A question many people wonder when planning for retirement or helping aging family and friends is, “How do you pay for assisted living or home health care?”
This may be especially true for individuals or families on a limited income, or those who want to protect their hard-earned assets from the high expense of long term care services.
Common Misconceptions
Don’t be fooled. The following are a couple common misconceptions when paying for care:
- Local state governments may offer financial assistance for individuals who are disabled or fall below the poverty line, but this coverage may not be available to everyone. Medicaid is reserved for people who have spent down1 their savings to $2,000 and meet other individual state requirements.
- Your health insurance will not pay for extended assisted living or home health care. It may cover some rehabilitative services, but long-term care is typically not covered by health insurance.
Outside of government assistance for those who qualify, most individuals and families have the following options to pay for long term care services such as assisted living or home health care.
Self-Funding
Home care or assisted living services may be funded by individual income from their retirement, savings, social security, etc.
The cost of care ranges by state and can be a significant annual expense depending on your location and the level of care needed.
Those who choose to self-fund should be aware of the current cost of care and account for future costs due to inflation. The cost of home care rises 1% per year on average while nursing home care averages a rise of 4% per year. As you can imagine, the cost of care 20-30 years from now will be drastically different than the cost of care now.
Depend on Family and Friends
You may choose to rely on family or friends to deliver care. It’s important to make sure your loved ones know of this decision and can offer the level of care you need.
In most households, this may require someone to quit their job to deliver full-time care in the home.
Caregivers who assist with the financial side of care of a loved one estimate that they pay, on average, about $10,000 per year in out-of-pocket expenses. Most caregivers do not anticipate or plan for this expenditure. Based on a recent study by Genworth Financial, 77% of caregivers indicated that in order to provide care for a loved one, they had to miss work2.
If you plan to save money by having your family help, make sure you count the financial, emotional, and physical costs involved in personal caregiving.
Protect Your Risk with Long Term Care Insurance
Have you experienced caring for an aging parent or loved one? If so, you understand the emotional and physical toll of providing care for someone you love.
Long term care insurance offers families peace of mind so they can focus their energy on spending time with and enjoying their loved ones.
When you protect your risk with long term care insurance, this coverage can pay for assisted living or home health care expenses.
Coverage typically provides access to additional helpful resources including a personal long term care planner. These planners assist you and your family with finding the right care and help ensure you’re taking advantage of all the benefits your policy offers.
Curious if long term care insurance is right for you? Learn more by browsing our resources and shop the market for an instant quote.
LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.
1Medicaid spend down varies by state. 2Genworth Financial, The Expanding Circle of Care: Beyond Dollars 2015.
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