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Who Pays for Long-Term Care Expenses?

Because many people neglect to address long-term care planning in their financial plan, the individuals receiving care, and their family members, pay for much of the long-term care provided in the U.S. out of pocket. Many people who experience a long-term care need are forced to draw from savings or draw funds from a reverse mortgage to pay for care. This can alter otherwise well-crafted retirement and financial plans.

Medicaid
The portion of long-term care not paid for by individuals and their families is paid mostly by Medicaid, the government funded program for those who are low-income, and most of this funding is for care provided in nursing homes that accept Medicaid eligible patients. Medicaid pays for about half of the aggregate cost of nursing home care1. Medicaid also pays for some limited home and community-based care services.

Many people receiving Medicaid assistance for nursing home care spent down assets on their health care to the point that they became eligible for coverage by Medicaid. Many people erroneously assume Medicaid will automatically finance their future long-term care, should it be needed, only to find out that they must meet strict asset and income eligibility guidelines. It’s also important to note that not all nursing homes accept Medicaid patients, and Medicaid can dictate which beds in a facility are available to Medicaid patients.

State laws differ regarding how much money and assets one is allowed to retain and still qualify for Medicaid. For information on your state, contact your state Medicaid office. For more information on Medicaid in general, click here.

Medicare, Medicare Supplement, Disability Insurance, Health Insurance
Medicare, Medicare supplement insurance, disability insurance, and general health insurance generally will not pay for all long-term care costs.

Long-Term Care Insurance
Long-term care insurance may pay for some or all of an individual’s potential long-term care costs, including home and community-based care, assisted living facility costs, and nursing home charges. Long-term care insurance is still a relatively new type of insurance protection and many policyholders have not reached an age at which they are likely to go on claim and receive benefits. It’s expected that in the years ahead, larger and larger portions of long-term care costs will be paid by insurers who provide long-term care insurance coverage to policyholders.

The purpose of this material is solicitation of insurance. An insurance agent may contact you. Long-term care insurance is issued on policy form series ILTC-5000 and INH-5000 with a state identifier, where applicable and edition date. These policies may have exclusions and limitations.

1NAIC. A Shopper’s Guide to Long-Term Care Insurance. 2009. Page 5.

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