As you grow older, the need for a bit of help with everyday chores becomes almost inevitable. But that doesn’t necessarily mean a move to a nursing home is next.
For many, full-time medical care isn’t necessary. Maybe all that is needed is an aide for a few hours a day to help with cooking meals and making sure medications are taken at the right time. In cases like this, home care is often the best option. Plus, there are many benefits to staying in your own home if you can remain independent and healthy. It can mean more freedom, familiar surroundings, and contact with friends and the places you’ve grown to love.
Often, the biggest question when you or a loved one reaches this transition will be how to fit it into the family’s budget. The costs of care can be expensive, but proper preparation can help.
Costs will vary widely by state and location. If you are not prepared, these costs can have a large impact on your family’s finances. The average lifetime cost for long-term care services is $180,000. If you don’t have a strategy to cover these services, these costs can escalate quickly.
How can you pay for long-term care? Here are a few options.
Government programs like Medicare or Medicaid
Many are surprised to learn that Medicare does not cover long-term care. As a federal health insurance program, Medicare primarily serves people over 65 years old and does not cover everyday activities. Medicaid, a public assistance program for low-income families and individuals that is funded by both the state and the federal government, does cover some services if you meet your state’s eligibility requirements. Federal guidelines are loose, so there can be significant differences in eligibility requirements from state to state, but individuals are often required to have limited income and assets.
Paying out of pocket
Many families self-fund long-term care. There are several options, with pros and cons, for coming up with the necessary money. One common option is to have an elderly parent move in with an adult child, but being a family caregiver comes with financial, physical, and emotional challenges. At the end of the day, what is right for your family will be different from what is right for your neighbor’s family.
Long-term care insurance
Similar to life insurance or disability insurance, long-term care insurance can be purchased to guard against the costs of necessary daily care, whether it’s at home, in an assisted living facility, or in a nursing home. There are many different types of policies and options you can put into place that help mitigate the cost associated with this type of care. As with most insurance, age and health matter when determining rates and eligibility. It’s often advisable to explore options and begin preparing when you are in your 40s and 50s, while you are still healthy.
1. “Formal cost of long-term care services,” PwC and MIB, 2021 update.