How to Pay for Care?
Mention long term care and most people envision the recipient as an older person in their later years. However, the need for long term care can arise when you least expect it, as the result of an accident or sudden onset illness or disease. In fact, 37% of long term care recipients are under 65 years old1. Regardless of the cause, when you or someone you care about requires long term care, it’s important to know the options when it comes to funding the care you need, where and how you choose to receive it.
Public Programs
Medicare and Medicaid may be familiar terms but many people don’t know exactly what they fund, for how long, and for whom. The most important thing to know about both is that they have physical and/or financial qualifications to determine if you are eligible for benefits. Those who do qualify to receive benefits are limited in terms of coverage and choice for care facilities. Understand Medicare & Medicaid.
Personal Resources
Self Funding
Do you have a healthy amount of money saved up for retirement or other future needs? If you can spare it, that money may be a good choice to cover long term care costs for you or a loved one. 63%2 of caregivers used their own retirement and savings funds to pay for care. Find out the cost of care in your area.
Family & Friends
Asking loved ones for help with long term care can be a bonding experience for all involved, but it is also can take a toll physically, emotionally, and financially. Over time, the stress and expense that comes along with it can have wide-reaching effects on everyone in the family. Learn more about the effects of caregiving.
Insurance & Annuities
There are several types of insurance designed to aid in the reimbursement of long term care expenses. Long term care insurance, life insurance with a chronic illness and long term care riders, and annuities can either pay for aging related expenses or provide a series of regular payments that can used for any reason, including health related charges.
Insurance
There are several types of insurance that can reimburse policyholders for long term care related expenses.
Long Term Care Insurance (LTCI) can be used to reimburse policyholders for long term care expenses administered in your home or at an assisted living facility or nursing home. LTCI is issued as either an individual policy or you can purchase coverage through some employers that offer group plans.
Some life insurance policies have built in benefits that can help pay for long term care expenses or similar types of expenses. These hybrid models may have a chronic illness rider or long term care rider that is designed to accelerate the life insurance death benefit to cover long term care or chronic illness needs while the policyholder is still alive.
Long Term Care vs. Long Term Care Insurance
When discussing Long term care, it's important to understand the difference between:
Long Term Care (LTC) is the assistance or supervision you may need when you are unable to do some of the basic activities of daily living — bathing, dressing, eating, continence, toileting and transferring. You also may need help because of a severe cognitive impairment that can be caused by Alzheimer’s disease or other brain disorders.
Long Term Care Insurance (LTCi) is an insurance policy that helps reimburse long term care expenses. Long term care insurance generally covers long term care not covered by health insurance.
Annuities
There are many different types of annuities with a diverse array of features and options. One feature that some annuities offer is often referred to as a "medical care facility" waiver. This type of waiver offers the ability to access a portion of your annuity's contract value without surrender charges or other insurance company charges/penalties, that can be used for any reason, but designed to help you pay for the cost of care if you are confined in a medical care facility.
