Long-term care is a major concern for many Americans, especially the 70 million baby boomers who are:
- Preparing for retirement
- Already retired or retiring
- Approaching their 80s and beyond, when extra care becomes more likely
About 70 percent of people 65 and older will require some type of long-term care, according to the U.S. Department of Health and Human Services. Long-term care services encompass both medical and nonmedical forms of assistance, including helping people with activities of daily living, or ADL. Examples of ADLs include everyday tasks such as getting dressed or using the bathroom.
Senior citizens in this group of 70 percent need to find healthcare options suitable for them, as well as the means to fund this care. Because healthcare needs vary from person to person, care options abound. Family and friends can provide a lot of long-term care at home. Such care can keep out-of-pocket expenses to a minimum.
However, some people require more comprehensive care. Nursing homes, assisted-living facilities and adult day care centers might better serve the needs of such people. Here are some options for long-term care during retirement that won’t require spending all your savings.
Several types of in-home caregivers offer services to people who want to remain at home and live independently. In-home caregivers include medical professionals, home health aides and home care aides.
Medical professionals include doctors, nurses and physical therapists. Home health aides are more basic health providers such as certified nursing assistants, who can administer prescribed medicine, change bandages or check a person’s pulse. Home care aides do not perform any medical services, but instead help with daily chores, such as cleaning or personal care matters.
The cost of a home health aide or home care aide is about $20 an hour, according to figures from the annual Cost of Care survey by Genworth Financial.
Meal-delivery providers offer another type of at-home care service. The nonprofit organization Meals on Wheels is one such provider that offers seniors free meals. Meals on Wheels has more than 5,000 independently run local operations across the nation.
For those considering moving into a facility, there are several choices. Each type of facility provides its own individual level of care.
The three basic types of facilities are:
- Public housing
- Assisted living
- Continuing care retirement communities
Federal and state programs offer public housing for the low- to moderate-income elderly population. To be eligible, you must make less than $46,000 if single, or $53,000 if married. Some public housing programs include meals, housekeeping, shopping and laundry services.
The Section 202 program is a federally funded housing program focused exclusively on those who are 62 or older. To qualify, you must have a household income that is no more than 50 percent of the area median.
The Section 202 program not only helps with housing but might also include housekeeping, transportation to healthcare and home-delivered meals.
Assisted living facilities offer a group living environment with amenities such as social and recreational daily activities and events, as well as help with personal care.
However, residents must pay for any medical or nursing requirements separately. In these facilities, residents generally have their own rooms and bathrooms, and free use of common rooms. Assisted-living facilities typically cost around $3,628 per month, according to Genworth.
Continuing Care Retirement Communities
Continuing care retirement communities are single campuses or locations that offer a wide range of living options that correspond to the level of care required. Arrangements can range from independent-living units to assisted living and nursing homes.
A CCRC can be an attractive long-term healthcare option for people who want a seamless transition, as they can change levels of care as their personal situation changes.
Residents of CCRCs typically pay a one-time entrance fee, which can be expensive. Depending on the facility, the fee might not be refundable. In addition to the entrance fee, most CCRCs also charge an ongoing monthly fee.
A New Initiative in Residential Long-Term Care
The Green House project is a new initiative aimed at making residents feel like they are living in their own home. Green House homes are generally smaller and are situated in residential neighborhoods. They are also unmarked, so they look like any other house on the street.
For example, there could be 10 or so residents per home, with residents occupying their own bedrooms and bathrooms, but sharing a kitchen and other living spaces.
Smaller residential facilities like this give residents the option to make their own medical arrangements, which incur additional and separate charges.
Paying for Long-Term Care
Paying for long-term care might involve tapping several sources of funding, from Medicare and Medicaid to medical insurance and retirement funds.
People often use their savings or pension to cover expenses. Depending on how much care you need, tapping into your Social Security benefits might be another way to make your monthly healthcare payments.
Both private health insurance and Medicare typically will only cover medically necessary long-term care for a short period of time. Private insurance will not pay for custodial or personal care services at all, but it might help cover Medicare-imposed co-payments or deductibles.
Disability policies are unlikely to provide any long-term care coverage. Healthcare costs associated with assisted living facilities, CCRCs and adult day services are not covered by either Medicare or private health insurance.
What is long-term care insurance?
Long-term care insurance was created to cover comprehensive long-term care costs that traditional insurance usually does not cover. The policy covers various types of care inside your home, including:
- Skilled nursing
- Various types of therapy
- Personal care such as bathing
In addition, long-term care insurance typically covers care in:
- A nursing home
- An Alzheimer’s disease special care facility
- Assisted-living facilities
- Adult day care centers
- Hospice care facilities
The cost of this insurance depends on a number of factors, including your age and the optional benefits you choose. People who already have a poor health status or are receiving long-term healthcare might not qualify for this kind of insurance, as most of these policies are subject to medical underwriting.
The U.S. Department of Health and Human Services recommends a few ways to pay for long-term care insurance, including:
A reverse mortgage is a type of home equity loan that allows you to receive cash against the value of your home while you still own the home and retain the title. Reverse mortgages are only available to homeowners who are at least 62 years old. The home must also be the primary residence of the loan recipient.
An annuity is another out-of-pocket option. Basically, annuities are sold by insurance companies, and offer you a specified monthly income after you make a single premium payment. The two different types are:
Immediate annuity: With this type of annuity, you make a single premium payment and the insurance company sends you a monthly check. You are eligible regardless of health status.
Deferred long-term care annuity: A deferred long-term care annuity is similar to the immediate annuity, except it splits up the payments into two separate funds: one specifically for long-term care and one to be used however the recipient wants. The long-term care portion is available immediately, but the other funds are not available until a specified future date. Deferred long-term care annuities are available to people 85 or younger who meet specific health criteria.