Easing the Financial Burden of Long-Term Care

Providing senior care for a loved one can be overwhelming both emotionally and financially. According to the 2009 Genworth Cost of Care Survey, median annual costs for various types of senior care in the Bay Area can reach burdensome levels:

Adult Day Care - $20,410 annually - based on eight hours a day, five days a week.
In-Home Services - Assistance with activities of daily living, including dressing, personal hygiene, bathing, etc. - $52,634 annually, based on 44 hours a week.
Assisted Living Facility -$39,960 annually - private one-bedroom
Nursing Homes - $82,125 - semi-private, and $102,018 - private, annually

I hear stories daily from adults regarding the financial challenges associated with providing their aging parents with assistance. Such assistance may be provided at home, assisted living facilities, residential care homes or nursing homes. As they go through the process, seniors commonly say, "I do not want to be a burden on my kids as I age." I've highlighted below some of the options that will help pay, fully or partially, for needed assistance or care:

Medicare/Medi-Cal
Most private health insurance plans follow the same general rules as Medicare. If any long-term care is covered, it is usually for only skilled, short-term and medically necessary care. Homecare is limited only to medically necessary skilled care. Custodial or personal care is not covered by health insurance. The coverage in a skilled nursing facility must follow a hospital stay and is limited up to 100 days. If you meet Med-Cal's financial eligibility status, you must select a skilled nursing facility that accepts Medi-Cal.

Long Term Care Insurance
Long-term care insurance could be the best investment one can make. Unless medically necessary, you can avoid skilled nursing facilities by residing at assisted living facilities, residential care homes or at a home with the needed in-home care. This type of insurance makes it much easier to cope with most otherwise uncovered health issues as you get older.

Long-term care insurance should be as important as your healthcare insurance, life insurance and homeowner's insurance. Generally, long-term care is needed for conditions that cannot be cured or healed, and for helping people with routine activities such as dressing, bathing, transferring, continence care, toileting and eating. Long-term care insurance extends for a long period of time, covering care for various types of dementia, including Alzheimer's disease. Long-term care insurance, which can reduce the burden from your family and your peace of mind, should be a very serious consideration.

Life Insurance
There are various ways you can use your life insurance to help pay for long term care, including accelerated death benefits, viatical settlements and life settlements.

Accelerated Death Benefit - An accelerated death benefit is a life insurance death benefit paid in cash in advance, tax free.
Life Settlements - Life settlements give you the ability to raise cash by selling your life insurance policy at its present value. The proceeds may be used for any reason including paying for long term care.

Viatical Settlement - This settlement allows you to sell your life insurance policy to a third party and use the money your receive to pay for your care. This option is only possible if you are terminally ill.

Veterans Aid and Attendance
The aid and attendance pension benefit offered by the Department of Veterans Affairs may be available to wartime veterans and surviving spouses who have in-home care or who live in assisted living facilities or nursing homes. The current monthly benefit can be up to $1,948.

Though there are minimum qualifications, I have listed the prerequisites for review below:
*Served in the military during time of war, or spouse.
*Have less than $80,000 in investments excluding home/car. Note: There are other options still to consider if this wasn't checked.
*Monthly income less than the monthly cost of care including prescriptions.Need help from others in one or more of activities of daily living.
*If surviving spouse, married to the veteran at the time of death.
*Have sufficient resources to pay for care while awaiting a decision from the VA - may take up to four to 12 months.

As you can see, while providing senior care for your loved one may be emotionally and financially challenging, there are a variety of available options to substantially ease the burden.