Getting older means having to evaluate the needs of yourself or a loved one in case someone needs long-term care. Assisted living and nursing homes can be expensive. Here are some insurance options and ideas to help you figure out an alternative for paying for long-term care instead of having to cover it out of your own pocket.
Long-Term Health Insurance
Even though turning 65 years old can be a celebratory milestone, it can also be the time to start thinking about long-term health insurance. Roughly 50% of people who live past 65 will at some point find themselves in a nursing home or assisted living community, so it’s essential to decide on this type of insurance early on. As one might suspect, the older you get, the more expensive it will be to buy into this type of insurance. The monthly costs can range in the hundreds, making it something that needs to be budgeted for. Many advisors recommend buying long-term care insurance earlier rather than later in life.
Medicaid for Qualifying People
There are programs in which Medicaid will pay for long-term care like nursing homes, but only for qualifying individuals. People who have no assets or are in a very low-income bracket are the ones who can take advantage of a nursing home paid for by Medicaid, but it also may not be the best accommodations available. Even though this is not an option for everyone, it is still good to be aware of. Sometimes as people get older, they give away their assets to their children or other relatives in order to qualify for this free care.
Sell Your Life Insurance Policy
If you have a life insurance policy, you can sell it off and use the money for anything you need, including long-term care expenses. This is an option if you do not have long-term health insurance and do not qualify for Medicaid coverage. This option may not leave your beneficiaries any money after your death. Another thing to consider is you may have to pay taxes on your policy if you cash it out.
Purchase an Annuity
Like having the foresight to buy long-term insurance when you are younger, purchasing an annuity is another option that can help you plan for the future. While annuities can be rather costly upfront, the monthly checks down the line can help pay for your long-term care if you need them. And if you do not have a life transition that requires living in another facility, the annuity payments can still provide you a supplement for daily living expenses.
Use Living Benefits on a Life Insurance Policy
Some life insurance policies permit you to use a portion of the funds while you are still alive for medical expenses or long-term care. This is an excellent option if your policy offers it, but keep in mind, it will deduct from your overall funds once you pass away. Some companies require circumstances like a terminal illness to use a portion of your funds, so be sure to read the small print ahead of time and know the limitations.
Save For Your Long-Term Care
While this option might not be possible for many, it is still a way to ensure that your needs are met if you reach a point where you need long-term care. By saving your own money, you will not have to pay a company for insurance you may not end up using. Your own savings may also give you more choices in a nursing home than what might be provided through Medicaid.