Funding Long Term Care For Seniors Four Options

When it comes to funding long-term care, or “LTC,” many seniors are woefully unprepared. Astonishingly, nearly 75 percent of single Americans will spend their entire life savings on care within one month of entering a long-term care facility, according to the Virginia Cooperative Extension (2009).

Whether you’re nearing retirement age, or just want to plan for the future, budget for funding long-term care now. Assisted living costs are on the rise, and a financial plan can help you avoid financial disaster later in life. Here are four ways to pay for your long-term care.

Option #1: Medicare and Medicaid

Medicare and Medicaid don’t pay for long-term care based solely on age or inability to care for your activities of daily living. These agencies only pay for home health care, skilled nursing care and other medically necessary services.

If you’re in relatively good health—but unable to care for yourself due to age alone—Medicaid or Medicare won’t cover assisted living costs. However, Medicare or Medicaid may be an option in special circumstances, such as if a preexisting medical condition necessitates day-to-day assistance.

Option #2: Personal Savings

Many Americans find that their personal savings don’t hold anywhere near the amount needed to pay for their LTC costs. In fact, most people burn through the money that they’ve saved in one month in an assisted living facility. After that, the financial burden is left to family members.

With recent economic developments, savings accounts and retirement plans are more depleted than ever, leaving seniors and their families in financial distress. Unless you’ve saved enough to pay the high costs of long-term care, this option isn’t ideal.

Option #3: Reverse Mortgage

A reverse mortgage or a property sale may be a wise option for funding long-term care. After all, if you’re entering an assisted living facility, you may no longer need the property in which you’ve built equity.

Be aware, however, that falling property values and an unsteady economy may have reduced the amount of equity in your home. Before relying on a reverse mortgage or home sale to finance your long-term care, have your home appraised so that you have a good idea of how much money you can expect to receive.

Option #4: Long-Term Care Insurance

Long-term care insurance, sometimes called “nursing home insurance,” is one of the best available options for funding long-term care in an assisted living facility. With a long-term care insurance policy, you pay a monthly premium, and the insurance company agrees to pay for an assisted living facility up to a certain coverage amount per year or per day.

These relatively low-risk policies dramatically lower the financial burden of long-term care. While some expenses may not be covered, the price of care will be much lower than if you don’t have this type of insurance.

When it comes to long-term care, consider your options carefully. Your goal is to finance your care as thoroughly as possible, without leaving a large expense for your family members. In today’s economy, you can’t rely solely on Medicare or Medicaid for this; you may need a private long-term care policy to ensure that your financial needs are adequately met.


Medicare. (2009) Paying for long-term care. Retrieved October 29, 2010, from

Virginia Cooperative Extension. (2009). Long-term care insurance.Retrieved October 29, 2010, from