Paying for long-term care
Summary
Navigating who pays for and how to pay for long-term care can be one of the most frustrating experiences for caregivers. This article explains several options for determining how best to pay for long-term care, and includes links to government resources and other providers to help meet your individual needs.
Medicare
Navigating who pays for and how to pay for long-term care can be one of the most frustrating experiences for caregivers. The federal government’s Medicare program will only pay for long-term care in certain circumstances. For most older adults, Medicare covers some skilled services or rehabilitative care in a nursing home, for up to 100 days. It also covers a short time of at-home care with a skilled home health aid or other qualifying care provider. Medicare only covers long-term care that it deems “medical care,” so many in-home services are not covered as they fall into its “activities of daily living” (ADL) category.1
Medicaid
Medicaid is a joint state and federal program that provides coverage to low-income older adults and those with disabilities. Many skilled nursing facilities (nursing homes) and associated costs are covered by these benefits, either in full or in part, depending on income and location. Medicaid also operates a waiver system, designed to keep people out of nursing homes by offering payments for home health care. In some states, this may even include payments for family members who are live-in or frequent caretakers. An online search of “medicaid home health care waiver” with your state name should direct you to your state’s agency and give details on eligibility and options.
Long-term care insurance
According to the American Association for Long-Term Care Insurance, about 7.5 million Americans have some form of long-term care insurance.2 This type of insurance is designed specifically for long-term care later in life, including assisted living care and nursing home care, as well as in-home health care and aides. For most of these plans, the younger the person buys in, the less the annual costs. A trusted professional insurance broker can help select the best plan for your needs.
Withdrawal from life insurance plans
For some, wMedicare.gov. PACE.ithdrawing some or all of a life insurance premium may be an option to cover long-term care costs. But only some life insurance policies allow this kind of access.
Term life insurance policies do not allow policy holders to withdraw money before the end of their life. These policies pay out only after the death of the policy holder.
Whole life insurance policies may allow holders to withdraw cash, so long as they have been paying into the policy long enough for there to be a cash balance to withdraw. For these kinds of policies, holders can either borrow on the amount that is in the account, or, in dire cases, cash out the policy altogether.
Program of all-inclusive care for the elderly (PACE)
PACE is a home and community-based service designed to offer assistance to those older individuals who qualify for benefits under both Medicare and Medicaid. An interdisciplinary team of professionals works together on a case-by-case basis to provide medical and everyday living assistance. These professionals may include a physician, nurse, social worker, physical therapist, and dietician.
Recipients must be 55 or older, live in an area that qualifies for PACE benefits, and be certified as eligible for a nursing home level of care by Medicare or an agency authorized by them. Those who qualify for Medicare but not Medicaid might be able to make monthly payments to achieve PACE coverage.3 State eligibility and participation vary, so it’s best to check your individual state to check if a person qualifies for benefits.
Veterans’ Affairs
Military veterans have access to a wide range of services from Veterans’ Affairs, including nursing home care, assisted living, and home health care. They may also qualify for in-home assistance with daily tasks, including bathing and eating, and support for caregivers so that they can work, travel or run errands. Many of these services are already covered under VA health coverage.
Supplemental Security Income (SSI)
SSI provides monthly payments to individuals who meet certain criteria for disability or illness, including hearing and vision loss, cognitive decline, and other health factors. Recipients must qualify as low-income as well as have few resources like savings accounts or retirement funds.
Reverse mortgages
Home equity conversion mortgages—more commonly known as reverse mortgages—are only available for borrowers over 62 years of age, and can help leverage the equity built up in a home. Essentially, borrowers take payments or a lump sum from the estimated equity in a home. This is most common if the homeowner owns the house outright or has significant equity in the home to borrow from. Upon the homeowner’s death, the home is sold and the remaining equity after the amount taken out by the reverse mortgage, if any, is distributed to the homeowner’s heirs.
Related information
Assisted living facilities
Getting financial assistance
Investigate long-term care options
Long-term care planning
Memory care
Skilled nursing facilities (nursing homes)
End notes
1 Medicare.gov. Long-Term Care Coverage
2 CNBC News.com. How to Pay for Long-Term Care
3 Medicare.gov. PACE.
