Paying for Long Term Care Without Insurance

Paying for Long-Term Care without Insurance

(The pros and cons of using your hard-earned money for long-term care)

Paying for long term care without insurance

Thinking about long-term care can feel like it’s a long way out. But it’s never too soon to think about the rest of your life. After all, if you were to find yourself disabled tomorrow and in need of assisted living until you pass away, could you afford it? 

Long-term care can be a complicated subject, and while we’ve previously addressed the most common questions about long -term care, today we’re diving into the best way to pay for it. Is it out of pocket? Is it through insurance? Does the government provide assistance? An independent insurance agent can answer all of these questions and more. But first, let’s talk about the pros and cons of paying for long-term care without insurance. 

What is Long-Term Care?

Long-term care means providing assistance and services for an extended period of time to someone who is unable to complete daily tasks on their own. There are a variety of long-term care services, but the most common include:

  • Adult day healthcare
  • Assisted living
  • Home health aide services
  • Homemaker services
  • Nursing facilities

People often correlate long-term care with the elderly, but a healthy young adult can end up needing long-term care after a debilitating disease diagnosis or extreme injury. 

Can I Pay For Long-Term Care Without Insurance?

If you can afford to pay for long-term care without insurance, no one is going to stop you. The biggest factor is simply being able to afford it. Depending on the reason you need long-term care and the length you need it for, it can get costly.

Retiree confidence on having enough money for long-term care in retirement

Do I have enough money in long term care for retirement

Only 15% of people who are retired believe that they can afford long-term care out of pocket. That’s not surprising when you look at the annual cost of long-term care services in the US.

Here's a look at the cost of long-term health care in the US

Here's a look at the cost of long term health care in the U.S.

Whether you’re in need of in-home care, assisted living, or a nursing home, you can expect to pay anywhere between $20,000 and $105,000 a year for care. 

If you’re planning for long-term care from an early age, and make a good living throughout your life, it’s possible to save up enough money to pay for long-term care without insurance. However, if you’re in need of care before expected, or are unable to save a decent amount of money when you’re young, looking into long-term insurance is a safer bet. 

What Are the Disadvantages of Paying for Long-Term Care without Insurance?

The most obvious downside to paying for long-term care without insurance is the impact it will have on your bank account. However, there is more to consider than just the cost.

Long-term care doesn’t necessarily mean you’re paying for yourself. Often times, people need to pay for long-term care for a loved one. At this point, you may be put in the position to have to make difficult choices. 

Let’s look at a scenario. You’re a healthy working adult in your 50s getting ready to retire when all of a sudden your mother gets sick and is in need of long-term care. She never purchased insurance, doesn’t qualify for Medicaid or Medicare, and now it’s up to you and your family to pay the bills. Essentially you’re faced with a variety of very difficult choices.

  • Do you honor your mother by taking care of her in her last years, or do you pay for your children’s college tuition?
  • Do you take care of your mom or tell your daughter she can’t have the wedding she wants?
  • Do you take care of your mom or maintain your own retirement strategy? 
  • Do you take care of mom or travel the way you always hoped in retirement years?
  • Do you take out a second mortgage in order to take care of mom? 

Hopefully, you see where we’re going with this. Whether you’re paying for long-term care for yourself or a loved one, doing it out of pocket can result in a lot of sacrifices, emotional decisions, and posterity.  

Will the Government Pay for Long-Term Care? 

We’ve all heard of Medicaid and Medicare, and if you’re uneducated on what they are, you may think that it’s a big chunk of money waiting to be claimed that will pay for all of your medical bills and needs when you’re old. This would be a large misunderstanding.

Percentage of Americans Covered by Medicare

Percentage of Americans covered by Medicare

In 2018, only 17% of Americans qualified for Medicare. However, this number is more than the 15% of Americans who were covered by Medicaid.

Percentage of Americans Covered by Medicaid

There are complex rules when it comes to qualifying for Medicaid and Medicare and what they will cover. For example, Medicaid will pay for custodial care in nursing homes and at home, while Medicare will not. 

Every state has its own rules and guidelines for who qualifies for Medicaid or Medicare. Once you qualify, the state still has to determine if you qualify for long-term care. To make a long story short, don’t rely on the government to pay for long-term care. Educate yourself on your state’s laws and whether you may qualify for government funding past retirement. 

Can I Purchase Insurance after I Need Long-Term Care?

The short answer is maybe. Whether you qualify for long-term care insurance after you’re already in need of care depends on your preexisting conditions. 

Accepted preexisting conditions

  • Diabetes
  • High blood pressure
  • Nicotine/Tobacco Use
  • High cholesterol

Conditions for automatic long-term care decline

  • You need help with: eating, bathing, dressing, transferring, toileting and incontinence.
  • You’re using using a walker, wheelchair, motorized scooter, or cane
  • You are on kidney dialysis, nebulizer, or ventilator or oxygen
  • You are using narcotic pain medications
  • You are receiving disability benefits
  • You are in physical therapy

Source: http://www.altcp.org/long-term-care-insurance-pre-existing-conditions/

In addition, long-term insurance plans will not accept your application if you’ve been diagnosed with any of the following conditions:

  • AIDS/HIV+
  • Alzheimer’s
  • ALS or Lou Gehrig’s disease
  • Cancers of bone, brain, esophagus, liver, pancreas, or stomach
  • Cirrhosis of the liver
  • Congested heart failure
  • Cystic Fibrosis
  • Dementia
  • Chronic kidney disease
  • Metastatic cancer
  • Multiple Sclerosis
  • Muscular Dystrophy
  • Organ transplant (except kidney or cornea)
  • Paralysis
  • Parkinson’s disease
  • Scleroderma
  • Schizophrenia
  • Transient Ischemic Attack (TIA) within two years, or more than one TIA

While the cost of long-term insurance varies greatly depending on your age and situation, here’s a look at the possible range of costs in a few different scenarios.

Scenario:

Individual female/male
Aged 55
$100 day, 2-year multiplier$1,406.57 annual premium
Individual female/male,
Aged 65
$100 day, 2-year multiplier$2,232.95 annual premium
Couple, aged 55$100 day, 2-year multiplier$1,939.36 annual premium
Couple, aged 65$100 day, 2-year multiplier$2,676.74 annual premium

Who to Speak with about Long-Term Insurance

If you’re debating whether long-term insurance is worth it, take a moment to chat with an independent insurance agent. Seeing as long-term insurance is sold through life insurance companies, with an independent insurance agent you can be sure you’re speaking with an expert.

An agent can discuss your financial situation, future goals, and provide insight on whether long-term insurance is a good decision for you.

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http://www.aaltci.org/long-term-care-insurance-rates/

http://www.altcp.org/long-term-care-insurance-pre-existing-conditions/

https://www.genworth.com/products/care-funding/long-term-care-insurance/ltc-insurance-calculator.html

https://longtermcare.acl.gov/medicare-medicaid-more/medicaid/index.html