As you grow older or if you are dealing with a sudden life change, you are likely starting to consider long-term care services to make life a little easier. Whether that means staying at home with in-home assistance or moving into a nursing facility or seeking adult day care for a loved one, all depends on your needs. However, all of these long-term care services are expensive. Before you make any decisions, it’s a good idea to look at the costs of LTC and ways of paying for it.
- Costs of Long-Term Care in 50 States
- Ways of Paying for Long-Term Care Costs
- Long-Term Care Insurance
- Home and Community-Based Services (HCBS) Waivers for Long-Term Care Assistance
- Program of All-Inclusive Care for the Elderly (PACE)
- Does Medicare Pay for Long-Term Care?
- Does Medicaid Pay for Long-Term Care?
- Do Veterans Benefits Cover Long-Term Care?
Costs of Long-Term Care in 50 States
Per the Administration for Community Living, the average cost for long-term care in a nursing home is $225 a day. If you choose to remain in the home while you recover from an injury or age in place, you’ll still be paying about $20.50 an hour for a home health aide.
Of course, the average costs for different types of long-term care vary quite a bit from state-to-state. The insurer, Genworth has put together a Cost of Care Survey showing the average costs of long-term care per state that is current as of 2019.
|State||Private Room in Nursing Home – Annual Cost||Adult Day Care – Annual Cost||Home Health Aide Annual Cost @ 44 hours per week|
Source: Genworth. (2019). [Interactive Cost of Care Survey & Map showing average annual costs of LTC per state]. Genworth Cost of Care Survey. Retrieved from https://www.genworth.com/aging-and-you/finances/cost-of-care.html
Ways of Paying for Long-Term Care Costs
Many people are caught off guard by the need for long-term care, especially if it is the result of an injury at a young age rather than old age. So, it can be hard to pay for the costs of having a nurse or home health aide come in or to pay for an assisted living center. Most health insurance won’t pay for long-term care. Although, it can cover a few at home visits or a short stay in an assisted living center.
Usually, people will drain their savings and even have to sell their homes to pay for care that extends beyond a few months. Once they are out of assets, then either Medicaid or Home and Community Based Services (HCBS) usually kick in and cover the costs of long-term care.
However, there are many ways people can pay for long-term care costs. Some of which allow you to take preventative steps to avoid losing all your assets when paying out of pocket costs.
Long-Term Care Insurance
Long-term care insurance is a type of private insurance that people can purchase when they are still healthy or young. It kicks in when you get to a point where you need help with a minimum of two out of six activities of daily living (ADLs) and have up to a 90-day waiting period. Although, if you are cognitively impaired the policy may kick in right away. Some policies also do away with the waiting period altogether.
There are two types of long term care insurance policies :
- Traditional long-term care insurance: You can learn everything you need to know about traditional long-term care insurance. There are fewer companies offering traditional LTC insurance due to increasingly high costs. If you are interested in having a policy, we have researched and compiled the list of the best traditional long-term care insurance companies for your consideration.
- Hybrid long-term care insurance: Hybrid long-term care insurance policy, or also called linked policy, life insurance and long-term care insurance. Despite being more expensive, it has become more and more popular nowadays. Here are the best hybrid long-term care insurance companies if you are interested in it.
Besides a long-term care insurance policy, you can also have long-term care benefits if you add a rider to your permanent life insurance policy. It can be either long-term care rider or chronic illness rider. Here are the differences between long-term care rider and chronic illness rider.
If you want to explore more options in long-term care insurance, here is our comprehensive guide to long-term care solutions.
What Are the Activities of Daily Living?
The ADLs are a group of activities that are necessary to live independently and remain functional. Various programs and organizations use the ADLs to determine if a person qualifies for assistance. If you are unable to complete two or more of the ADLs without assistance, you may need short- or long-term care. These include:
- Maintaining Mobility
- Maintaining Continence
- Using the Toilet
Home and Community-Based Services (HCBS) Waivers for Long-Term Care Assistance
Some states offer long-term care assistance through HCBS waivers that allow them to receive in-home care or community based care. These waivers are paid for through Medicaid, federal government, and state government programs. States can offer hundreds of different waiver programs that are targeted to specific groups, such as the elderly, those with AIDS, and people with intellectual disabilities. States can also set different income and resource rules for HCBS waivers that may allow more people to qualify for long-term care.
Program of All-Inclusive Care for the Elderly (PACE)
The new PACE program is meant to provide supplemental all-in-one care for those elderly people still living at home who also qualify for both Medicare and Medicaid. The program offers comprehensive care primarily in adult day health centers and in-home and referral services.
Does Medicare Pay for Long-Term Care?
Typically, Medicare doesn’t pay for nursing care or in-home care unless it is medically necessary or follows hospital care per the Administration on Aging. However, it can be used for short-term stays in nursing facilities and in-home part-time care and equipment.
In these cases, you have to meet strict requirements like being an in-patient at the hospital for a minimum of three days as a result of your injury or illness. Also, it only covers 100% of the care for the first 20 days and then requires a co-payment of $164.50 a day up to 100 days of care. After that, Medicare won’t pay for any nursing home care.
If your doctor prescribes part-time or intermittent skilled nursing care to treat an ongoing medical condition, there is no time limit on coverage.
Does Medicaid Pay for Long-Term Care?
Many states also offer long-term care through Medicaid which is usually available to those who are below 138% of the poverty level, are disabled, have children or are pregnant. Nursing care and in-home care through Medicaid usually becomes available when you have exhausted your assets and can’t pay for long-term care in another way. It also requires recipients to use Medicaid-certified nursing facilities and programs, which usually aren’t hard to find as many facilities seek out this certification.
Do Veterans Benefits Cover Long-Term Care?
If you are a U.S. military veteran you may also qualify for long-term care coverage through the United States Department of Veterans Affairs. The VA offers multiple LTC options, including:
- Long-term care services for veterans with service-related disabilities
- Long-term care services for veterans who can’t pay the costs of necessary care
- A cash-allowance program for veterans with disabilities to pay for HCBS
- A flexible budget-based LTC services program called, Veteran Directed Home and Community Based Services (VD-HCBS), for veterans of all ages
Long-term care services can include multiple types of assistance from adult day care to in-home cooking and cleaning. It may also count as assisted living or nursing home care. However, all long-term care is pricey and it’s a good idea to start planning on how to pay for it now.
Depending on your financial situation and health, you’ll find that there are multiple programs and insurance options available for LTC coverage. Those who are still young might want to invest in a LTC insurance policy. If you are low on resources and need LTC now, consider applying for Medicaid or an HCBS waiver program.