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Sage Advice: Paying for Long-Term Care

ElderPride Contributor, Hazel Bridges offers some sage advice in planning for Long-term care. Here's what Hazel has to say:

Paying for Long-Term Care Costs Medicare Doesn’t Cover

Two out of three seniors will become physically or cognitively impaired in their lifetime. When an impairment makes it impossible for an adult to carry out daily activities such as washing and dressing themselves, they require some sort of long-term care. While many people assume that their long-term care needs will be covered by Medicare -- the federal health insurance program for American seniors -- the truth is it only covers custodial care under specific circumstances. Seniors have to figure out ways to pay for their long-term care needs themselves.

Reverse Mortgage

Seniors who own their own home have an advantage when it comes to funding long-term custodial care. A reverse mortgage is a type of mortgage that allows homeowners to borrow cash against the value they have accumulated in their home. Their intention is to help adults over 62 fund their retirement without giving up the title to their home. After the homeowner passes away, their beneficiaries can then sell the property to pay off the lender. A reverse mortgage is a great option for seniors who do not qualify for insurance and do not have the liquid cash available to self-insure for their long-term care. Among the cons of a reverse mortgage are the implications to one’s estate. If you take out a reverse mortgage on your home, the remaining equity in the property will decrease with time. If you need even more cash to fund long-term care costs, you may want to consider selling your home (you can find home-value estimates online).

Long-Term Care Insurance

Long-term care insurance is a specific type of health policy that fully funds a senior’s long-term care needs. These insurance policies have monthly premiums, but they provide options and a sense of security when it comes to covering out-of-pocket expenses that come with home care, assisted living and nursing homes. Long-term care insurance covers all of the basic daily needs of an incapacitated senior over an extended period of time. However, those who have long-term health insurance are few and far between. According to the American Association for Long-Term Care, only approximately 8 million people have this protection.

Health Savings Account

Many Americans open a health savings account (HSA) as a way to save for medical costs while reducing taxes. Some employers make HSAs even more desirable by matching contributions. Funds kept in an HSA can be used tax-free to cover everything from acupuncture to x-rays. Additionally, those with HSAs can withdraw money to cover the costs of long-term custodial care or even long-term care insurance premiums. Contribution limits for HSAs change from time to time, but families can put upward of around $13,000 a year into their account tax-free. Best of all, that money can be withdrawn for reasons other than health care; it will simply be subject to taxes at that point.

Life Insurance Options

Those who have an existing life insurance policy can check with their agent to see if adding a rider that covers the costs of long-term care is a feasible option. Adding a rider means the policy holder can enjoy accelerated benefits and use a portion of their death benefits to cover the costs of in-home care, assisted living facilities, or a nursing home. A rider will increase life insurance premiums by about 5 to 10 percent, but that still may be a more affordable option compared to long-term care insurance. Those who do not want to add a rider but still own a life insurance policy can also consider a life settlement where they sell their policy in exchange for a lump sum that can pay for long-term care when it is needed. If you’re unable to locate your policy or unsure if you have life insurance, you can try to find your policy by looking through old bills, bank statements, and other paperwork. If that doesn’t work, you can contact past employers or put a call in to your state’s insurance commissioner’s office.

The majority of seniors will need long-term care at some point, yet many are unaware that Medicare will not pay for these services. Instead of leaving the burden of paying for assisted living on your family, look into options that cover the costs Medicare will not. Reverse mortgages, long-term care insurance, health savings accounts, life insurance riders, and life settlements are all workable options that can protect your finances.

Hazel Bridges is the creator of, a website that aims to provide health and wellness resources for aging seniors. She’s a breast cancer survivor. She challenges herself to live life to the fullest and inspire others to do so as well.

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