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Q&A: How do you pay for long-term care?

We hear from families and caregivers every day as they try to manage the care for loved ones while attempting to navigate health and long-term care options to meet their needs. Many of their concerns are based on the high costs of caring for relatives or friends who can no longer care for themselves. Few families can afford the ongoing expense of in-home care, assisted living, or, especially, nursing homes, which now approach $100,000 per year in some parts of the country.

Long-term care in the U.S. is confusing, there is no doubt about it, and trying to sort through the elements and options can be stressful. But there are some resources to help. Here’s a selection of frequently asked questions that we receive, along with recommended sources for further information.

Q. I am confused about the difference between Medicare and Medicaid. Will either program help my 64-year-old mom, who has Parkinson’s disease?

First, let’s clarify some concepts: long-term care for adults traditionally refers to nursing home care, assisted living, and home- and community-based services such as in-home care for people with chronic or disabling disorders such as stroke, traumatic brain injury, diabetes, Parkinson’s or Alzheimer’s disease. Long-term care services are specifically for people who can no longer manage daily activities such as dressing, bathing, eating and medication management, or who might need 24-hour supervision and/or nursing care.

In the United States, families, not institutions, provide most of this care, and in many cases, they pay out-of-pocket for some or all the expenses. Standard health insurance policies do not cover long-term care.

To help you determine if assistance is available for your mother, you’ll need to find out if she’s eligible for any state or local community services, in addition to Medicare/Medicaid.

Medicare and Medicaid are federal healthcare programs (Medicaid is both federal and state). Both offer a variety of services and have different requirements.

Medicare is the health insurance program for people age 65+ and those with disabilities. It is mostly concerned with acute care, to cover such things as hospital stays, doctor visits, medications and diagnostic tests. Under certain circumstances, Medicare may pay for limited skilled nursing facility care or rehabilitation. Fees for Medicare are covered by taxes and taken out of monthly Social Security checks, with additional premiums, co-payments and deductibles.

Medicaid is a free or low-cost program designed to help low-income families, and may cover both acute and long-term care. It will help pay nursing home expenses in certain facilities for those who qualify (states are not required to use Medicaid to pay for assisted living but some do.) People may qualify for Medicaid after they have “spent-down” their assets. In the case of a couple, the spouse not needing care is entitled to retain certain limited assets so as not to be completely impoverished as a result of paying for their a spouse’s care. Some people, labeled “dual eligibles,” qualify for both Medicare and Medicaid. For a summary of eligibility requirements for Medicaid, click here.

For more detailed information, and to find out which programs might be applicable, check these websites and organizations:

Q. Should I buy long-term care insurance to cover future expenses?

Whether or not to purchase long-term care insurance (LTCI) is not a clear-cut decision. Long-term care insurance is one way to pay for a variety of services used by people with disabilities or chronic illnesses. It may cover in-home care, community programs such as adult day services, assisted living and nursing home care.

Long-term care insurance is sold privately by insurance companies. While this insurance might be the answer for some families, for others it can be unaffordable, inaccessible, or too late to provide assistance. Premium costs are fairly high and vary greatly depending on the age and health status of the purchaser, the benefits covered by the policy and other factors. Some policies have loopholes that disallow certain types of assistance, or have a long waiting period.

Like most insurance, LTCI is something of a gamble. The purchase must be made before you actually need the coverage. It’s possible to be paying monthly premiums for years — even decades — for coverage you never use. Often, people first purchase LTCI in their 50s or 60s, but most people utilizing coverage are in their 80s. Approximately 4 percent of seniors reside in nursing homes; a higher percentage stay only for a short time or need in-home care or assisted living. For those with lower incomes, Medicaid may pay the cost of a nursing home.

Every family’s situation is unique, and there is no single answer to whether you should purchase long-term care insurance. Before you make the decision — and ideally before you speak with a sales person — educate yourself on the basics of LTCI. You may wish to talk to a financial planner about your personal situation.

To find out more about the risks and benefits, visit:

Q. My father has Alzheimer’s. My parents don’t have a lot of money, but they’ve lived in their home for 35 years and they’ve built up a lot of equity. My mom is thinking about selling the house but hates the thought of moving. Should they get a reverse mortgage instead to pay for care for my dad?

Reverse mortgages provide you with tax-free cash by tapping into the equity in your house without requiring that you sell or move out. Funds from a reverse mortgage may be used for any purpose, and do not have to be repaid as long as you remain living in the home. You must be age 62 or older to qualify, and you may receive the funds as a line of credit to be accessed when needed, as monthly income or as a lump sum. The funds do not affect your Social Security income.

For many people, this is one way to pay for long-term care expenses. Fees are high, however, and you must be careful not to exhaust the funds, especially if you choose to take a lump sum. This decision will also affect your heirs, since it takes away from the final sales proceeds of a home. Because this can be a complex financial move, counseling prior to getting a reverse mortgage is required.

For additional information on reverse mortgages:

Q. I quit my job to take care of my mother, so now I have no income. Is there a way I can get paid for providing her care?

Very few programs will pay family members or friends to provide care on a regular basis. Sometimes, caregiving families can obtain some financial relief for specific purposes, such as for respite care, to purchase goods and services or for certain home health services.

For example, the Family Caregiver Support Program (FCSP), a federally supported program under the Administration on Aging, provides services to help ease the financial burden of caregiving to a person 60 years and older. This program is available through your local department on aging. Services include information and assistance; counseling and support groups; education and training; respite care to give you a break; and supplemental services, including the purchase of consumable supplies, emergency response systems and home modifications.

Also, national disease-specific organizations, such as CancerCare, may offer grants or other financial assistance to people with the disease and their family caregivers. For more information about disease-specific organizations active in your area, as well as other programs, click here and select your state.

If funds allow, some families decide that the main caregiver — often an adult son or daughter — will be paid directly by the parent who is ill, or by a sibling or another family member. When this is the arrangement for care, we recommend drafting a Personal Care Agreement. This Agreement is a written contract that spells out responsibilities and salary. If changes in care need to be made, the agreement can be revised.

Your state may offer additional support programs for family caregivers. In certain cases, Medicaid (which may go by a different name in your state) may pay family members who provide care to Medicaid recipients.
We suggest that if possible, before you quit your job, explore any and all options, because you will not only lose your employment income and possibly your health insurance, you will reduce future Social Security income or other retirement benefits as well.

For information about the services your state provides to family caregivers and the benefits for which you or your family member may be eligible, see:

Q. My wife has cancer and really needs help during chemotherapy. I’m afraid I’ll lose my job and wind up unemployed if I take time off work to care for her.

The Family and Medical Leave Act (FMLA), a federal law, provides certain employees in all states up to 12 weeks of unpaid leave per year to care for themselves, a sick family member (limited to a spouse, child or parent), or a new child without losing their jobs or health care insurance. Note that this law applies only to companies with 50 or more employees and that an employee must have worked at least 52 days full-time or 1,250 hours during the previous year before taking FMLA leave.

In addition, some states have laws that expand leave protection. For example, they may include care for relatives who are not covered by FMLA, such as grandparents, siblings and in-laws. Other states have programs that continue to pay workers part of their wages while they take time off to care for an ill family member.

For additional information on family leave policies, see:

More Information & Resources

Eldercare Locator
Locate Area Agencies on Aging and other resources

National Association of Professional Geriatric Care Managers
3275 West Ina Road, Ste. 130
Tucson, AZ 85741

Lotsa Helping Hands
A website to help you create, organize and stay in touch with your family, friends and care community.

Residential Care Search
Listings by geographic area:

Long-Term Care Options Explored on PBS NewsHour:

More Helpful Publications from Family Caregiver Alliance:

About Family Caregiver Alliance

Family Caregiver Alliance
National Center on Caregiving
785 Market Street, Suite 750
San Francisco, CA 94103

Family Caregiver Alliance (FCA) offers an extensive online library of free educational materials for caregivers. The publications, webinars and videos offer families the kind of straightforward, practical help they need as they care for relatives with chronic or disabling health conditions.

Family Care Navigator is FCA’s online directory of resources for caregivers in all 50 states. It includes information on government health and disability programs, legal resources, disease-specific organizations and more.

Residential Care Search: listings by geographic area

Helpful FCA Publications:

Community Care Options
Hiring In-Home Help
Legal Planning for Incapacity