No matter whether you’re helping parents or planning for yourself, navigating long-term care decisions is often challenging. Let’s take a look at some key considerations to ensure you make the right choices for your needs.
What Is Long-Term Care?
Long-term care may become necessary if you require help with daily activities due to a disability, chronic illness, or age. Through long-term care, you’ll receive a range of support that you need to stay healthy, happy, and safe. Services encompass both medical support and help with daily living activities, like bathing, preparing meals, and dressing.
Types of Long-Term Care
The first thing to think about is what kind of long-term care you’d like to receive. It may be impossible to decide this now (especially if you’re planning for yourself for the future) or you may already know the extent of support the person is likely to need (such as if a parent already has a disability).
The main types of long-term care are (from least to most support):
- Adult day care — The person spends time at the facility during the day to receive health and social services but goes back to his or her own home in the evenings. This may be a good option if a loved one is able to live independently for the most part or if a family member is providing care and wants some extra support during the day, such as if a caregiver still has a full-time job or other responsibilities.
- Home health care — If the person is unable to leave home on a daily basis but doesn’t want to move into a facility, an option may be to use a home health aide. This is suitable for a range of needs, as services are tailored to the individual.
- Assisted living — Moving into an assisted living facility is useful for individuals who want constant access to support services but don’t need full-time medical care. Residents live in private apartments in a community with other people with a similar level of needs.
- Nursing home — Individuals who require round-the-clock healthcare often need to move into a nursing home. This gives them access to full-time medical staff as well as support with daily activities.
To decide which type of care would be suitable, consider factors such as the health status of the person, what kind of daily living activities the individual needs, what kind of support system from friends and family is available, how much you can afford, and personal preferences. If you’re unsure what level of care the person will need, it’s worth thinking about what you would do for all the above options.
Paying for Long-Term Care
Since long-term care is often expensive, figuring out how to manage the financial aspects is key. This involves first calculating how much you’re likely to need to pay and then exploring your options for funding.
How Much Does Long-Term Care Cost?
The cost of long-term care will vary significantly depending on the type of care you choose. The Federal Long Term Care Insurance Program 2021 Cost of Care Survey found that the national average for a nursing home with a private room was $114,975 per year and with a semiprivate room was $100,740 a year. Assisted living facilities were $57,912 per year, a home health aide was $41,120 a year, and adult day care was $24,700 a year. This is an average cost of between $95 and $315 a day.
The Genworth Cost of Care Survey offers a breakdown of the average costs per state, as these also vary widely.
Even if you have enough savings for these expenses for several years, there’s no guarantee that you won’t spend an extended time in long-term care. This could lead you to run out of funds early.
Options to Pay for Long-Term Care
The good news is there are a variety of ways to pay for long-term care.
- Personal funds — In addition to savings, calculate how much you will receive from other sources, such as a pension, a retirement fund, or investments you already have. How much of this would you want to allocate to long-term care? How many years would this last at different levels of care?
- Investments — It’s worth preparing now by acquiring more financial products that will pay for long-term care when you need it. Options include health savings accounts (HSAs), annuities, and trusts.
- Assets — If going into long-term care means moving out of your house, you may have the possibility of selling your house to pay for your care. Another option is to remortgage your home to gain funds.
- Insurance — There are also long-term care insurance policies available that you can use at any time in your life. To pay the least in premiums, take out a policy when you’re as young as possible. Make sure you check the policy terms carefully to determine what type of long-term care it offers and whether there are any limitations.
What Does Medicare Cover?
When you turn 65, you should take advantage of Medicare for the lower costs from health insurance and medical expenses. This also provides some limited long-term care benefits. Plans only give you coverage if you require medical care. This includes if you have a Medicare Supplement Insurance (Medigap) plan.
However, if you qualify for Medicaid, you’ll have a few more benefits for long-term care. You’ll be able to receive health-related services that are unavailable in the community from a Medicaid-certified nursing home. You may qualify for Medicaid if you have limited savings and assets.
Covering the Legal Requirements
It’s important to ensure that your (or your family member’s) wishes are followed. It’s worth talking to a lawyer to ensure you have all the documentation in order in case you’re unable to express these wishes later. There are a few documents you’ll need:
- Advance care plan — This ensures healthcare professionals meet your preferences for medical attention if you’re unable to communicate.
- Power of attorney — You’ll name the person who you want to make healthcare and financial decisions on your behalf if you’re unable.
- Living will — This is less essential than the other two, but it’s still worth considering. It states what you wish if you require life-sustaining treatments.
Talking to Family Members About Long-Term Care Wishes
It’s important to have a discussion with your family about your long-term care wishes — whether these are your own or someone else’s. It’s best to set a specific time to talk to ensure you come prepared, and you must make sure to broach the subject with sensitivity for others’ feelings. Be clear about your wants and expectations to prevent misunderstandings.
You should also set a time to talk again in the future to discuss plans again. This will be important if anything changes in terms of your health status or finances, but also if you change your mind about certain aspects, such as if you’re influenced by experiences of other family members or friends who start long-term care.
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