If you are worried about the high cost of long-term care as you age, then you have good reason for concern.
According to information compiled by the U.S. Department of Health and Human Services in 2016, the average cost of nursing home care when staying in a private room was $7,698 per month. Costs for long-term care can vary depending on the nature of the care. For example, if you stay in your home and have a caregiver come to you, then your costs may be lower than if you stay in a nursing home or similar facility. However, any type of care may seem out of your financial reach when you are uninsured.
Enlisting friends and family members to help you may allow you to postpone paid care. Eventually, your needs may become too great for loved ones to handle. Before this happens, it is important to understand you have other options for paying long-term care costs. Below are some of the top methods for paying for long-term care without insurance.
If you do not have health insurance to cover long-term care, then it is likely due to an inability to afford it. Therefore, you may not have a lot of money in your savings accounts. Even so, paying for long-term care yourself is still a viable option. To start, you can use whatever savings you do have to pay for your long-term care. If you must locate additional sources of funding, then the following are possible options:
Spending all your savings may seem like a bad idea. However, you may not have a choice. There are programs to help you pay for long-term care but these programs have limitations. Many of the programs require you to deplete most of your assets before you can qualify for aid. There are some exceptions. For example, you are typically allowed to retain one vehicle as an asset but you must still demonstrate a financial need for assistance. Therefore, exploring the self-payment of long-term care costs is often a necessary first step.
If you are at least 62 years of age, then you can take out a reverse mortgage on your home to cover the cost of long-term care. Unlike a traditional home loan, a reverse mortgage does not require immediate repayment. It also allows you to stay in your home without fear of default. There are no regular mortgage payments to miss, so you cannot ever face eviction for lack of payment.
When considering using a reverse mortgage to pay for your long-term care there is one important thing you must remember. The home must remain your primary residence for the duration of the reverse mortgage. You must pay the loan back in its entirety if you move out of the home, including for the purposes of receiving long-term care in an external facility, such as a nursing home. As a result, taking out a reverse mortgage is not a viable option when you intend to receive long-term care outside your home.
When applying for a reverse mortgage to cover long-term care, you may also be concerned about how the extra income impacts your ability to receive additional assistance. Each state and federal program providing long-term care assistance uses different assessment criteria. Eligibility for some forms of assistance is negated but another program eligibility is unaffected. For example, reverse mortgage funds do not count as part of your income or assets when determining eligibility for Medicaid.
If you are unable to pay for long-term care on your own, then state and federal assistance programs may provide you with the financial support or care access you need. Two of those assistance programs are Medicaid and Medicare. Medicaid benefits vary in each state, but if you are a Medicaid beneficiary you may qualify for temporary nursing home care. If you do not qualify for Medicaid benefits or your Medicaid benefits run out, Medicare can also provide you with some assistance. For example, Medicare provides coverage for up to six months of end-of-life hospice care.
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In some states, Medicare includes the Program of All-Inclusive Care for the Elderly (PACE). Under PACE, you can receive multiple forms of assistance. However, a fee is paid for PACE services in some states. If you qualify for PACE, then benefits you may receive include:
You may also qualify for assistance through specific agencies. For example, if you are a veteran, then the U.S. Department of Veterans Affairs (VA) may provide you with long-term care support. The National Council on Aging and local or state agencies for older residents are also excellent resources. These groups can provide you with direct aid or access to other resources for long-term care assistance.
There are two ways to use your life insurance policy for long-term care coverage. One option is to activate a chronic illness rider or accelerated death benefit. To do so, you must have a permanent or term life insurance policy for which such options are available. A chronic illness rider allows you to collect benefits for long-term care deducted from your life insurance policy if you prove you need assistance with at least two tasks necessary for daily life. To qualify for an accelerated death benefit you must meet one of the following criteria:
The other way to use your life insurance policy to fund your long-term care is to sell the policy to an insurance company. When selling your policy, you must do so using a life settlement or a viatical settlement. A life settlement allows you to sell the policy to an insurance company for its total value at the time of the sale. A viatical settlement only provides a portion of the total policy value to you. It is typically only available if you have a terminal diagnosis.
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