Ways to Pay for Long-Term Care - Part 1

Have you ever paid for long-term care? If not, brace yourself. Long-term care is expensive and getting more costly every day. According to the 2021 Genworth survey, care in a semi-private room in a nursing home averages $7,908 per month, with care in a private room averaging more than $9,034 per month.

Do you have that kind of money laying around? Most of us don’t.

According to Chris Bratton, owner of Bratton Law Group, a Life Care Planning Law Firm in the Philadelphia area, there are five ways to pay for long-term care. Medicare is an option for a limited time, but after those benefits have been exhausted, the remaining payment sources include private funds, long-term care insurance, and two public benefit programs. “If you're a qualifying veteran or the spouse of a qualifying veteran, you may be able to receive some VA Pension Aid & Attendance benefits,” Chris said. “For most people who have no other payment sources, Medicaid is the fallback payment method.”

In this article, Chris addresses two potential payment sources: Medicare and long-term care insurance.

Many people make the mistake of thinking that Medicare will foot the entire bill for long-term care. “Medicare will pay for a short period of time,” explained Chris. “The rule prior to COVID was that if you were admitted to the hospital for a period of three days and then entered into a rehab within 30 days for the same reason or condition that you were in a hospital for, then Medicare would pick up the tab for up to 100 days. The first 20 days are paid in full by Medicare and then days 21 through 100 require the patient to pay a co-payment.”

Chris says that people are often surprised when Medicare stops paying well before the 100-day limit. “One hundred days is the maximum number of days Medicare will pay,” he said. “The number of days actually paid is based on your progress through rehab. Once your rehab providers say you’ve reached maximum recovery, Medicare stops paying.”

The next option is to use long-term care insurance if you have it. Though this type of insurance has been widely available for years, Chris says that most of his clients don’t have this coverage. “It’s an expense that they have to budget for, and if people wait too long, the premiums can be come prohibitively expensive,” he explained. “It’s out of reach for many people.”

For those who have a long-term care insurance policy, the threshold to file a claim usually involves a diagnosis of a chronic condition and/or the need for assistance with three activities of daily living. “The contract will spell it all out,” Chris said. “There is usually an elimination period where the client has to pay privately for a time, usually about 90 days. Hopefully, Medicare is covering most of those expenses before the long-term care policy kicks in. The contract will specify what you need in the way of limitations or a diagnosis to file a claim.”

Chris will address the remaining payment options in the second article in this series.