When Senior Loved Ones Need Long Term Care at Home: Financial Options

Aging in place — more than a buzzword, it’s a way of life for millions of older adults.

Many Americans, perhaps even you, wish to remain at home for as long as safely possible. However, to remain in the home of one’s choice, many senior adults will require personal care as functional abilities decline.

We often talk about the need to make homes and communities ready to accept aging in place older adults, but we need to consider how we can support seniors as they age in place and assist them to be financially ready to make this dream a possibility.

There are a variety of options to help pay for some or all of the costs associated with senior care services needed in the home, including accomplishing daily activities such as housekeeping, transportation, escort to medical appointments and shopping,; personal care tasks such as dressing, bathing, toileting, etc., pet care, meal preparation, errands, companionship, medication reminders, memory care and other important needs. Your senior’s nest egg alone may not be adequate to cover the costs associated with aging in place.

Programs to Help Get Long Term Senior Care in the Home

  1. Long term care insurance (LTCI): an insurance plan you purchase if qualified that provides personal care generally not covered by other types of health insurance such as Medicare and Medicaid. A person generally has to be in good health when obtaining the insurance and there are conditions which must be met in order to qualify. These conditions are getting more rigorous and the costs increasing. LTCI usually includes expenses of home care, assisted living, adult daycare, respite care, hospice care, nursing home and Alzheimer’s facilities. It often pays for a visiting or live-in caregiver, companion, housekeeper, therapist or private duty nurse up to seven days a week, 24 hours a day (up to the policy benefit maximum). LTCI can be expensive. It can’t be canceled once begun by the insurance company except for non-payment and is guaranteed renewable for the person’s lifetime. The National Association of Insurance Commissioners caution that a senior should not pay more than 7% of their income for LTCI.
  2. Long term care service contract: not an insurance plan but rather a contract for the provision of care. Covered services include companionship, overnight care, assistance with activities of daily living such as grooming, bathing, toileting, household chores provided by a home senior care agent, friend or family member who is cleared by the company to provide care. A monthly fee is paid by the senior upon entering the contract. There are no health questions, eligibility requirements or age limits. There are maximum allowed services and a short waiting period to obtain services once enrolled. You can opt into the program before services are required as a hedge in case of emergent need. Different levels of service are available depending on the required needs but come with an increased price point.
  3. Personal Services Contract (PSC): agreement made with family members who provide care in the home for an aging loved one to offset the personal and financial costs to providing this care such as reduced work hours. The expenses paid to a family member under this contract are considered legitimate for the Medicaid or VA benefit “spend down” process. If care and money are given from an elder to a family member without a contract, it is considered “love and affection” and could result in a penalty from Medicaid and may have to be paid back by the family member. A PSC has become more prevalent and has been considered by Medicaid to be a way to spend down assets, allow an elder to remain at home longer and transfer assets to a family member without penalty. This should be done with the consultation of an elder law attorney.
  4. VA Aid and Attendance: If eligible, a veteran can receive an additional monthly pension amount under the Aid & Attendance (A&A). Apply through your VA benefits center. You may qualify if one of these conditions applies to you.
    1. You require the aid of another person in order to perform personal functions such as bathing, feeding, dressing, attending to the wants of nature, adjusting prosthetic devices, or protecting yourself from the hazards of your daily environment.
    2. You are bedridden, in that your disability or disabilities requires that you remain in bed.
    3. Your eyesight is limited to a corrected 5/200 visual acuity or less in both eyes; or concentric contraction of the visual field to 5 degrees or less.
  5. Life Care Funding:  an alternative option to a lapse or surrender of an in-force life insurance policy.   This plan allows a life insurance policy owner the ability to convert their life insurance policy into a Long Term Care Benefit Plan instead of abandoning their policy to qualify for Medicaid.  Some seniors abandon their life insurance policies due to inability to pay once funds have been “spent down” in order to qualify for Medicaid. This conversion option pays market value on the life insurance policy which can then be used to extend the time a person remains private pay and delays their entry onto Medicaid. Once in the plan, payments can be made to a long term care facility, assisted living facility, memory care, hospice or in home care. This plan is available in every state. It also preserves a portion of your senior’s benefit to pay for funeral costs and any remaining balance is paid to the family after death.

Help Loved Loves Make the Best Decision for Them

As with any legal and financial considerations that you and your senior make, it is always best to learn as much as you can. Seek advice from experts working only for you, not trying to sell something.

Keep in mind there is no one fits all plan when dealing with long term care planning and aging in place strategies. Each plan should be investigated thoroughly to be sure it will meet the financial budget of a senior as they age, provide the senior care that may be needed now or in the future, and satisfy all laws and regulations for everyone’s protection.

You should also consult with an elder law attorney who is knowledgeable in the needs of aging loved ones and can advise you and your senior on an appropriate course that will meet your needs.

Do you have any experience with one of these plans that you can share?

6 thoughts on “When Senior Loved Ones Need Long Term Care at Home: Financial Options”

  1. My grandmother recently passed away but she had Alzheimer’s for many years before that. Luckily, she had a long term care insurance policy from years back so we were able to pay for her at home care with the insurance. Before her mental and physical abilities declined she was very secure with a medical alert button from Alert1. It was an affordable and easy way to bring her peace of mind, without having a full time caretaker before she needed it.

    • Karen, thank you for sharing and great news for your family that your grandmother’s long term insurance was so helpful in allowing her to stay home as she progressed in her illness! We hope you keep stopping by to get more information and share with our community!

  2. I agree with what you have said on last paragraph – “it is always best to learn as much as you can” and to seek for an advice from an expert in the field of long term care insurance. It is always best to gather information and explore for more choices. Like there are a lot of long term care insurance policy options, check out each before deciding which best fits you.

    • We agree Criselda. There are many options for financial planning for aging healthcare needs and they should be fully explored to be sure you are finding the best option. Review each type of LTC insurance policy as well as other financial planning options to be sure they can provide what may be needed when the time comes. Keep in touch with Senior Care Corner as we seek more information to pass on to help everyone learn more!

  3. Thanks for the share. Another option that I heard of are life settlements. I have always thought they were used for things like getting money for money for cancer treatments but from what I have heard more and more seniors are choosing this method to pay for care. Thoughts?

    • A life settlement plan is when you sell a life insurance policy for more than its cash surrender value but less than its death payout value. Many older adults are using the money for current care since those needs supersede later benefits that they consider no longer a priority. It might be a beneficial option for many seniors, thanks for sharing Mike!

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