The costs of long term care can be financially devastating to the individual who needs long term care and their family. The 2013 Genworth Survey of Long Term Care Costs reports that the average cost of nursing home care in the United States is approximately $75,000 a year. The average cost of assisted living care is nearly $45,000.00 a month. The average cost of in-home care provided by home health aids is $41,000.00 a year. Merrill Lynch recently published its Family & Retirement: The Elephant In the Room survey, which indicated that only 30% of Americans think they will need long term care services, when, in fact 70% of Americans will need long term care services.
With the average income of a retiree around $36,000.00 a year, few can afford the costs of long term care without planning and help. Because of the costs of long term care and the lack of ability for many to pay, family members end up providing the vast majority of long term care at great costs to themselves, their own families and their careers.
Even in the face of these striking statistics, every day, I meet with families forced to grapple with the staggering costs of long term care and few have ever considered it, much less discussed it. This failure to discuss the issue, is probably the most stressful thing. After all, if a family knows a parent is going to fall short in paying for long term care, they can make plans to address it. However, when families fail to discuss the issue until a loved one is in an expensive facility and the bill comes due, the crisis often overwhelms them.
One of the easiest ways to start this conversation is to ask yourself: How will I pay for my long term care? Then, look at your own answer.
The following is a list of ways in which long term care is most commonly paid for or provided.
Income: Income is the money that is periodically received from a regular source. Examples include:
1) Social Security; 2) Pension; 3) Retirement Benefits; 4) Investments; 5) Military Benefits; 6) Annuity Payments; 7) Dividends; 8) Rental Income; 9) Trust Income; and 10) Spousal Support.
Your Personal Assets: These are the assets that you own in your name or jointly with a spouse. Examples include:
1) Savings; 2) Retirement Accounts; 3) Real Property other than the family home; 4) Family Home; 5) Surrender Value of Whole Life Insurance Policies; and 6) Business Interests including those you may have in a family business.
Long Term Care Insurance. This is a specific type of insurance purchased before an individual knows he/she will need long term care that covers the costs of long term care services. These services usually consist of custodial care services. Long term care insurance usually pays for these services only after an individual needs the services for a certain period of time, meets certain medical criteria, and has been verified by a doctor to need the services. This coverage is often limited to a certain amount per day or for payment for particular services. The coverage limitations are set forth in the long term care insurance contract.
Family Resources: These are resources provided by your spouse, children, grandchildren or other family members. Examples include:
1) Direct care provided by a family member. This is when a family member provides actual care to you. It can include providing meals, managing medications, transportation, assistance with activities of daily living, and supervision for your safety.
2) Payments for long term care services. This is when a family member, such as a child, pays for some or all the costs of your long term care with their personal income or assets.
Public/Government Benefits: These include programs that either provide actual caregivers or pay for caregiving services. Many are means tested, which means you must have assets and income below certain set caps. Examples include:
1) Medicare. This is a health insurance program that provide health care coverage to those age 65 or older or who are disabled and have worked the requisite amount of time in their lives. Medicare pays for very little long term care. However, it does pay for limited rehabilitation in a nursing homes or in-home therapy.
2) Medicaid. This is a means-tested program that pays for the costs of long term care in a skilled nursing facility or, in some special circumstances, in the individuals home. Individuals who receive Medicaid must be below certain asset and income limits as well as meet certain medical criteria. Medicaid recipients are limited to using providers that accept Medicaid as payment for services and they may be responsible for paying part of their income as their “patient responsibility” for their care.
3) Veterans Benefits. These are benefits provided through the Veterans Administration. These benefits are based on the veteran’s service, discharge status and, in some cases, their assets and income. These benefits are summarized at the VA web site. In addition to monetary benefits, the VA also provides health care, nursing homes and domicilaries, for veterans.
If you and your family are grappling with the costs of and payment for long term care services, there may be help available from places and entities you have not considered. An elder law attorney can help you find solutions for paying for these high costs.
