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Long Term Care for Seniors – A Financial Guide for Residents & Families Christina Morales

March 12th, 2015

Long Term CareHealth care debates continue to linger on in televised newscasts and in newspaper articles. Regardless of which side you are on, there is one thing that everyone can agree upon: health care is expensive. One of the biggest stressors of growing older is the financial burden that many seniors unfortunately face.

What are your options for paying for long term care?

Veteran’s Benefits – If you or your spouse served in the military, you may be available to receive assistance (up to $1,800 per month). Your best bet is to meet with a VA representative to avoid making mistakes while filling out the complicated paperwork which can lead to being declined or additional months of waiting.

Medicare and Medicaid – This option for payment also has its complex specifications and qualifications. Not all senior homes or communities accept Medicare or Medicaid so when looking for facilities, this may be one of the first answers you research. Medicare often pays for the first 20 days of service at a skilled nursing facility and from day 20 to day 100, it covers 80% of the cost. After day 100, Medicare pays nothing. Medicare supplemental insurance will pay 20% for the last 80 days, but it does not extend nursing home care coverage beyond 100 days.

It is also important to remember that Medicare does NOT cover non-medical costs such as bathing, meals, or grooming. Furthermore, Medicaid is not available if personal finances can pay for care which means that a savings account and assets must be depleted. The individual must receive an income of less than $2,000 per month and the value of their assets is limited to $2,000 (excluding their home).

Long Term Care Insurance – Long-term care insurance covers care that is usually not covered by health insurance, Medicare, or Medicaid. About 70 percent of individuals over age 65 will require at least some type of long-term care services during their lifetime. Long-term care insurance rates are determined by six main factors: the person’s age, the daily (or monthly) benefit, how long the benefits pay, the elimination period, inflation protection, and the health rating (preferred, standard, sub-standard). The National Advisory Center for Long Term Care Insurance has a great website that provides a care cost calculator, a list of factors that can make you more at risk for needing long term care, and direct assistance to help you through the process of finding insurance to help pay for the care you or a loved one will need in the future.

Converting Life Insurance into Useable Funds – The owner of a life insurance policy of any type (term, whole, universal, group) can convert the death benefit into a living benefit that will cover the costs of long term care or residing in a senior living facility. According to money advisor David Bakke, “By trading in the policy’s death benefit for a discounted sum that is placed in an irrevocable, FDIC-insured account, they will receive money for a policy they may have abandoned that is protected and use to make monthly payments directly to the care provider on behalf of the account owner. Every policy owner has the legal right to elect to take this conversion option, and numerous states have introduced laws requiring that all policy owners are informed of this option.” Life Care Funding is one such company that deals with converting life insurance policies into senior income and can provide additional insight into this process.

Gift Tax Exemption – Have a child or relative that is willing to provide financial assistance? In 2013 the IRS implemented a gift tax exemption in which individuals can provide gifts of up to $14,000 per person per year without paying a federal gift tax ($28,000 as a joint gift). Be sure to contact your tax professional to ensure that you and your loved one are making the proper financial decisions in accordance to IRS regulations.

The Older Americans Act – This federal program was designed to organize, coordinate, and provide home and community based services to older adults and their families. Including in home personal care, meals, transportation, respite care, and housekeeping, this program focuses on low-income, frail, or disabled seniors over age 60, minority older adults, and older adults living in rural areas. The Administration on Aging’s website can help you to find programs available in your area.

Comments

  1. Angie muscat March 15, 2015

    Vert good article that summarizes options clearly. I have worked with numerous long term carriers that provided reimbursement for clients. I’m still not convinced that it’s the best way to go. So much red tape and limitations. With so many companies getting out of the long term care business, I wonder about the future of such policies.

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