Long-term care means help with everyday activities, such as bathing, dressing, eating and moving around, over a long period. It can be provided at home by family or paid aides, in adult day programs, in assisted living or in nursing homes.
According to the federal government's long-term care information site, someone turning 65 today has almost a 70% chance of needing some type of long-term care in their remaining years. Women, on average, need care longer than men. Yet many people do not plan for it until a crisis.
What Medicare covers, and what it does not
Medicare covers short-term skilled care, such as a limited stay in a skilled nursing facility after a hospital stay or part-time skilled home health care. See does Medicare cover home health care?
Medicare does not cover custodial care, the ongoing help with daily activities that most long-term care involves, when that is the only care you need.
What long-term care can cost
Costs vary widely by location and type of care. National surveys show that a home health aide can cost thousands of dollars a month for regular weekday help, assisted living often costs several thousand dollars a month, and a private room in a nursing home can exceed $10,000 a month. Check prices in your own area.
Ways to pay
Savings and income. Many people pay at least part of the cost from savings, pensions and Social Security.
Long-term care insurance. Traditional policies pay a daily or monthly benefit for care, after a waiting period, up to a set limit. Premiums are lower when you buy younger and healthier, and some policies have had large premium increases. Many people are turned down for health reasons after their 60s.
Hybrid policies. These combine life insurance or an annuity with long-term care benefits. If you never need care, your heirs receive a death benefit. They often require a large upfront payment.
Home equity. Selling a home, or in some cases a reverse mortgage, can help pay for care. See reverse mortgages.
Veterans benefits. Eligible wartime veterans and surviving spouses with limited income may qualify for a VA pension with an extra Aid and Attendance benefit. See benefits for older veterans.
Medicaid. Medicaid is the largest payer of long-term care in the US. It covers nursing home care, and in many states home and community-based services, for people who meet strict income and asset limits. Medicaid looks back five years at gifts and transfers when you apply for long-term care. See Medicaid for older adults.
Steps to take now
- Think about your preferences. Where would you want to receive care if you needed it?
- Talk with your family. Who could help, and how? Are there expectations that need to be discussed?
- Look at your home. Could it be adapted for aging in place? See aging in place.
- Review your finances. How much could you pay from savings, and for how long?
- Get legal documents in place, including a durable power of attorney and health care directives. See organizing important papers.
- Get advice. An elder law attorney or fee-only financial planner can help you understand your options, especially if you are considering insurance or Medicaid planning.
Shopping for long-term care insurance
If you consider a policy, compare the daily benefit, benefit period, waiting period, inflation protection and premium history. Ask whether premiums can rise. Your State Health Insurance Assistance Program and the National Association of Insurance Commissioners' shopper's guide can help you compare.
