17 Ways to Pay for Long-term Care in 2024

Knowing how to pay for long-term care will help you better understand your options.

It’s critical to have a long-term care plan since half of the people turning 65 will need care, and seven out of ten seniors will require long-term care services for three years or longer.

If you or a loved one need long-term care and want to know how to pay for it, keep reading. This guide will help you understand how to pay for long-term care. You will also discover alternatives if you don’t have insurance coverage or assets.

FOR EASIER NAVIGATION:

• What Is Long-term Care?
• Who Needs Long-term Care?
• Different Ways To Pay For Long-term Care
• (1) Long Term Care Insurance
• (2) Hybrid Long-term Care Insurance With Home Care Coverage
• (3) Traditional life Insurance
• (4) Life Insurance With Long-term Care Riders
• (5) Life Insurance Cash Value
• (6) Life Insurance Conversion Program Or Life Assurance
• (7) Life Insurance Settlement
• (8) Cash Or Paying Out Of Pocket
• (9) Annuities
• (10) Individual Retirement Account (IRA)
• (11) Sell Your Home
• (12) Renting Your Home
• (13) Reverse Mortgage
• (14) Veterans Aid And Attendance
• (15) Social Security
• (16) Medicare
• (17) Medicaid
• How Can Funeral Funds Help Me?

What Is Long-term Care?

Long-term care refers to different services people require to meet their day-to-day personal care needs.

Most long-term services are not medical but basic self-care activities, also known as the activities of daily living, which include:

• Eating
• Bathing
• Dressing
• Toileting
• Continence
• Transferring

Other long-term care services include instrumental activities of daily living (IADLs), which include:

• Housework
• Preparing foods
• Cleaning up after meals
• Shopping for groceries and clothes
• Taking medication
• Paying bills and managing money
• Using the telephone and mobile devices
• Caring for pets
• Responding to emergency alerts

Who Needs Long-term Care?

Study shows that most American seniors will need long-term care services. Women will more likely need long-term care since they outlive men by about five years.

Accidents can cause disability that will make you need long-term care. Chronic illnesses like high blood pressure and diabetes will likely cause you to need long-term care.

A family history of chronic illness will make you more likely to need long-term care.

If you live alone, you’re more likely to need long-term care than if you are married or living with a family.

Different Ways To Pay For Long-term Care

1. LONG TERM CARE INSURANCE

Long-term care insurance covers all or a portion of the cost of care.

You can use LTC insurance for assisted living care. Some use LTC insurance for nursing home care to cover mental or physical disability.

To use this type of insurance, you must be unable to perform at least two activities of daily living (eating, bathing, dressing, toileting, continence, and continence).

The cost of long-term care insurance depends on your:

• Age
• Gender
• Health
• Face amount

The younger you are when you buy the policy, the lower the premium. The older you are, the higher the premium.

Having poor health may disqualify you from this policy, or you would need to pay higher premiums.

If you can afford long-term care insurance, we strongly encourage you to do so. Sign up for long-term care insurance now to avoid putting your family under a financial burden in the future.

2. HYBRID LONG-TERM CARE INSURANCE WITH HOME CARE COVERAGE

Hybrid long-term insurance combines the benefits of life insurance and long-term care insurance into a single policy.

Hybrid long-term insurance is a permanent life insurance policy that you can use while still alive to pay for long-term care expenses. It also has a long-term care rider that extends the long-term care benefit just in case you exceed the accelerated death benefit.

Benefits of hybrid long-term care insurance include:

• Level premium that never increases
• A death benefit if you never use long-term care services
• A return of premium if you reach a specific year

We recommend hybrid long-term care insurance rather than self-funding for long-term care services.

3. TRADITIONAL LIFE INSURANCE

Some traditional life insurance policies offer living benefits.

Living benefits pay a portion of your death benefit if you face a terminal illness. Your policy will provide you with funds to pay medical or long-term care expenses.

Terminal illness can quickly drain your funds when faced with hefty medical bills for long-term care. Living benefits can help you cover those expenses.

4. LIFE INSURANCE WITH LONG-TERM CARE RIDERS

Some life insurance policies allow you to add a long-term care rider. Adding a long-term care rider to your life insurance policy lets you use your death benefit to cover long-term care expenses that health insurance won’t cover.

Your death benefit will be reduced by the amount of long-term care you use. Adding a long-term care rider is valuable since 70% of seniors today will need some form of long-term care services in the future.

5. LIFE INSURANCE CASH VALUE

Whole life insurance has an investment component in the form of cash value. Cash value grows through the years. You could use your policy’s cash value to pay for long-term care. 

You can take a policy loan or withdraw cash from your cash value. You also have the option to fully surrender your policy for the cash value, which you can use to pay for your long-term care expenses.

6. LIFE INSURANCE CONVERSION PROGRAM OR LIFE ASSURANCE

Seniors requiring long-term care services can convert their life insurance benefits into long-term care payments. However, life insurance conversion pays less than a life insurance settlement.

You can often only get 15 to 50% of the death benefit. It is a good option if your life insurance value is less, and you won’t qualify for a life insurance settlement.

7. LIFE INSURANCE SETTLEMENT

If your life insurance does not allow living benefits or long-term care riders, there is still one option for you to consider. You can sell the policy to a third-party company for a life settlement and get 50-70% of your policy value.

When you sell your policy, the third-party company will pay the monthly premiums, and the company will receive the full death benefit when you pass away.

8. CASH OR PAYING OUT OF POCKET

Paying out of pocket is one of your options if you don’t have life insurance or financial support. Paying out of pocket can come from retirement accounts, savings, investments, or other sources of income.

Long-term care costs between $30,000 to $150,000 a year, which can devastate a long-term care recipient’s finances. Most of the time, long-term care costs can put undue stress on the family.

9. ANNUITIES 

You pay a lump sum upfront when you purchase an annuity, and you can receive regular payments, which you can use to pay for long-term care. An annuity can help extend your savings and ensure that you will always have an income, even when your premiums run out.

Annuities can be a better option to pay for long-term care if you live longer because you will continue to receive money regularly. Another benefit of annuities is that it isn’t counted as assets by Medicaid when you apply for government assistance.

10. INDIVIDUAL RETIREMENT ACCOUNT (IRA)

You can use your income from your individual retirement account to pay for long-term care. The income from IRA may qualify for a medical expense deduction on taxes.

Taking money from an IRA will increase your taxable income, but you can deduct the long-term care cost. Basically, IRA is tax-free health savings account if used for long-term care.

11. SELL YOUR HOME

Some seniors who decide to move into an assisted living community can choose to sell their homes because they will no longer be able to live in it.

Selling a home can provide an opportunity to use the funds from the house’s sale to cover the cost of long-term care.

Selling a home can be a better option if the senior owns the home and there’s no mortgage on the property.

If there’s still a mortgage on the house, selling could be a little tricky. The mortgage must be paid first before the remaining property value can be used to pay for long-term care.

12. RENTING YOUR HOME

The family home can be useful if you are not considering selling it.

If you are moving into an assisted living community, renting your home can be an excellent option to pay for your long-term care.

You can hire a property manager to manage the property for you and continue to generate enough rental income to ease the burden of long-term care.

13. REVERSE MORTGAGE

A reverse mortgage can be an adequate tool if you need to access the cash quickly and you don’t mind moving out of the house or losing your home after you pass away.

The homeowner must be 62 or older to apply for a reverse mortgage. This option is inappropriate if you want to keep the house in the family.

A reverse mortgage could provide you with untaxed monthly cash advances you can use to pay for long-term care. With a reverse mortgage, you can access as much as 60% of your home value.

Make sure you understand the cost associated with this and other terms if you choose this option to fund your long-term care.

14. VETERANS AID AND ATTENDANCE

Veterans who have served in conflict for as little as 90 days and their spouses are entitled to financial aid. Veterans Affairs Aid and Attendance benefit can help pay for long-term care if they qualify.

VA Aid and Attendance allow veterans and spouses to access the improved pension. The elderly and disabled can pay about $1,000 to $2,000 monthly for long-term care. Veterans who qualify only need to have $80,000 in assets.

VA Aid and Attendance can help if you are a veteran who needs help with activities of daily living, are bedridden, residing in a nursing home, or have limited eyesight. You can receive this benefit to cover long-term care costs.

15. SOCIAL SECURITY

Social security pension can help pay for long-term care but is rarely enough to cover the full expenses.

The average monthly Social Security check is $1,503. The maximum social security benefit for retirees is $3,011, roughly a thousand dollars less than the median cost of long-term care.

The amount of benefit you can get from Social Security depends on your earnings throughout your career. Social Security pays more to people who earned more during their lifetime.

16. MEDICARE

Medicare covers hospitals, doctor visits, and short-term health care; however, it does not pay for room and board for nursing homes or assisted living facilities. Medicare only pays for doctor-prescribed home therapies like physical therapy, occupational therapy, and speech therapy.

Medicare only covers long-term care if you need skilled services or rehabilitative care in a nursing home for 100 days.

After 100 days, you are totally on your own. If you are receiving skilled in-home health services, long-term care services at home are only provided for a short time.

Medicare does not pay for non-skilled assistance with activities of daily living, which comprise most of the long-term care services. Medicare does not cover long-term care expenses after 100 days. Therefore, you should not count on Medicare to pay for your long-term care.

17. MEDICAID

If you don’t have enough savings or other financial assets and your income is low, you may qualify for Medicaid. Medicaid can help pay for long-term care services, but you must only have less than $2,000 in assets to qualify.

Every state varies on the number of assets you can retain to be eligible for Medicaid. The average amount most states allow you to keep is $2,000 in countable assets.

Countable assets include:

• Cash, savings, and checking accounts
• Retirement accounts
• CD’s, Mutual funds, bonds, and stocks
• Property aside from primary residence

You may need to do a Medicaid spend-down to be able to qualify for Medicaid.

A Medicaid spend-down means you must limit your assets to meet the eligibility limits. Exempted assets include your primary home, vehicle, and life insurance with a cash value lower than $1,500.

Medicaid pays the largest share of long-term care services, but you must be unable to perform at least two activities of daily living. Medicaid eligibility varies by state.

Medicaid programs can go by other names in different states. In Arizona, Medicaid is called Arizona Long-term Care System, so it’s a good idea to check the name of your state’s program online.

Check your options and determine what works best for you and your family before the time you need long-term care services.

Use this guide to look for better options to cover your long-term care. Regardless of how you plan for your long-term care, it’s important to write down your wishes and tell your family members about it. 

How Can Funeral Funds Help Me?

Trying to find an insurance policy while looking for long-term care can be frustrating; working with an independent agency like Funeral Funds will make the process easier and quicker.

If you have a health history or pre-existing medical conditions, let us help you; we will work with you side by side to find a plan that fits your needs. We will shop your case at different insurance carriers and get you the best price.

We work with many A+ rated insurance carriers that specialize in covering high-risk clients like you.  We will search all those companies and match you up with the best burial insurance company that gives the best rate.

We will assist you in securing the coverage you need at a rate you can afford. So, if you are looking for funeral, burial, or final expense life insurance.

Fill out our quote form on this page or call us at 888) 862-9456, and we can give you an accurate quote.