How Can I Pay for Long Term Care?
There are few options to pay the costs of long term care services:
Private Payment
You might consider using your savings to cover the cost of your long term care needs. Unfortunately, even the most well laid out plan is subject to unexpected challenges. In 2011, the national average cost of a semiprivate room in a nursing home was $75,555 annually.3 According to the U.S. Department of Health and Human Services, the average length of stay in a nursing home is 2.4 years.6That is more than $181,000 per average stay. How long might it take to save for the cost of an average nursing home stay today?
See if You Can Afford to Pay for Long Term Care Yourself
Also, there is no way to be sure that you won't need long term care before you have saved the appropriate amount to cover the increasing cost of care. Since life is full of surprises, unexpected events can eat away at your savings or the money which you may have counted on for long term care expenses.
Medicaid
Medicaid (Medi-Cal in California) is a state-based program supplemented by Federal funds that acts as a safety net to provide health services to those who meet their state's poverty guidelines. Medicaid pays for the largest share of long-term care services, but only if you meet financial and functional criteria.2
Medicaid might cover your long term care costs if you meet your state's poverty criteria and receive care that meets your state's guidelines. Usually this means expending all but $2,000 of your assets and savings (except for, perhaps, your house and car). It also means receiving care from a limited number of state-approved caregivers (mostly institutions like nursing homes) that are willing to accept Medicaid's payments.
When Medicaid pays for long term care services, it limits your choice in terms of the type of care you can receive and where you can receive it. Many people "spend down" their assets to state-required levels to become eligible for Medicaid, using up their retirement nest-egg and resources intended for their heirs.
Some people will try to transfer their assets to a family member or a trust to avoid "spending down" their assets. The Federal government now allows states to go back five years to examine the finances of people applying for Medicaid.
If the state finds that assets were given away during that time period, they can impose a penalty period before you are eligible to receive benefits. Typically, this is determined by dividing the average monthly cost of nursing home care into the amount that was given away.
Medicaid eligibility requirements vary by state. For more information, contact your local Medicaid office or visit http://www.cms.hhs.gov/home/medicaid.asp.
VA-funded Long Term Care
The Department of Veterans Affairs (VA) health system makes certain long term care services available to veterans based on a priority ranking system, with highest priority given to those with severe service-related disabilities.
VA-funded long term care may be worth investigating, especially for veterans with service-related disabilities and/or limited incomes and assets. Keep in mind, however, that in addition to the priority ranking system, the availability of long term care services from the VA may be subject to funding limitations and may vary by geographic area.
For more information on eligibility for VA benefits, please visit www.va.gov/elig.
Long Term Care Insurance
Long term care insurance is a reliable method of paying for long term care expenses. You can find detailed information on long term care insurance in the section, Long Term Care Insurance Basics.