From the National Institute on Aging
The cost of long-term care can be a significant concern for older adults and their caregivers. These expenses can consume a substantial portion of monthly income, even for those who believe they have saved enough. How individuals pay for long-term care depends on their financial situation and the types of services they need.
Many people assume their current health or disability insurance will cover long-term care, but most of these policies offer limited, if any, long-term care benefits. Consequently, individuals often need to find other ways to pay for these services. They may utilize a variety of payment sources, including personal funds, federal and state government programs, and private financing options.
The Eldercare Locator
The Eldercare Locator can help you find resources in your area, including in-home help and transportation, and can provide information about paying for care. Visit the Eldercare Locator online at www.eldercare.acl.gov or call 800-677-1116.
Personal Funds
Many older adults cover the cost of long-term care with their own money, known as personal or “out-of-pocket” funds. This may include personal savings, pensions or other retirement funds, income from investments, or proceeds from selling a home.
Initially, family and friends often provide personal care and other services, such as transportation, at no cost. However, as the needs increase, paid services may become necessary.
Older adults frequently pay out of pocket for adult day care programs, meals, and other community-based services that help them stay in their homes. In some cases, these services are offered for free or at a low cost by local governments and nonprofit organizations. Professional care in assisted living facilities and continuing care retirement communities is almost always paid for out of pocket. In some states, Medicaid may cover certain costs for eligible individuals. More information on Medicaid and other government programs can be found below.
LongTermCare.gov offers details about long-term care needs and available benefits. Visit the Costs & Who Pays page to learn more about the costs of long-term care, who pays for services, what insurance covers, and self-payment options.
Older adults may qualify for some government health care benefits. Caregivers can assist by learning about possible financial aid sources and helping older adults apply for appropriate assistance.
Several federal and state programs assist with healthcare-related costs. Over time, the benefits and eligibility requirements of these programs can change, and some benefits vary by state. For the most recent information, check directly with the individual programs.
Government Programs
- Medicare
- Medicaid
- Program of All-Inclusive Care for the Elderly (PACE)
- State Health Insurance Assistance Program (SHIP)
- Department of Veterans Affairs (VA)
- Social Security Administration Programs
Private Financing Options
In addition to personal funds and government programs, several private payment options are available, including long-term care insurance, reverse mortgages, certain life insurance policies, annuities, and trusts. The best option depends on many factors, including the person’s age, health status, and financial situation.
Compensation for Family Caregivers
Family caregivers often make significant sacrifices to care for older, sick, or disabled relatives, with some even quitting their jobs to provide full-time care. Caregiving involves many costs, such as travel expenses, bill payments, and household essentials, which can create a considerable financial burden.
Many states offer compensation for family caregivers, but laws, eligibility, and funding for this support vary by state. The most common source of assistance is Medicaid, which provides several state-based programs for eligible individuals based on income or disability. These programs include home- and community-based services, adult foster care, and Medicaid personal care services. For more information, contact your state Medicaid agency.
Veterans and individuals with certain diseases may also qualify for financial assistance through federal and state agencies or private organizations. Information is available through the Eldercare Locator or by calling 800-677-1116.
Long-term care insurance often covers care at home. However, policies differ regarding who can deliver that care. In some cases, only professional services are covered, while in others, family members can be paid to provide care. Check with your long-term care insurer for the specifics of your policy.
