As we age, the cost of maintaining our quality of life increases. Medical costs rise and new services such as in home care may become necessary. While medical care costs are covered by insurance policies, Medicare and Medicaid, in home caregiving costs are not, and instead must usually be paid for out-of-pocket. With a little planning, though, you can make it easier to handle the expense.
In this article we’ll cover several of the methods available for covering the cost of in home care, and next time we’ll describe the rest of the available approaches.
Long-Term Care Insurance
Long-term care insurance (“LTCI”) is one solution for those families who had the foresight to purchase LTCI coverage before care was necessary. Frequent readers of my articles may know that I believe that LTCI companies often make it unnecessarily discouraging, difficult and confusing to file claims for benefits under LTCI policies.
Therefore, it may be surprising to learn that I do recommend that families purchase LTCI insurance at an appropriate time. The best reason for having LTCI insurance is to help avoid draining the life savings of a couple to pay for the care of the first member of the couple that requires care; the LTCI benefits can help avoid impoverishing the well spouse with the care costs of the ill spouse.
Like most insurance, you generally cannot purchase LTCI coverage when you need it, and it costs more when you are older than when you are younger. Well-known personal finance talk show host Dave Ramsey recommends getting LTCI when you are 60, and not before that.
For seniors who own their homes, a reverse mortgage may be an option. With a reverse mortgage, the bank makes payments to the homeowner instead of the other way around. When the owner moves or passes away, the money (plus interest) is repaid to the bank. Reverse mortgages can be a good solution for seniors whose greatest asset is their property and when no other options are available. Compared to other types of loans, though, they can be relatively expensive.
Home equity lines of credit (“HELOCs”) may also be an option, for seniors with equity in their homes and with some form of reliable income. In order to qualify for HELOCs, borrowers need to meet tougher credit tests than for reverse mortgages, but HELOCs often have lower loan initiation fees and other costs.
If your loved one was a veteran, the U.S. Department of Veterans Affairs has a program that may help. Called the Aid and Attendance Program (“A&A”), it is a needs-based program and several conditions that must be met, but those who are eligible may qualify for up to $1,600 towards in-home care expenses.
The most important requirements to qualify to receive A&A benefits are
You are a U.S. military veteran who served at least one day during a time of war.
You must be a person of relatively modest means, with limited assets and income.
Paying for in home caregiving is not an easy task, generally it isn’t paid for by the government, and requires advance planning. By knowing what to expect, though, you will be better prepared by knowing what you can, and cannot, count on to help cover the cost.
We have covered several of the methods available for covering the cost of in home care, and next time we’ll describe the rest of the available approaches.