How Does Long Term Care Get Paid For?

Who Pays For Long Term Care Costs?

As people make retirement plans or help an elderly person with their care, they start to learn about the high cost of nursing care. Many people have the wrong idea about how this care actually get paid for. Since it can be a very large expense, and since the need for nursing care is growing, it is important to understand some basic facts about the costs of skilled nursing services..

Note that these services could be from home heath care, assisted living, or a nursing home.

Medicare

Medicare is the US health insurance program for seniors and disabled people. Many people just assume that this program will pay for their nursing costs. However, this is really a dangerous assumption.

Medicare only pays for short term nursing services or very specific services. You cannot count on you benefits to pay for long term nursing care.

This is true even if you have a supplement or Medicare Advantage plan. In general, these plans may expand your benefits, but they usually only cover the same things that the original plan covers. Please read the details of your own plan to see how they cover nursing care.

Personal Savings

According to the US Census Department, about half of nursing costs are paid for out of pocket. However, since nursing costs can amount to thousands of dollars every month, this expense can deplete savings very quickly. Most people have not saved enough money to provide a comfortable retirement and the money for long term nursing care.

After savings are depleted, a person may qualify for Medicaid which does cover long term care.

Medicaid

This is the federal health insurance program for people with very low incomes and very small savings. After a person used up most of their savings, they may qualify for Medicaid. Qualification rules are different in different states. Medicaid will cover nursing homes in Medicaid approved facilities or from approved health companies.

Long Term Care Insurance (LTCi)

This is a special type of health insurance that was designed to cover long term nursing care. LTCi policies are not really standardized like, for example, Medicare supplements are. This means that policies may have a variety of deductibles, waiting periods, services they cover, and plan maximums.

For example, some plans may cover any type of nursing care. It could be from home health, assisted living, or a skilled nursing facility. Others may only cover nursing facilities.

In addition, some plans are tax qualified. This means that you can deduct the premiums from your taxes. Other plans are not tax qualified, and this means you will not get any tax benefits.

Long Term Care Insurance Alternatives

There are some other products that may provide an alternative to a stand-alone LTCi policy. Some life insurance policies or annuities have clauses that allow the owners to take some of the face value or cash account in case they need to use it for nursing care.

This allows the owner to put their money into a product that may provide retirement income or a death benefit, but still use them in case he or she needs to pay for nursing care.