When a loved one needs help with daily activities, such as cooking or dressing, long-term care may become necessary. And while professional caregiving is common — 70% of those aged 65 or older will require it at some point — it can feel overwhelming to discover that your loved one needs it.1 After all, you want to provide the best care, but it may seem prohibitively expensive.
The good news is that there are many funding options available to help you and your loved one navigate these costs, from insurance to medical loans to non-profit assistance. The best solution will depend on your loved one’s needs, as well as your combined means and resources.
Start by understanding your loved one’s care needs
Long-term care can look different from person to person, so it’s important to understand exactly what your loved one needs to live their best life. For some, that may mean having in-home care, while others may be better served in a specialized nursing home.
You can talk to knowledgeable professionals, such as your loved one’s doctors, to help you assess the level of daily support that makes sense for them, and how long they’ll likely need that type of care. This can help you understand the costs and come up with a realistic budget.
Review what insurance may cover
Insurance is often the first line of defense when it comes to covering long-term care costs. There are several types of insurance you might use to help you pay for this type of care.
Long-term care insurance
If your loved one has a traditional long-term care insurance policy, which is designed to help cover a wide range of long-term care costs, that coverage can provide a much-needed safety net. Policies typically include a benefit amount (how much it will cover) as well as a benefit period (how long the coverage can apply).
Coverage may begin when your loved one can no longer perform a certain number of activities of daily living (like bathing, dressing and eating), or they develop a cognitive issue, like Alzheimer’s. Keep in mind that there may also be waiting periods before coverage kicks in.
Medicare
If your older loved one requires skilled services or rehabilitative care, they may be able to get up to 100 days of long-term care in a nursing home covered by Medicare. And if they're receiving skilled home health or other skilled in-home services, Medicare can also cover those costs for a short period of time.
Non-skilled assistance, however, such as help bathing or dressing, is excluded from coverage.
Health insurance
For the most part, employer-sponsored health insurance plans offer the same types of long-term care coverage as Medicare. That means it’s typically limited to skilled, short-term care that’s medically necessary. Not all health insurance plans cover long-term care, so you’ll need to check your loved one’s policy to see what may be included.
Medicaid
For those who qualify for Medicaid (which is designed for those with limited income and assets), this program can cover the majority of long-term care costs. State requirements to qualify are based on the amount of assistance a person needs.
If your loved one has Medicaid, you may be able to become a paid caregiver via your state’s consumer-directed personal assistance program. Availability, requirements and pay can vary depending on where you live. But this may be a useful option if it aligns with your family’s needs.
Look at savings and income sources
If you’ve exhausted your insurance coverage, or don’t have any, you may consider tapping into other funds.
That may include:
- Retirement savings
- Pensions
- Savings
- Income from investments
Some may also consider selling or renting property that’s no longer needed.
The best option may depend on how long your loved one is expected to require care. For context, only about 20% of today’s 65-year-olds will require long-term care for longer than five years.2
Explore government and community support
If your loved one’s needs exceed their means, there may be other options that can help cover the costs of long-term care. For example, veterans can access a wide range of long-term care benefits through the Department of Veterans’ Affairs.
Some states require employers to offer paid family leave in order to support a family member who provides care. (Your state labor office can help clarify your rights.) Otherwise, your local Area Agency on Aging may provide assistance with meal deliveries and day care programs for older adults.
Government agencies and non-profits may be able to provide support through caregiver grants, too. The Elder Care Locator is a useful tool to find services your loved one can qualify for.
Consider financing options that offer flexibility
For some, the costs of long-term care may cost more than what insurance, government programs and non-profits can provide. In that case, you may want to look at options like loans.
For example, medical loans can provide a lump sum that can be used to cover various costs. Alternatively, homeowners may consider tapping their property’s equity via a home equity loan (for a fixed amount of money) or a home equity line of credit (for ongoing expenses).
The key is to ensure that the payments are manageable while providing consistent care that meets your loved one’s needs.
Once you have a plan in place, you’ll be better positioned to help your loved one navigate this time in their life.
Notice: Information provided in this article is for information purposes only and does not necessarily reflect the views of thehumancapitalhub.com or its employees. Please be sure to consult your financial advisor about your financial circumstances and options. This site may receive compensation from advertisers for links to third-party websites.
