5 Ways to Pay for Long Term Care

Long term care is one of the most expensive costs that you may encounter later in life. For most, it creates a financial hardship and forces difficult decisions by family members. Understanding your options can help you better prepare now for potential future needs. Here are 5 ways to pay for long term care in Massachusetts.

1 – Long Term Care Insurance

Long-term care insurance is sold by some health insurance providers and is one of the best ways to pay for long term care. Similar to life insurance, the premium is more expensive the older you are. Therefore, it’s beneficial to purchase it at a younger age. Additionally, be sure to purchase one that is “guaranteed renewable,” which means the policy cannot be cancelled by the insurance company. You may renew it each year by simply continuing to pay the premium. Some life insurance companies offer a life insurance policy with a long-term care rider, also known as a “hybrid policy”. If funds are needed for long term care, they are paid by the insurance company. When the insured dies, the death benefit paid out to the beneficiaries is reduced to the extent of funds paid for the insured’s long-term care, if any..

2 – Health Savings Account

Health Savings Accounts are offered by most employers. It allows you to set aside money from your paycheck, pre-tax, towards medical and dental expenses. As of 2019, the federal limit is $3,500 per year for individuals and $7,000 per year for households. Since unused funds can be rolled over each year, you can potentially use it for future medical expenses including long term care.

3 – Veterans Benefits

If you served in the military for at least 90 days during wartime, you and your surviving spouse may be eligible for assistance for long term care from the US Departments of Veterans Affairs. Applications must be submitted for approval. Visit va.gov for additional information.

5 – Medicaid (i.e. MassHealth)

You may receive assistance with long term care costs if you qualify. It’s important to note that qualification criteria is strict in Massachusetts. You must have limited financial assets and certain MassHealth programs have income limitations as well. The rules are different for single and married applicants and there are transfer penalties associated with certain types of asset transfers that can prohibit you from qualifying.

4 – Personal Assets

Given the strict qualification for Medicaid, most people instead must resort to paying for long term care from their personal savings and liquifying other assets such as cars and homes. Preparing for the possibility for long-term care with a good retirement and estate plan can alleviate this burden later in life. Speak to a financial planner about how to include long-term care in your overall plans.

Summary of Ways to Pay for Long Term Care

Unfortunately, long term care is often something that we don’t think about until we need it. By understanding the ways to pay for long term care noted above, we hope to get more people thinking about and planning for what could be a major expense.