How to Keep Long-Term Care Costs From Ruining Your Finances

Even though Americans are now living longer and in better health than ever before, studies show that 75% of people aged 65 and older will at one point need some form of long-term care.

Unfortunately, the costs of this type of care keep rising year by year. Surveys suggest that many Americans are neither adequately educated about the expenses related to long-term care nor are they prepared to carry to the financial burden it entails. For example, according to a study conducted last year, the annual cost of a private room in a nursing home reaches more than $97,000, which translates into more than $8,000 a month. In-home health aide, providing assistance 44 hours per week, costs about $49,000 a year.

Because governmental insurance programs such as Medicare do not cover all of the expenses related to long-term care, the financial impact of it may heavily strain a budget of virtually any family, quickly draining savings and effectively ruining its finances. Therefore, due to a high likelihood that you or your family member may require long-term care at some point in the future, it is important to start preparing for it now. In this blog post, we present a few suggestions on what your family can do to anticipate future long-term care costs. Some of the advice given in this post may also apply to those who already find themselves in a long-term care situation and face concerns that it will quickly consume all their funds.

1) Consider buying long-term care insurance

In exchange for regular premiums, an insurance company commits to cover a part of the economic liability of your future long-term care. Although it’s an additional expense in your monthly budget, long-term care insurance may provide a measure of financial security in the long run. However, it is important to note that long-term care insurance policies set a specific limit on the daily cost of care the insurer will cover. Therefore, it is important to consider the costs of desirable long-term care and compare different insurance policies against it. Some other factors to look for in a long-term care insurance policy is inflation adjustment (the costs of long-term care rise each year and your benefits must keep up) and the shortest possible elimination period (the time before your policy starts covering your expenses).

2) Minimize your expenses when on retirement

Trying to spend less once you reach the retirement age may help you allocate additional funds towards long-term care. While this may seem challenging at first, there are many ways to minimize the expenses when on retirement. For example, most retirees no longer live with children so moving to a smaller house or a condo may result in lower living expenses – and the additional income can be set aside to pay for long-term care in later years. Similarly, moving outside the city to the area with lower taxes and more affordable housing options can be another solution to save up additional money with long-term care in mind.

Similarly, minimizing the expenses is also a vital way of ensuring that you don’t quickly run out of money if you or a family member find yourself in need for long-term care for which you haven’t had a chance to adequately prepare.

3) Rely on in-home care for as long as possible

As mentioned at the beginning, in-home care is considerably less expensive than care in a nursing home. Because of that, depending on the type of in-home care a person needs, it may be covered in full by long-term care insurance. It is also a reasonable solution for those who already find themselves in a long-term care situation but fear that their funds may quickly run dry if they relocate to a nursing facility.

4) Use Medicaid planning

Sadly, due to costs of long-term care constantly rising, many find themselves unable to cover the expenses of care services provided either at home or in a nursing home. Medicaid is a governmental program that does cover the expenses of both in-home care and living in a nursing facility. However, it is a need-based program which means that in order to be eligible for it, a person must have virtually no income and very insignificant personal assets. Still, in many cases, it is possible to qualify for Medicaid while keeping personal assets or by transferring them to somebody else. A qualified elder law attorney will be able to assist in finding a suitable solution in such circumstances.

Attorney Luis Barreto has helped hundreds of senior citizens every year to make important decisions regarding their financial security. If you or your family member are currently facing a financial challenge related to long-term care, do not hesitate to contact us. Our legal team will carefully analyze your financial situation and advised on the best possible course of action in your circumstances. For a free initial consultation with an elder law lawyer, contact Luis E. Barreto & Associates, P.A. today.

Written by Luis E. Barreto

Luis E. Barreto

Luis is a probate and guardianship litigator with over 23 years of experience in the field. Determination of heirs, will contests, breaches of fiduciary duty, removal of personal representatives, guardians and trustees are just some of the types of litigation he addresses. In addition, he administers non-contested estates and guardianships.