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Tips to Deal With the Cost of Long-Term Elder Care

Many of us will need long-term care somewhere down the line. Currently, 47% of men and 58% of women over the age of 65 are estimated to need long-term care at some point in their lives.

Yet elder care is known for being expensive. A one-bedroom unit in an assisted living community typically costs $141 a day, or over $4,000 a month. A home health aide usually charges up to $24 an hour.

And if you need more care than that, the average cost of a semi-private room in a nursing home in the United States is $225 a day, nearly $8,000 a month. A private room is closer to $9,000 a month. And if you prefer to live in a larger city or more central area, it’s likely to be even more expensive.

This high cost can be intimidating to those of us planning for our retirement or looking for solutions for our elderly parents. Thankfully, there are options out there for assistance with the cost of long-term elder care. 

Long-Term Care Insurance

One way to handle some of the costs of long-term elder care is to purchase long-term care insurance. This typically provides coverage for home health care, personal care, nursing home care, and adult daycare. 

Costs of long-term care policies are higher as the insured person ages. Most insurers will not accept applicants over the age of 75. The earlier you get a policy, the higher your chance of acceptance, and it is generally recommended to purchase it before the age of 60. You are much more likely to qualify for a policy if you are under 50 and still in relatively good health. 

To receive the lowest premium, you can opt for an extended elimination period, meaning it will take longer for the insurance to kick in. The average annual premium for a 55-year-old couple’s long-term care insurance in 2021 was $5,025

Medicare and Medicaid

Medicare covers the cost of home health care but not a long-term stay in a skilled nursing facility. Medicaid, however, does cover the cost of a long-term stay in a nursing home. In order to qualify for either, individuals must meet specific income and asset requirements and be considered low-income. 

If you are not currently low-income, it is possible to plan to become low-income by the time you will require long-term care. You can do this by giving your assets over to friends and family or by paying for your own care until your assets are depleted. Medicaid currently has a five-year lookback period, meaning that money transferred within the last five years will still count toward your assets. 

Estate Planning

There are several ways to use trusts, wills, and joint accounts in order to help you cover long-term care costs. Options include:

  • Revocable trusts - This type of trust is created while you are still alive. You sign ownership of assets to the trust while retaining access to them. This type of trust counts toward your income as defined by Medicare and Medicaid. 
  • Irrevocable trusts - This trust type cannot be altered or changed once it is created. For this reason, assets in an irrevocable trust do not count toward your income as defined by Medicare and Medicaid, which means they can help you qualify for these insurances. 
  • Life insurance trust - This is a type of irrevocable trust that holds the proceeds of a life insurance policy

Reverse Mortgage

A reverse mortgage is a type of home loan that allows a homeowner to convert part of the value of their home into cash without having to sell the home. It is available to adults aged 62 and over. The loan is tax-free and can be used toward any expenses including the cost of long-term care. Individuals considering a reverse mortgage should speak to a financial expert as they can be quite complicated, and other options may be preferable. 

Assistance Programs

Some states offer PACE, the Program of All-Inclusive Care for the Elderly, which is a combined Medicare and Medicaid program that covers medical, social service, and long-term care costs for people who would otherwise need care in a nursing home. It can be used to help people continue living at home rather than moving to a long-term facility. 

Additionally, the U.S. Department of Veterans Affairs (VA) provides coverage for long-term care for some veterans who are eligible. 

Finally, the Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) programs provide financial assistance to people with disabilities, which can be used by people who are younger than 65 years old who are disabled according to the Social Security Administration’s definition. 

Protecting Yourself in Long-Term Care Facilities 

One important thing to note for people planning to live in a residential facility, whether it be a nursing home or an assisted living community, is the risk of abuse. Nursing home abuse, or the harm, neglect, or mistreatment of residents by nursing home staff, is a serious risk for elders. It’s essential to learn about the different types of nursing home abuse and their warning signs in order to be able to identify and stop it.

Victims of nursing home abuse and their loved ones should immediately contact the relevant authorities for help. They may also speak to a nursing home abuse attorney to learn more about their options for pursuing justice through a civil lawsuit.

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