The Crisis in Long-Term Care Funding: Understanding Private Pay Alternatives
The Problem: 70% of the baby boomers reaching Social Security and Medicare age will need long-term care. Statistics show the majority don’t know the various forms of long-term care and the different means to pay for it.
Current Status: Over ten million Americans now require long-term care annually and Medicaid is the primary source of coverage for many. With these numbers increasing every year the United States has crossed the tipping point into the era of the “long-term care funding crisis”. To compound the problem most people are unaware that long-term care services are not covered by insurances such as health insurance, long-term disability insurance, Medicare or Medicare supplemental coverage.
Future Prediction: More responsibility is going to be placed back on individuals and families to find the resources necessary to handle the costs of long-term care. The Solution: A variety of private pay options exist to help people remain financially independent, preserve assets and maintain control of the type of care they need. There are several options to consider that will help pay for senior living:
- Private pay from savings, sale of house, 401K, Investment portfolios etc.
- Medicaid / Medicaid Spend Down (Assisted Living, Memory Care or Adult Care Home only) for those with very limited assets
- Veterans Aid & Attendance;
- Monthly benefit for low income Veterans and their spouse
- Visit a Disability, Aging and Veteran Services office in your county for more information
- Long-Term Care Benefit Plan
- Conversion of an in-force life insurance policy into an irrevocable FDIC-insured Benefit Account to fund long-term care benefit plan
- Life or Viatical Settlements
- Sale of existing life insurance policy to a third party for more than its cash surrender value but less than its net death benefit
- Senior Care Bridge Loans
- Unsecured loan with up to six cosigners permitted instead of collateral. Maximum term of loan is three years. After three years the loan must be repaid including all interest and fees.
- Immediate Annuities
- A contract with an insurance company under which consumers pay a certain amount of money to the company and the company sends the consumers a monthly check for the rest of their lives.
- Long-term Care Insurance
- Financial product that helps cover the future cost of a variety of long-term care services.
- The younger and healthier the purchaser, the lower the premiums will be.
Knowing about options for paying for long-term care may help relieve stress of your patients’ families. We recommend that they meet with a financial planner, elder law attorney and/or insurance agent to learn more about these funding options. Paying for assisted living can be a challenge, but with education about options and the right amount of planning and foresight, assisted living can be an affordable option for many seniors.
Written by: Liz Fischer, Right Fit Senior Living Solutions
Please Note: Right Fit Senior Living Solutions advisors are not financial advisors or insurance specialists. We are a full service referral agency whose goal is to provide a wide range of resources to our clients such as viable options for funding long-term care.