Paying for Long-Term Care

Kimberly Whiter

Paying for Long-Term Care

Kimberly Whiter

Caregiving is a family affair, and there are a lot of us engaged in this role. Current numbers tell us that over one in five American adults serve as unpaid caregivers to loved ones which means that roughly 53 million Americans are dealing with the emotional and financial stresses that come with planning and paying for long-term care.

The reality is that, at some point, it is likely that a senior you love is going to need help due to diminished cognitive and/or physical functioning. From the moment you decide to offer your care support, you will face a growing list of concerns as you consider: What kind of care they need; what kind of equipment is required; where they receive care and how often; where should they live; and how on earth all these long-term care costs are going to be paid for.

Reviewing your long-term care options, understanding their costs, and establishing a plan before long-term care becomes an immediate necessity is the best way to limit worry and prevent burnout in the future.

Progression of Caregiving Responsibilities & Long-Term Care Options

New to Caregiving

The role of primary caregiver often begins with more regular visits and check-ins and helping with small chores. You may also start taking on simple tasks like cleaning, running errands, home maintenance, or meal preparation. There may also come a time when your loved one struggles to perform some of their activities of daily living (ADLs), like dressing and bathing. At this time, you will become more involved in some parts of their personal care. Technology, like medical alert devices, can be a great tool when your loved one gets to this point. 

Daytime Care Support

When your loved one shows signs that they need a little help performing ADLs, you may find yourself in more of a part-time caregiving role and in need of some additional care support. At this stage, you may also consider moving your loved one into your home or hiring an in-home caregiver. As the name implies, these types of paid caregivers provide care in the home, and their skill level ranges from untrained companionship to skilled nursing. These professionals can be hired either directly or through a home care agency. Common roles include personal care assistants, home health aides, and certified nursing assistants.

This is also a good time to consider adult daycare centers which support families in their efforts to help their loved ones age in place. They offer social activities, meals and snacks, personal care, and therapeutic activities. These centers, which are available in every state, have professional staff with valuable eldercare knowledge and experience. In addition to keeping your loved one safe and socialized, these programs offer caregivers some personal time and respite.

Continuum of Care

When a loved one no longer wishes to live at home or can’t perform most ADLs safely, it is time to start looking at other long-term care options--including senior living. One of the undeniable characteristics of long-term care is its intentional progression. It is helpful to think of your options as a continuum of care. Each level of care builds upon the previous.

  • Independent living communities are the first option in this continuum in care. They include homes and apartments, often on a single campus, for seniors who can live independently but want access to hospitality services and medical assistance should they need it.
  • If your loved one isn’t independent, meaning it isn’t safe for them to care for themselves, then they will require assisted living. This type of community is similar to independent living in that it includes room and board, housekeeping, and transportation. They also provide comprehensive medical and personal care and are licensed by the state.
  • The last stage on the continuum of care is nursing home care, also known as skilled nursing or long or short-term rehab. These facilities have 24/7 nursing care in order to address the specific personal care and rehabilitation needs of your aging loved one.

Overview of Long-Term Care Costs

Here’s a cost breakdown for each of the aforementioned care options in 2021:

  • Adult day services cost on average $71 a day (8-10 hour day typically).
  • In-home care (e.g. home health) comes to about $52,000 annually or $23 an hour.
  • Independent living can be partially funded from federal government programming (e.g. subsidies, section 8 vouchers, tax credits, interest-free mortgages) which can help make these services more affordable.
  • Assisted living can range from $5,000 to $8,000 per month. Although there are times the cost can be as low as $2,000 or as high as $10,000 per month. Assisted living has a lot of competition currently which means families are sometimes in a position to negotiate.

For more information on the average costs of professional care support, read How Much Does it Cost to Hire a Caregiver?

Paying for Long-Term Care

For most families there is no way to avoid long-term care expenses, but there are strategies to pay for the care that’s needed. Now that you know how much long-term care costs, here are some of the funding options available:

Government programs

Medicare, a federal government health insurance program for people 65 and older, will cover medically-necessary skilled nursing care on a short-term basis but not longer-term assisted living services. Medicaid, on the other hand, will cover longer-term assisted living care but only for those who qualify financially. Medicaid also is accepted by many adult day service programs. It's important to note that not all skilled nursing facilities accept Medicaid, so keep this in mind as you explore your options.

Our seniors that are veterans have opportunities to pay for long-term care using benefits through Veteran’s Affairs (VA). VA benefits will cover long-term care such as adult day services, hiring relatives to provide care, home health, and other care needs. Currently, veterans can receive an award of up to $1,911.00 per month and a surviving spouse can receive up to $1,228.00 per month. It is also available in many areas for veterans to receive flexible individualized monthly payments to be used in a variety of ways to pay for care costs. The VA benefit also offers a few ways for family caregivers to receive cash benefits.

To understand additional caregiving costs covered by Medicare and Medicaid, read What’s the Difference between Medicare and Medicaid?

Long-term care insurance

Long-term care insurance is a private insurance policy that can be used to pay for long-term care services including home modification and in-home care not covered by health insurance, Medicare, or Medicaid. It is important to choose the right plan for your family’s needs as plans vary in what they will cover. Long-term care insurance plans can cover things like in-home care, nursing home care, and palliative and hospice care. Plans vary in price and can be purchased from a variety of companies. Since many people buy these plans when they are younger and prices are lower, it’s always a good idea to review when entering a long-term care situation to ensure your plan is still a good fit.

Other ways to pay for long-term care

Aside from governmental program and long-term care insurance, there are other ways to pay for long-term care including selling a life insurance policy, taking out a reverse mortgage on a senior’s home, exploring applicable tax credits, and accessing local nonprofit and community agencies for help with food, transportation, monitoring, and more. The majority of seniors own their own home with little to no mortgage debt making this one of the largest assets to maximize. What most people don’t realize is that using the financial value of a home to fund long-term care expenses does NOT mean giving up the home as a place to live. In some cases, you can also get paid for your caregiving role. This is possible through Medicaid, some long-term care insurance policies, and the VA.  

Caring for an aging loved one isn’t easy, but it’s a responsibility that many of us will have to face at one point or another. No matter how financially prepared you are, care expenses can add up over time and take a significant financial toll. Fortunately, as a result of our aging population, there is increased awareness of the needs of our seniors and more options than ever before for long-term care. While it’s important to plan ahead as much as possible, don’t forget to take it one day at a time and remember that you’re doing the best you can.

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