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Long-term care costs in our area are very high. And, in some respects has increased dramatically in 2020. The rise in the cost of care was due in part to increased costs caused by the COVID-19 pandemic.
For example, in 2020, the median cost of assisted living facilities grew 6.5%, the median cost of home health aides grew 4.35 % and the median cost of a private nursing home room grew 3.57%. As a result, many individuals are left wondering, how can they afford the increase. And more worrisome, how can they afford long-term care expenses overall if/when they need it.
Ways to Pay for Long-term Care Costs
There are three ways to cover your long-term care costs:
- Private Pay
- Long-term Care Insurance
An individual may choose to spend down their own monies on their care. This is often not an option for most individuals since long-term care costs can be very expensive. For example, in our area, the cost of nursing can be as much as $15,000 per month, and in some cases more.
Long-term Care Insurance
An individual may choose to purchase long-term care insurance, in advance of any illness or disabling event, to fund any long-term care they may need in the future. Long-term care insurance is a policy that an individual takes out, that often provides a daily benefit rate that will payout if a person requires long-term care. If approved, the individual can opt to have coverage for Nursing Home Care, Home Care, and Assisted Living. The individual will go through an underwriting process to make sure they are eligible. Each policy is different. In some cases, long-term care insurance may not be an option due to prior medical conditions, or in some cases, the premiums may be cost-prohibitive for the individual.
Another option is accessing the Medicaid system to cover your long-term care costs. Medicaid is a government program, that if certain financial criteria are met, can be utilized to cover a person’s long-term care. Long-term care coverage by Medicaid may extend to home care, nursing home care and in limited circumstances, assisted living. Medicaid can be a valuable source of long-term care coverage. Therefore planning in advance is important to make sure you can meet the financial criteria for eligibility.
We recommend that you meet with a qualified Elder Care attorney to obtain information and discuss what plan is right for you and your family.