Savvy Senior: Ways to pay for long-term care without insurance or savings

Dear Savvy Senior,

What types of financial resources are available to help seniors pay for long-term care? My 86-year-old mother will need either an assisted living facility or nursing home care in the near future, but she doesn’t have long-term care insurance and her savings are minimal.

Searching Daughter

Dear Searching,

The cost of assisted living and nursing home care in the United States is very expensive. According to the Genworth cost-of-care survey tool, the national median cost for an assisted living facility today is over $4,600 per month, while nursing home care runs more than $8,100 per month for a semi-private room. (See Genworth.com/aging-and-you/finances/cost-of-care.html to look up costs in your area.)

Most people pay for long-term care (LTC) – which encompasses assisted living, nursing home and in-home care – with either personal funds, government programs or insurance. But if your mom is lacking in savings and has no LTC insurance to cover her costs, here are your best options to look for funding. 

Medicaid (not Medicare): The first thing you need to know is that Medicare -- the government health insurance program for seniors 65 and older and those with disabilities -- does not cover long-term care. It only provides limited short-term coverage, up to 100 days for skilled nursing or rehabilitation services after a three-day hospital stay.

Medicaid, however, (the joint federal and state program that covers health care for the poor) does cover nursing home and in-home care. But to be eligible for coverage, your mother must be very low-income. Her countable assets can’t be more than around $2,000, including investments. (Note that most people who enter a nursing home don’t qualify for Medicaid at first but pay for care out-of-pocket until they deplete their savings enough to qualify.)

There are also many states that now have Medicaid waver programs that can help pay for assisted living. To get more information on Medicaid coverage and eligibility, call your state Medicaid office (see Medicaid.gov). You can also check your mom’s Medicaid eligibility at MedicaidPlanningAssistance.org.

Veterans benefits: If your mom is a wartime veteran, or a spouse or surviving spouse of a wartime veteran, there is a benefit called Aid and Attendance that can help pay toward her long-term care.

To be eligible, your mom must need assistance with daily living activities like bathing, dressing or going to the bathroom. And her yearly income must be under $15,816 as a surviving spouse, or $24,610 for a single veteran – after her medical and long-term care expenses. Her assets must also be less than $138,489 excluding her home and car.

To learn more, see VA.gov/geriatrics, or contact your regional VA office, or your local veterans service organization. Call 800-827-1000 for contact information.

Life insurance: If your mom has a life insurance policy, find out if it offers an accelerated death benefit that would allow her to get a tax-free advance to help pay for her care.

Or consider selling her policy to a life settlement company. These are companies that buy life insurance policies for cash, continue to pay the premiums and collect the death benefit when she dies. Most sellers generally get four to eight times more than the policy cash surrender value.

If she owns a policy with a face value of $100,000 or more and is interested in this option, get quotes from several brokers or life settlement providers. To locate some, use the Life Insurance Settlement Association member directory at LISA.org.

To look for these and other programs in your area that can help pay your mom’s long-term care, go to PayingForSeniorCare.com and click on “Find Financial Assistance for Care.”