Who Pays for Long-Term Care?

You may think that Long-Term Care services are covered by your Health Insurance, Disability insurance or Medicare... Unfortunately, that's usually not the case!

Who Will Actually Pay for Long-Term Care Services?

  • Not Health Insurance : It is designed to cover acute care medical expenses, illnesses or injuries like cancer, a broken arm, or a stroke. It will pay the hospital bills you incur for a stroke, but it won't pay for any long term assistance you may need once you go home, such as help dressing or using the bathroom.

  • Not Disability Insurance: It is designed to replace the income you lose if you're unable to work. Disability benefits can help you pay your mortgage or normal household expenses, but it won't provide additional benefits for long-term care services.

  • Medicare:Many people mistakenly believe Medicare will cover their Long-Term Care costs. Although Medicare does provide health coverage for those over age 65, it provides limited Long-Term Care coverage. In fact, in 2000, only about 14 percent of all Long-Term Care expenditures were covered by Medicare. (1)

    • Medicare will pay the cost of some skilled care in an approved nursing home or in your home but only in specific situations. This benefit will only cover if a medical professional says you need daily skilled care after you have been in a hospital for at least three days and you are receiving that care in a nursing home that is a Medicare-certified skilled nursing facility. While Medicare may cover up to 100 days of skilled nursing home care per benefit period when these conditions are met, after 20 days beneficiaries must pay a coinsurance fee. In 2008, that fee was $128.00 per day (2).

    • Medicare does not pay for costs of care in an assisted living facility, homemaker services, home health aides to give you personal care unless you are homebound and are also getting skilled care such as nursing or therapy. The personal care must also relate to the treatment of an illness or injury and you can only get a limited amount of care a week.

  • Medicaid will cover the cost of some types of Long Term Care, but to qualify, a person must meet Medicaid's strict income and asset eligibility requirements. See your state's guidelines. Some people consider simply reducing their assets in order to meet Medicaid's eligibility requirements. Unfortunately, once a person goes on Medicaid they lose control over what care services they receive and where they receive them. Only certain facilities accept Medicare patients, and they may not be close to your family or friends. You also may find that many of the facilities that accept Medicaid patients are not as nice as private-pay facilities.

  • Long-Term Care Insurance is another way you may pay for long-term care. This type of insurance will pay for some or all of your long-term care. It was introduced in the 1980s as nursing home insurance but has evolved and now covers, nursing home, home care, assisted living facilities, etc. Long Term Care insurance allows the insured to pay an affordable premium to protect an unaffordable catastrophic event.

  • Paying With Cash: If you have a sizable net worth, this may be an option. Keep in mind that the average cost of an average stay in a nursing home is nearly $168,985 (3) , and nearly half of all nursing home residents run out of money and qualify for Medicaid within the first year (4).

(1) "Long Term Care: Aging Baby Boomer Generation Will Increase Demand And Burden On Federal And State Budgets," U.S. General Accounting Office, March 21, 2002)

(2) Centers for Medicaid and Medicare Services, Medicare & You 2008 Guide.

(3) MetLife Mature Market Survey, October 2007.

(4) "Long Term Care: Your Financial Planning Guide," Phyllis Shelton, 2003.

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