More than half of adults 65 and older will need long-term care at some point, according to the Department of Healh and Human Services. As much as you might not want to end up in a situation where someone else has to help care for you, you need to prepare for that possibility.
It’s important to know what your options are when it comes to additional support. And it’s important to understand those options before that additional support becomes critical so you don’t have to rush into any decisions about your care.
Long-term care, as it is called, can be confusing. So here’s what you need to know about the options that are available, the cost of care and the different ways to pay for it.
What long-term care is
The standard definition of long-term care is a range of services to help people with what are called the activities of daily living (ADLs):
- Using the toilet
- Caring for incontinence
- Transferring to or from bed or a chair
Options for long-term care
Long-term care can be provided in a variety of settings: at home, through community-based services that supplement care at home or in a facility such as assisted living or a nursing home. It’s important to be aware of the various options so you can decide which is the best for your needs.
At home: An overwhelming majority of people who need long-term care receive that care at home -- typically from unpaid caregivers, according to a study by the Bipartisan Policy Center. However, there are a variety of professional services that can help provide in-home care. These services range from companion care providers who provide a low level of assistance to personal assistants who help with the activities of daily living to nursing assistants who can provide some medical care.
You can find home care services near you at Caring.com or by contacting the local Area Agency on Aging. Keep in mind that even though people tend to prefer care at home, it isn’t always the best option if the home isn’t set up to accommodate your needs.
Adult day care: This community-based service offers supervised care for adults with dementia or disabilities in a group setting, typically on weekdays during normal business hours. It can be an affordable alternative to professional home care and an option if you have to rely on family caregivers who can’t afford to quit a job to care for you full-time. You can find a center near you by searching the National Adult Day Services Association’s online directory.
Be aware that Medicare – the government health care program for adults 65 and older – does not pay for most long-term care services. It typically covers only short-term stays in skilled nursing facilities after a hospital stay.
Assisted living: These residential facilities provide round-the-clock care and assistance with the activities of daily living. They typically offer private rooms or suites or shared rooms. Some may have a nurse on staff, but assisted living facilities usually don’t provide advanced medical care. You can find facilities through Caring.com, APlaceforMom.com and SeniorLiving.org.
Memory care: These assisted living facilities specialize in providing care for people with memory loss. Not only do they have staff who assist with the activities of daily living and administering medications, but also they are locked to the outside to prevent residents from wandering. You can search for facilities at Caring.com, APlaceforMom.com and SeniorLiving.org.
Skilled nursing: These licensed health care facilities provide 24-hour medical care with nursing and therapy staff for short-term rehabilitation (such as after surgery) or long-term residential care. It’s a higher level of care than what is provided by assisted living and memory care facilities. You can find Medicare and Medicaid-certified nursing homes and see their ratings at Medicare.gov.
[ Keep Reading: What to Know About the Different Types of Long-Term Care ]
How much long-term care costs
Whether it’s provided at home or in a facility, long-term care can be expensive. That’s why people who need care often rely on family members to help.
The most affordable option by far is adult day care. As of 2020, the median monthly cost of this service is $1,603, according to insurance company Genworth’s Cost of Care Survey. However, the level of care provided by adult day care is limited and might not be enough as your needs increase.
Home health aides and assisted living facilities can provide a higher level of care -- at a higher cost. As of 2020, the median monthly cost of assisted living is $4,300, and the median monthly cost of a home health aide is $4,576, according to Genworth. A private room in a skilled nursing facility can cost almost twice as much -- $8,821 a month.
How to pay for long-term care
Although long-term care can be expensive, there are ways to help cover the cost. However, it can take careful planning.
First, be aware that Medicare – the government health care program for adults 65 and older – does not pay for most long-term care services. It typically covers only short-term stays in skilled nursing facilities after a hospital stay.
Medicaid will cover long-term care in a skilled nursing facility and at home. However, to qualify for this joint federal and state health care program, you would need have to have very limited income and assets.
You might qualify to receive nursing home care through the Department of Veterans Affairs if you have a military service-related disability. If the long-term care need isn’t service related, you might qualify for the VA’s Aid and Attendance program that provides an increased monthly pension to cover the cost of care at home or for Veteran Directed Care that helps cover the cost of home or community-based care.
If you have long-term care insurance, the policy will help pay for professional care at home or in a facility once you can no longer perform two of the six daily activities of daily living or has cognitive impairment. Most policies also cover the cost of modifications to a home to make it easier for a person to receive care there. And some may even pay for a family caregiver.
It’s important to know that if you don't have long-term care coverage and already have a health issue that requires care, you won’t qualify for coverage. A policy must be purchased while you are in relatively good health before there is a need for care.
However, you might be able to purchase an annuity with a long-term care benefit if you don’t qualify for insurance and have a stash of cash to invest. A lump-sum payment is made, then the annuity will pay out at least twice that payment over time. OneAmerica and Global Atlantic are among the insurance companies that offer annuities with long-term care benefits.
Another option is a permanent life insurance policy. If you have built up cash value in the policy by paying premiums for many years, you might be able to borrow against that cash value, simply withdraw cash or surrender the policy to receive the cash value to pay for long-term care. A permanent life insurance policy also can be sold to a life settlement company, if certain requirements are met. The payment won’t be as high as the policy’s death benefit, but it will be more than the cash surrender value.
Another option is a reverse mortgage. Adults 62 and older can borrow against the equity in their home if they own their home outright or have paid off most of their mortgage. The loan doesn’t have to be paid back until the house is sold or the homeowner moves out or dies. However, reverse mortgages are complicated and tend to have several fees, so this option should be more of a last resort. The Department of Housing and Urban Development has more information about Home Equity Conversion Mortgages, which are the only reverse mortgages insured by the federal government.
If you have the funds to pay for care out of pocket, consider working with an accountant or financial planner to create a plan for withdrawing those funds. Depending on the types of accounts those funds are in, withdrawals from those accounts could be taxed differently. The bigger the tax bite, the less money will be available to pay for your loved one’s care.
[ Keep Reading: How to Pay for Long-Term Care ]