaries (the people who get the insurance proceeds) will receive when you die. You can get an accelerated death benefit [for chronic, critical, and terminal illness, or critical injury to pay for whatever caregiving you require in whatever location is appropriate.] …
- Using annuities to pay for long-term care: You may choose to enter into an annuity contract with an insurance company to help pay for long-term care services. In exchange for a single payment or a series of payments, the insurance company will send you an annuity, which is a series of regular payments over a specified period.”
Benefits eligibility resources
If you aren’t sure if your loved one is eligible for financial help, there are some free ways to find out. National Council on Aging (NCOA) is a private group that provides a free service called Benefits CheckUp. This service will research federal and state benefit programs for older adults based on general information about the person who needs care. Potentially, help paying for prescription drugs, heating bills, housing, and meal programs is available.
In each state, the national program called State Health Insurance Assistance Program (SHIP) gives one-on-one guidance and counseling for Medicaid. They can help navigate eligibility, coverage, appeals, and out-of-pocket costs, and answer questions about your family’s unique situation and needs. In California, the SHIP website is https://www.aging.ca.gov/hicap/ and the toll-free number is 1-800-434-0222. Finally, Benefits.gov has more information about federal, state, and local government benefits.