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When you think about the possibility that you or someone you love may need long term care, one of the first questions that probably comes to mind is: How on earth am I going to pay for it? There’s no getting around the fact that long term care, whether at home, in an assisted living facility or in a nursing home, can be a huge expense. Many people consider three main options when planning for the expense of long term care.
The Do-It-Yourself Route
In some cases, family members and friends may be able to help with some of the care you need — preparing meals, providing transportation, helping to keep track of medications, doing housework and other tasks.
If you end up needing more full-time or specialized care, family members might not be able to provide it. Family caregivers may suffer from “burnout,” when they feel overwhelmed or just need a break from the stress of taking care of a loved one’s needs.
When professional long term care is what you need, one option is paying with your own resources — your savings, work income (if you’re still able to work) or Social Security payments. The problem you may run into is that you might end up needing care for longer than you had expected, or need more comprehensive and costly services over time. Some people may need to use funds they were hoping to pass along to their children, just to pay for long term care. So it’s worth thinking about your other options, and planning accordingly.
Help From Government Programs
Many people assume that long term care is covered by Medicare or Medicaid. In fact, Medicare generally provides for long term care if it is part of a rehabilitative plan or skilled care. Many services may only be covered in certain settings, under certain conditions and for limited periods of time.
Medicare may cover some kinds of skilled care at home or in a nursing home — if your doctor says they’re medically necessary. Medical equipment such as wheelchairs or oxygen may also be covered in certain situations.
What Medicare doesn’t cover are custodial services like bathing, dressing, eating, getting in and out of bed and using the bathroom — which can be a big part of long term care. So while Medicare can be a useful tool in paying for long term care, it’s not a sure thing in every situation.
Medicaid, on the other hand, does cover long term care, including custodial services at home or in a nursing care facility. However, Medicaid only pays after you meet eligibility requirements, including significant restrictions on income and assets1.
Using Private Insurance
There are a few ways private insurance can be helpful in paying for long term care. The first one that probably comes to mind is private health insurance. Unfortunately, long term care typically isn’t covered by traditional health insurance plans.
But there are two other kinds of insurance that can be useful.
First, there’s long term care insurance. As the name suggests, this is insurance that’s specifically designed to help cover the cost of long term care if you need it. Policies vary by provider and location, but generally you have the option to buy a policy that covers facilities only (care in nursing homes, assisted living or hospice facilities) or a comprehensive policy that covers both facility services and other services, like home and community-based services, respite care and others.
Some insurance companies, including Massachusetts Mutual Life Insurance Company (MassMutual), also offer hybrid policies that combine a life insurance policy with long term care benefits. This kind of policy lets you accelerate a portion of the death benefit to help pay for long term care.
Keep in mind that there’s a clear advantage to buying insurance coverage at a younger age. You are more apt to be healthy and qualify for coverage. And generally speaking, premiums are lower at younger ages for both life insurance and long term care insurance.
Making It Work
Some people use a combination of approaches — help from family, paying out of pocket, Medicare or Medicaid and private insurance — to pay for the long term care they need. Understanding your options and having a plan in place won’t make long term care any more affordable. But it does take some of the financial anxiety out of the equation, so you can focus on your health and happiness instead.