FAIR Health Consumer Access

Managing Costs of Long-Term Care

Long-term care is medical and nonmedical care that you receive for an extended period of time, at home or in other settings. There are lots of reasons you might need long-term care. One is serious illness. Another is disability or frailty. Most commercial health insurance won’t cover long-term care. And it can be expensive. This article will tell you how to manage the costs of long-term care. It will tell you what’s included in long-term care and the different settings where it takes place, as well as give you information on commercial and public sources of coverage and tips on paying out of pocket.

This article does not provide medical, financial or legal advice. Consider speaking to a medical professional, a financial advisor or an attorney to discuss your specific situation.

What’s Included in Long-Term Care?
Long-term care can include help with household chores, like cleaning, grocery shopping and yard work. And it can help with personal care needs, like eating, bathing or getting dressed. These personal tasks are often called activities of daily living (ADL). But long-term care can also include help with medical needs and equipment. Your long-term caregivers can provide physical therapy or other specialized medical care for a medical condition you may have.

Long-Term Care Settings
Long-term care can take place in different settings, depending on what you need or prefer.

Home-based care is long-term care you get at home. This care could be given by a friend or family member. Or it could be given by professional caregivers who are paid for their services. Nurses, therapists and healthcare aides are types of professional caregiver. These caregivers can come to your home and help you with ADL and medical care.

Community care includes care you get when you visit a center in your community. It could be an adult day care center or senior center. While you’re there, you could get help with ADL and medical care, as well as engage in social activities. Find out more about coverage for adult day care in our article here.

Residential care is given in a place that you stay overnight, such as a nursing home or assisted living facility. Some residential care includes just housing and housekeeping. Others include ADL and medical care. Some also offer specialized care for certain conditions such as Alzheimer's disease.

Commercial Coverage for Long-Term Care
Health insurance and disability insurance. Commercial health insurance that you get through an employer won’t usually cover long-term care. You may be able to use disability insurance—if you have it—to cover your long-term care, so long as it’s needed for an illness or injury that prevents you from working. Find out more about disability benefits in our article here.

Long-term care insurance is a type of private health insurance that can pay for long-term care. It covers services and support in your home, your community or in residential care. Most policies will also cover changes in your home to make it easier to live there. If you’re not in good health or have preexisting conditions, you might not be able to get long-term care insurance. But you may be able to buy some coverage. Many policies have limits. Some will pay only for a few years of long-term care. But others will pay for care for as long as you live. Many policies have an elimination period too. That’s how long you have to wait before the policy pays out. Contact your state’s Department of Insurance to find out which companies offer long-term care insurance in your state.

Hybrid life insurance is life insurance plus long-term care insurance in one policy. It can pay for long-term care if you need it. And if you don’t need it, the policy can pay out a lump sum to your beneficiaries when you die.

Be sure to speak to a financial advisor to work out the best solution for you and your loved ones. The National Association of Insurance Commissioners also has a shopper’s guide to long-term care insurance that includes hybrid options.

Public Coverage for Long-Term Care
Medicare is government health insurance for people over 65 or who have certain disabilities. Medicare pays for long-term care only if you need medical rehabilitative care or skilled services. That means it won’t pay if you only need help with ADL, like personal care, housekeeping, grocery shopping or yard work. Also, there are time limits. If you stay in a nursing home and need medical care, Medicare will pay only for a maximum of 100 days. And if you have an in-home caregiver, Medicare will pay for services only for a short period of time. Find out more about Medicare and long-term care here and about the kinds of home health services Medicare will cover here.

Medicaid pays for many long-term care services, including home-based, community and residential care. To qualify for Medicaid, you need to have a low income and limited assets. Find out more about Medicaid’s long-term care here. Different states have different Medicaid rules. Find out what your state’s Medicaid program covers here. See below for more on qualifying for Medicaid coverage with income and assets.

Program of All-Inclusive Care for the Elderly (PACE) is a Medicaid and Medicare program. PACE covers medically necessary care, including residential, home and community long-term care for people over 55 years old. If you already have Medicaid, you won’t pay extra for PACE. Otherwise, you can join PACE for a monthly fee.

Veterans Affairs (VA) long-term care services. If you’re a veteran, the VA can help with long-term care. If you have VA healthcare, some long-term care services are covered if you have a clinical need for them. These include adult day healthcare and in-home care. Residential settings have different requirements. Find out more and how to apply for long-term care from the VA here.

Area Agencies on Aging (AAA). States have programs that help seniors access services. These are known as AAAs but may have different names in different states. If you’re an older adult, an AAA can assist with housing, home-delivered meals, transportation services and other help. Find your local AAA at Eldercare Locator.

Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) benefits can help pay for long-term care, such as an assisted living facility. But the payments probably won’t cover the full cost of care. To be eligible for SSI, you need to have a low income or a disability or be over age 65. If you’re already receiving SSI, you might qualify for Medicaid to cover your long-term care. SSDI pays benefits when you, your spouse or your child can’t work due to a disability. The amount you get can be used to pay for long-term care. But the amount will depend on how long you worked and your earnings. Find out if you’re eligible for SSI and SSDI and how to apply here.

Paying Out of Pocket
While lots of people use their savings or pensions or get help from family and friends to pay for long-term care, you may choose to pay for it differently depending on your situation. For example, some people get money from selling or refinancing property they own. Or some people who can’t afford long-term care but don’t qualify for Medicaid may choose to “spend down” their resources until they do qualify. But this might not be as simple as it sounds, especially if you hope to leave some money to your family. Each option may come with risks and benefits, so speak to a trusted financial advisor, estate planning lawyer or elder care attorney. Each state has different rules about the level of care needed and the financial limits required for Medicaid, so be sure to check your state’s rules. And plan ahead if you can.

Resources
Visit the National Institute on Aging for more resources on paying for long-term care.

Find out more about Medicaid’s spend-down program here.

Check out the US Department of Health and Human Services page on caregiver resources and long-term care.

If you’re a caregiver, check out our article on help for caregivers here.