Most people do not think much about how to pay for long-term care when they age. Moreover, most only consider it when their parents need long-term care, or when they themselves do. Yet, people over the age of 65 have almost a 70% chance of need some form of long-term care services either now or in the future.
According to PWC, the average of long-term care over the course of a lifetime is $172,000. For this reason, it is important to have a plan. Which means before thinking about how you will pay for long-term care you need to know figure out which options you want to take. Will you want to stay in your own home or move into a care facility? Do you have family members who will contribute financially? Should you consider moving to a more cost-effective area? How are your health conditions? Based on how you answer these question will determine your how you should consider paying for your care and what options are best for you.
Medicare vs. Medicaid
When considering a government assistance program many ask, “what’s the difference between Medicare and Medicaid?” Medicare will only cover up to 100 day in a nursing facility or a short-term rehabilitation or home healthcare. Medicaid on the other hand is only for those who meet the financial qualifications. Financial eligibility varies from state-to-state. If you qualify, Medicaid will cover 100% of the cost of your long-term care. However, not all facilities and home care services accept Medicaid.
Personally Financed Care or Insurance
One of the biggest issues with financing your own care is that you must have enough money in order to do so. Senior care is expensive. The national average cost for a private room in a nursing home was $102,200 annually in 2019. On the other hand, the yearly average for an assisted living facility was about $48,612 and 52,624 for a home health aide. According to experts you would need to have at least 2 years covered in order to consider paying out of pocket for long-term care. However, depending on your health this may not be enough.
If you are not confident in paying out of pocket than another good option maybe long=term insurance. The average annual premium for a 55-year old couple is $3,050, according to the association’s 2020 price index. For a single man, age 55, the average cost is $1,700, while a 55-year-old single female is looking at an average annual premium of $2,650. The initial pool of benefits is $164,000 each and reaches $386,500 by age 85. The only issue with long-term insurance is that while it will cover you care needs the cost can be expensive and you do not know whether you will need to use it or not.
Making the Decision
The decision of how to pay for your long-term care in the future comes down to your situation. Choosing which options are best for you can be difficult. It is recommended that you speak with a professional to help make the process simpler.