How to Pay for Long Term Care Costs
There are several ways to pay for long-term care. This article discusses the methods you can use to finance your long term care needs.
There are so many possible ways to pay long term care based on your personal needs. Below are the solutions in paying for long-term care:
Self Insure – This is so far the most expensive way of paying LTC. This is often used by people who wish to exhaust their assets and qualify for Medicaid in return. However, it is not advisable to use this method because it can drain your assets. People work hard to accrue great money and assets to live a fancied lifestyle, so using the personal savings for long-term care doesn’t make sense at all.
Medicare/Medicaid – Medicaid/Medicare is a publicly funded program aimed at helping the poor. Medicaid follows strict qualifications in determining the recipients of the program. Many Americans protest on the strictness of Medicaid for long-term care including the asset limitation. To become eligible, your asset should be at poverty level or $2000 total cash assets and your estate is subject for state recovery. Also, Medicaid decides where you stay and who will provide care for you. Those circumstances are not favorable for seniors who wish to lead a dignified elderly life.
Commercial Long Term Care Insurance – There are reputable companies throughout the country offering competitive policies designed for individual needs. Nowadays, insurance companies are attracting younger people for LTC coverage to ensure their elder care and protect their assets. Financial experts advise people in their late 40s and 50s to start buying policies to safeguard their assets than wait until the cost becomes much expensive or they become insurable.
The type of policy that can be purchased from the insurer depends primarily on the age and health history. It is important to discuss with your insurance agent your health history and personal needs to identify the policy that will work best for your interest.
Group Plans – These are designed to provide much affordable plans to members of association, normally between the employee and employer. Some commercial insurance may offer discounts on individual policy when he/she is included in the group insurance of the same company or organization.
Group plans are underwritten by commercial companies. Group plans normally have restrictive benefits and higher deductibles versus the individual plan. It may be non-tax qualified, meaning you pay tax on benefits but the premiums are not tax deductible. Otherwise, the insured may lose some of the options or benefits if he/she resigns.
Life Insurance with Long Term Care Rider – This plan is pricier compared to the long term care insurance. The initial premium and death benefit determines the total amount of monthly LTC payment. The death benefit should be drained first to get the LTC, and then the rider continues to pay the benefits. Any death benefit not covered for LTC will be given to the beneficiaries.
Corporate Benefits – Small business may enjoy the benefits from multi-life discounts provided with simple underwriting. There are also executive LTC programs, voluntary employer programs and association plans available.
Reverse Mortgage – This is not a substitute for long term care insurance since you must live in your house. The amount of benefits depends on the borrower’s age, the FHA maximum lending limit, and current interest rates. This is an option for people with low or insufficient incomes.
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