Given the fact that 70% of Americans over the age of 65 will require some form of long term care in their lifetime, it is shocking that few seem to plan ahead. Those who do not plan for the possibility of requiring nursing home or assisted living care may be stuck paying the bills out of pocket.
A 2015 Genworth cost of care survey breaks down the costs of long term care by the type of care. Below are a few highlights:
- Annual cost of adult day care: $20,800
- Annual cost of home health aides: $46,904
- Annual cost of single room assisted living: $39,000
- Annual cost of a nursing home with a semi-private room: $90,703
- Annual cost of a nursing home with a private room: $99,098
The Genworth survey highlights the fact that seniors cannot wait until it is time to move into a nursing home to think about how they will pay for their care. Paying out of pocket is simply not practical for most – especially seniors living on a limited income. Luckily, there are a few ways to avoid going broke paying for care.
Medicaid is a great tool to pay for nursing home care, however it requires careful planning. There are many legal strategies to qualify for Medicaid benefits that an elder law attorney can utilize. Be careful however – gifts to children or a charity can result in a Medicaid penalty if they were made in the last 5 years.
Long term care insurance is another option to avoid paying for care out of pocket. If insurance is purchased while relatively young and healthy, premiums are more affordable. Also, there are now long term care plans that include life insurance. This means that if you do not use the insurance (a 30% chance), then the money will be paid back as a life insurance benefit. Essentially, the money is never “wasted”.
Both Medicaid and long term care insurance require careful planning. Meet with a qualified elder law attorney to discuss all your long term care options.