Long-term care – care in a nursing home or at home -- may be paid for in four main ways:
- Out-of-pocket. If you have sufficient resources, you can pay for your long-term care needs with money you have saved.
- Medicare. Medicare covers short-term nursing home stays after an illness or injury that requires hospitalization. Medicare covers up to 100 days of "skilled nursing care" per illness.
- Medicaid / MassHealth. If you have limited resources, Medicaid, administered by MassHealth in Massachusetts, will pay for nursing home care. In order to be eligible for Medicaid benefits a nursing home resident may have no more than $2,000 in "countable" assets (it may be higher in some states).
- Long-term care insurance. With long-term care insurance, you pay monthly premiums to buy a policy that pays your long-term care costs if you are admitted to a nursing home or need home care (depending on the policy).
Another factor to consider is your family’s health history. Most nursing home stays are short-term and paid for by Medicare. A common reason for needing extended long-term care is dementia. If you know you have a family history of Alzheimer’s disease, for example, it may make more sense to buy insurance.
Of course, we never really know what the future may bring. Long-term care insurance is like any insurance policy: we don’t know if we will ever need it. In general, long-term care insurance is something to consider if:
- you have the resources to pay the premiums, even in retirement,
- you want to preserve your estate for your heirs, and
- you don’t have enough money to self-insure.