How to Pay for Long-Term Care

Long-term care can be expensive. According to a survey by insurance company Genworth, the price tag can be upwards of $9,000 a month for a private room. Estate planning attorney Marisol Goodman tells Solace Cremation that “folks have that sticker shock of, ‘Oh, my! My care is going to cost 10 grand a month,’”

While you or a loved one may not need this type of care now, Genworth, quoting federal statistics, says 7 out of 10 people will require long-term care in their lifetime.

Goodman says one challenge is that many people imagine that they’ll be independent and healthy until they pass away in their sleep, but that’s not usually the case. “For the majority of folks, death is not like that,” Goodman said.

What’s more common, she says, is for the person to have various “precipitating events” in the last years of their life. “They recover – but not completely and eventually we reach a threshold that is acceptable or unacceptable.” It varies for each person, she says and that’s why she encourages families to talk about choices and values as they plan together for long-term care.

So, how can older Americans pay for long-term care?

Goodman says some may choose to pay out-of-pocket for their care if they have the income and assets. She advises clients that they need to plan for five years of care if they go this route and have the resources to do so.

Some people opt to purchase long-term care insurance, usually most affordable if purchased well before it is needed. Goodman says that’s usually when people are in their thirties or forties.

Veterans may be eligible for long-term programs through the U.S. Department of Veterans Affairs.

But the largest single funding source for long-term care is Medicaid, the joint federal and state program that covers low-income Americans. More than 84 million Americans are currently enrolled.

Medicaid should not be confused with Medicare. Medicare is the federal health insurance program for people over 65 and is based on age, not income. It covers things like inpatient hospital care and hospice, but it does not cover long-term care.

Medicaid has income limits that vary state by state, but typically those seniors who want to enroll need to first exhaust savings and other assets (beyond their home and vehicle) before becoming eligible.

According to AARP, experts say a common mistake is to “spend down” assets and income to qualify for Medicaid without a plan. Many states have a five-year lookback period that they’ll review to prevent fraud, so keeping records is very important.

Because the rules and strategies can be complex, many seek out the help of an attorney or a professional Medicaid planner to reduce income and assets to become eligible for assistance. Some Medicaid planners are free and some charge hundreds of dollars. The American Council on Aging is one resource for finding a Medicaid planner and weighing the differences between various available options. The website also has an eligibility calculator.

There are several kinds of attorneys, each with a different specialization that can help with end-of-life issues. Some focus on estate planning and administration for all ages, like Goodman, some specialize on Medicaid eligibility, and others specialize on the legal rights of elders (protection from abuse, preserving assets, ensuring access to medical care or helping family members navigate the court system for when they need others to make decisions for them), usually an elder law attorney.

The National Academy of Elder Law Attorneys has a database of lawyers. The Oregon Bar Association has a referral program for various types of attorneys.

Goodman says that many people make elaborate plans for the birth of a child and their first five years. “We make this beautiful birthing plan of how someone enters the world … We do not make the same plan for how we exit this world,” she says.

“Start having real conversations,” Goodman urges. “Imagine that in reverse.” She recommends visiting assisted living and rehabilitation facilities before you need them.

While thinking about the future might be daunting, by planning ahead, you and your family will be better able to navigate the complexities of paying for long-term care.

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