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There are few options to pay the
costs of long term care services:
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Basics ]
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 2007, the national average cost of a
semi-private room in a nursing home was $68,985 annually.9
With an average stay of 2.4 years,4
that's more than $165,500 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.
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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 covers long
term care services and currently pays for 40% of the nation’s
long term care costs.6
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
www.cms.hhs.gov/medicaid.
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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.
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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.
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