Many Americans seem to have some misconceptions about who pays the bills when elderly people need long term care. Medicare only offers short-term coverage under specific circumstances. Medicaid does pay for nursing care for many American seniors, but this is only after recipients have exhausted most of their other resources. Very few people have enough money to keep paying bills for a nursing home, assisted living facility, or even home healthcare on their own.
How Much Does Senior Care Cost?
According to figures that were published on LongTermCare.gov, American nursing home bills averaged $90,000 a year, and a bed in an assisted living facility cost about half that much. Services at home can vary quite a bit, but they averaged about $21 an hour. It’s easy to see how an expense like this could exhaust the savings of most senior citizens pretty quickly.
Long term care insurance is a type of private health insurance that helps cover these bills. The problem is that these plans have never been standardized, so benefits are confusing for many consumers. Also, it’s often difficult to decide to add another insurance bill to a retirement budget, so long term care has not become that popular in the United States.
On the other hand, many Americans who end up needing senior care do end up exhausting their savings and have to rely upon Medicaid. Having to spend savings and then rely on government programs is the reality for many, but it’s never considered ideal. Most folks would rather save their money for their own use or to pass onto their children and grandchildren.
Is Long Term Care Insurance the Right Choice?
Everybody is different. Some retirees may find that long term care insurance offers them a good value. Some lucky people may even get this type of insurance as a benefit from their jobs, but this isn’t that common. Others might consider an alternative way to plan. For example, some annuities and life insurance policies have features that can help with these expenses. Other retirees may just hold onto their home equity as a way to fund nursing care if it’s ever needed. Couples need to think about the impact of one spouse needing nursing care when the other spouse still can live independently.
Retirement planners need to be aware of the cost of nursing care and who usually ends up paying for it. There may not be one perfect solution for all retirees. However, it’s a good idea to make some attempt to account for this potential expense when making financial plans for retirement.