As we get older and become frailer, we may find ourselves needing help with everyday activities that’s as simple as getting dressed, eating, or getting in and out of bed. Even if we’re healthy, accidents may necessitate assistance with such activities. This assistance is called long-term care (LTC) and can be provided at home, in an assisted living facility, and in nursing homes. But LTC services aren’t cheap. The average annual rate for nursing home care (semi-private room) is $88,348, and costs continue to surge.1 While having a long-term care insurance (LTCI) policy may be the best option to cover the costs, it may not be feasible for everyone. Fortunately, there are other ways you can fund LTC:
1. Annuities. An annuity combined with LTC benefits can deliver a lifetime income stream that increases in the event of an LTC need for additional financial protection.2
2. Life Insurance. A whole, term, or universal life insurance policy can all be converted into a LTC benefit account. During this conversion, the policy ownership is transferred to an entity that acts as a benefits administrator, who assumes all responsibility for paying the monthly premiums.3
3. Health Savings Account (HSA). You can tap into HSA assets to pay for future LTC costs. Funds in an HSA rolls over year to year and withdrawals are tax-free if used for qualified healthcare expenses, including LTC and LTCI premiums.4
4. VA Benefits. If you’re a veteran or spouse to one, there are many different benefits programs available through the U.S. Department of Veterans Affairs. Veterans and their spouses are entitled to receive financial aid known as the Veterans Affairs Aid and Attendance Pension Benefit or A&A benefit, which can be used to pay for LTC.5
5. Medicaid. Under the reality that many Americans are simply living longer, this strategy becomes more viable the closer you are to running out of money. The government assesses income and asset levels when deciding who qualifies, so once total assets are low enough, Medicaid will kick in. However, it should be noted that private insurance will likely provide a better quality of life.6
The expenses of LTC may be reality for many of us in the future, but there are a multitude of options. It’s never too early or too late to think about LTC, so make sure to include it as part of your retirement plan.