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Unlike other daily expenses, the costs of long-term care can weigh heavily upon the recipient as well as loved ones. There is help, though. The key to affording the appropriate type of senior housing is in knowing your options and planning in advance, when possible.
"Medicare doesn't pay for long-term care; Medicaid does," explains David Bendix, CPA/PFS, CFP, CFS, RFC, president of Bendix Financial in Garden City, NY. "But to qualify for Medicaid, you really have to become destitute. You have to deplete your assets, or 'spend down.'"
Bendix outlines three long-term care financing options:
1.Either pay for care yourself, out of your own pocket.
2.Become destitute by spending down to where you don't have any money, and then say to the government, 'Now I'm eligible, pay for my long-term care.'
3.Purchase a long-term care insurance policy while you're young, Bendix says.
The last option is most likely the best, he notes. Even better, the insurance premiums for such plans will be more reasonable while you're young and in good health.
Depending on the type of housing you choose, the methods of payment can differ. For nursing homes: Medicare (federal health insurance program for those 65 and older as well as younger people with disabilities); Medicaid (state and federal program that subsidizes most nursing home costs for those with limited incomes or who have spent down their assets); long-term care insurance (private pay insurance); veterans' benefits and private funding, or out-of-pocket payment (personal financing, estate planning and management).
Unlike nursing home care, though, assisted living must be paid out-of-pocket. Some comprehensive long-term care insurance policies may cover the cost associated with room and board for the latter, but not always. Accelerated Death Benefits (cash advance or percentage of proceeds of death benefit), annuities (regular payments over a specified period of time), trusts (transferring assets), life settlements (cash for selling your policy), and reverse mortgages (tapping into the equity in your home) are additional sources to explore when considering other senior living options.
If planning for long-term care leaves you confused or overwhelmed, there's always help. State Health Insurance Assistance Programs–a group of programs administered by individual states and funded by the Center for Medicare & Medicaid Services–are designed to answer questions about paying for long-term care and programs available to help pay for care. These programs , known in some states as Statewide Health Insurance Benefits Advisors, Health Insurance & Benefits Assistance Corporation, or Medicare Medicaid Assistance Programs, provide education, outreach, counseling, and information to Medicare beneficiaries, their families, and caregivers. |
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