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Learn About Long-Term Care

Long-term care in a nursing home is NOT covered by Medicare.

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Nursing Homes Cost About $75,000 a Year*

You Don’t Need an Additional $75,000

1 in 2 Americans age 65 can expect to spend at least 1 year in a nursing home.

If you’re in a nursing home

  • That $75,000 covers all your living expenses.
  • Social Security, pensions, and other continuing income will cover at least part of the cost.

To cover the additional cost, you have 3 options

  • Use your savings or cash from your house.
  • Buy insurance.
  • Go on Medicaid.

* Costs vary widely from state to state. Source: MetLife Mature Market Institute. 2010. Market Survey of Long-Term Care Costs.  Click HERE for a useful tool on costs in your state from Genworth Financial.

Should You Pay Out-Of-Pocket?

Should You Use Reserves or Your House?

Long-term care could require hundreds of thousands of dollars, depending on the additional cost and number of years needed.

  • If you are single and own your home, you could sell it should you need to move into a nursing home.
  • It’s more complicated for couples.  If one spouse needs moderate care, the other can often provide it.  But should that spouse need nursing home care, the other still needs a home to live in and much of their income for current expenses.

Should You Buy Insurance?

Less than 15% Have Long-Term Care Insurance

You can buy private long-term care insurance to help cover the cost.

  • Premiums are about $200 a month per person for a policy bought at age 65 that pays up to $60,000 a year.*
  • But you could be charged a higher or lower amount, based on your medical history, state of residence, and other factors.
  • And your premiums could rise in the future, if the insurance company’s costs are more than expected.

* National Clearinghouse for Long-Term Care Information, “Long-Term Care Insurance Costs and Receiving Benefits,” Washington, DC.

Should You Rely on Medicaid?

This is What Most People Do

Medicaid, the state-run government program for those with “limited means,” does cover long-term care — for those with limited means.

  • If you are willing to exhaust your “means” should you need to enter a nursing home, usually at the end of life, you don’t need to hold savings or your house in reserve or buy long-term care insurance.  
    • If married, many states also allow a spouse to keep the house + about $100,000, should you or your spouse need care.
  • If you only rely on Medicaid, your nursing home options could be significantly limited.  
    • Once in a home, however, most will accept Medicaid payments should you run out of funds.

Make a Plan

To Address the Risk of Needing Long-Term Care

Until you do, it’s hard to make a retirement plan. 

Long-term care in a nursing home is the only significant expense you’ll likely face down the road.  So to plan for retirement, you need to decide

  • Will you buy insurance? If so, you need more income to pay the monthly cost.
  • Will you rely on savings and home equity? If so, how much do you need in reserve?
  • Will you rely on Medicaid? If so, how might you protect your spouse (if married)?

Only then can you figure out a retirement income plan – how to use your savings and house to get the monthly income you need, not just now but for the rest of your life. 

So make a plan, and do it now.  If you put it off, you’ll likely put it off again.  And if you don’t make a plan you

  • Might not afford the care you want.  
  • Deplete the savings you or your spouse will need down the road.  
  • Hold more than you need in reserve and live on less than you otherwise could. 
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