9 Ways to Pay for Long Term Care

Long term care insurance can help you with the cost of assisted living, nursing home, and home health care. But not everyone can afford or qualify for long term care insurance coverage. But there are other options to pay for long term care. These include group long term care insurance, long term care annuities, hybrid insurance, HSAs, pensions and social security, veteran’s benefits, home equity, and Medicaid. In this article, we will go over these 9 ways to pay for long term care.

1. Long Term Care Insurance

You can purchase long term care insurance so you can avoid blowing through your assets and savings to cover care. You pay premiums in return for long term care benefits. They can cover nursing homes, memory care, and home health care. However, these types of policies do come with extensive medical underwriting procedures. So, the younger and healthier you are, the more likely you are to be approved for care at a reasonable rate.

2. Group Long Term Care Insurance

Through your employment benefit system, you may have access to group long term care insurance. This type of LTCI can help someone who does not qualify for an individual policy to gain coverage. This is because there is a simplified underwriting process that makes coverage more attainable. Some employers may even help cover the costs of premiums.

3. Hybrid Policy

A hybrid policy is a life insurance policy with a long term care rider. You can use your death benefit to pay for long term care. If you do not end up using your benefit, it will go to your appointed beneficiaries when you pass. These policies are often exempt from premium raises. Additionally, if your health is not great, you can avoid the in-depth underwriting process of a long term care insurance policy.

4. Long Term Care Annuity

This is typically a fixed equity index annuity with a long term care rider. If you ever need care, you will receive guaranteed lifetime income to cover care.

5. HSA

You can only create and contribute to an HSA if you have a high-deductible health insurance plan. It allows you to put aside tax-free money to be used for medical and long term care expenses. You can also use the funds to cover long term care insurance premiums.

6. Veteran’s Benefits

This type of long term care coverage only benefits a small amount of people. If you have a service-related disability you will receive long term care. Your family members that serve as a caretakers may also be eligible for compensation. It is important to note that the rules related to this program are complex and you may need someone to help guide you through the process.

7. Pensions and Social Security

Depending on how much your monthly payments are and the level of care you require, you may be able to pay for your long term care with your social security and pension.

8. Home Equity

Many people overlook their most valuable asset, their home. You can tap into your equity through a home equity line of credit, reverse mortgage, or selling the home and using the money to fund your long term care. It is important to note, that this should be a last resort since is results in the loss of your home.

9. Medicaid

If you have exhausted all the other options to pay for long term care, the government will help you through Medicaid. But you must spend down all your assets before you can qualify. In the end, the state may require your house to be sold to recoup costs.

How to Start

First, you have to come to terms with the fact that you will likely require some form of long term care. Review the costs of the different ways to pay for long term care. You should also take inflation into account. Find the way that best suits your budget and care goals.

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