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7 Financial Options to Pay for Long-Term Care
The costs of long-term care can be exceptionally high. Nursing home care expenses for one year averages about $87,000. As a result, you will need to find creative and functional ways to pay for care. These financial options can help you pay for assisted living, nursing homes and other forms of long-term care.
According to the government website, Medicare covers hospital care, skilled nursing facility care, hospice care and home health services. However, Medicare usually does not cover long-term care. Even though it does not cover all kinds of long-term care, it is still invaluable. Use Medicare regarding more immediate, short-term conditions.
2. Consider final expense insurance
Even simple funerals can cost thousands of dollars and will sometimes leave family with substantial debts to be paid. Final expense insurance can protect an individual’s future finances by paying for expenses that sometimes aren’t covered under other insurance plans, like funeral costs or final medical bills. This will help your loved ones with many stressors that can come.
3. Use a Health Savings Account
If you don’t already have a health savings account (HSA), you should look into getting one now. An HSA allows you to save money and is not subjected to taxes when you withdraw from the account. If you plan on using this option as a way to pay for long-term care down the road, it’s important to know that you must first pay for a high deductible health plan. When you enroll with Medicare, you are no longer qualified to make contributions to your plan. You can also only use the money from your HSA for medical-related expenses. It’s better to invest in an HSA sooner rather than later so you can reap the benefits.
4. Look into veterans benefits
A recent article from Forbes addressed one of the most underutilized ways to pay for long-term care: veterans benefits. It’s not just veterans who are covered by these benefits. Their spouses often qualify as well. According to the article, the Veterans Aid and Assistance Pensions Benefit provides about $1,794 per month for a veteran, $1,153 for a surviving spouse or $2,127 for a couple. Very few people know about this benefit, and if you or your spouse is a veteran, do the necessary paperwork that can make sure you’re cared for.
5. Buy long-term care insurance now
There are many circumstances under which Medicare doesn’t cover long-term care. By signing up for long-term care insurance when you’re younger, you can save money. For example, rates increase by 2 to 4 percent in your 50s, compared to 6 to 8 percent in your 60s. The premiums for a long-term care insurance policy will probably run a couple thousand dollars a year, but that money is a drop in the bucket considering that care often costs hundreds of thousands of dollars over the years
6. Use home equity
The National Council on the Aging released a report on reverse mortgages that suggests they can be a good way to pay for assisted care when it is needed very soon. Vulnerable individuals should be aware of this option, especially if you would do best to stay at home. If your home is a viable option, consult with a financial advisor to see what your best options are for tapping into your home equity.
7. Get life insurance with a long-term rider
There are some hybrid policies that combine long-term care and life insurance. You can also find life insurance policies that pay for long-term care. These policies can be an excellent option because they will pay out what remains of a life insurance policy if it isn’t exhausted paying for long-term care. However, they can also be expensive in the short term and probably aren’t a good option for people who need immediate care.
There are many options to pay for long-term care. By consulting with a financial advisor and preparing in advance, you can be protected from the large bills of long-term care.