How To Pay For Long-Term Care: A Comprehensive Guide

Shawn Plummer

CEO, The Annuity Expert

Long-term care, a necessity for many as we age, is an expense that can quickly drain savings and cause significant financial distress. But it doesn’t have to be that way. This guide will help you understand who needs to pay for long-term care, the standard methods of payment, and what happens when finances run dry. In this journey to understand how to pay for long-term care, we will explore options such as nursing home financial assistance, social security benefits, and how Medicare comes into play.

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Understanding the Need for Long-Term Care

Before discussing how to pay for long-term care, it’s crucial to grasp who may need this service. As we age, many of us will require assistance with daily activities such as bathing, eating, dressing, and moving around – these are tasks that long-term care facilities specialize in. However, it’s also not just about the elderly; anyone with chronic illnesses or disabilities may require long-term care regardless of age.

Example: Meet John, a retired teacher diagnosed with Parkinson’s at 65. As his disease progressed, he needed assistance with daily tasks, making long-term care a necessity rather than a luxury.

How To Pay For Long-Term Care

Standard Methods of Paying for Long-Term Care

There’s no one-size-fits-all answer to how to pay for long-term care, but a few standard methods exist.

Long-Term Care Insurance

Long-term care insurance is a policy that covers the costs of care not covered by traditional health insurance, Medicare, or Medicaid. It’s often seen as a financial safety net and can help meet long-term care costs.

Example: Sally, a 60-year-old woman, wisely invested in long-term care insurance in her early 50s. When she developed severe arthritis and required long-term care, her policy covered much of her expenses.


For those with substantial savings, paying for long-term care out-of-pocket is an option. However, given the high care costs, this method can quickly deplete one’s life savings.

Example: Tom, a successful businessman, chose to pay for his long-term care out-of-pocket. However, the high costs quickly depleted his retirement savings.

How To Pay For Long Term Care

What Happens When Money Runs Out?

An inevitable question arises when considering how to pay for a nursing home with no money. Unfortunately, the truth is many senior citizens face this dilemma. Luckily, there are options.


When personal funds and insurance are not enough, Medicaid steps in. It’s the largest payment source for long-term care, and while the eligibility criteria vary from state to state, it generally serves those with limited income and resources.

Example: Mary, a retired nurse, had exhausted her savings paying for long-term care. However, she was eligible for Medicaid, which helped cover her continuing care costs.

Social Security Benefits

Social security benefits can be used to pay for nursing home care, providing a crucial lifeline for many. However, these benefits alone may not cover the total cost of long-term care.

Example: Peter, an elderly widower, used his social security benefits to cover some of his nursing home expenses.

The Role of Medicare in Long-Term Care

Many people wonder, “How does medicare pay for nursing homes?” Unfortunately, Medicare does not typically cover long-term care. It can, however, cover skilled nursing or therapy services for a limited time if you meet specific criteria.

How Much Does Medicare Pay?

The amount Medicare pays for long-term nursing home care depends on the situation. For instance, it may cover a portion of the first 100 days in a skilled nursing facility following a hospital stay.

Example: Susan, who underwent hip replacement surgery, required skilled nursing care post-surgery. Medicare-covered her stay in a skilled nursing facility for the initial period.

Paying For Long-Term Care

Exploring Long-Term Care Financial Assistance

Various long-term care financial assistance programs exist, from non-profit organizations to government assistance, helping to alleviate the financial burden of long-term care.

Example: David, a veteran, accessed long-term care financial assistance through a program specifically designed for veterans, significantly reducing out-of-pocket costs.

Next Steps

Understanding how to pay for long-term care can seem like a daunting task. However, with options like long-term care insurance, out-of-pocket payments, Medicaid, social security benefits, and Medicare, there are multiple avenues to explore. It’s essential to plan early, understand each option, and choose the one that best suits your financial situation and care needs. Long-term care financial assistance is available, and no one should feel alone in this journey. After all, getting the care we need as we age is not just a necessity—it’s a right.

How To Pay For Ltc

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Frequently Asked Questions

How much does Medicare pay for long-term nursing home care?

Medicare typically does not cover long-term nursing home care costs. It may cover limited skilled nursing care for a short period following a hospital stay but not ongoing custodial care.

What is the usual method of paying for long-term care insurance?

Most people use personal income and resources to pay for long-term care expenses, referred to as personal resources.

What is the biggest drawback of long-term care insurance?

One downside of long-term care insurance is that the premiums tend to rise over time, which could be too expensive for some older adults. Moreover, with traditional LTCI, there is no option for a premium refund. This implies that if a senior never need long-term care, the money they put towards the policy cannot be recovered.

Is long-term care costly?

Long-term care can be costly, particularly when required for an extended duration (one year or more). For example, in California, nursing homes charge an average of $290 per day, meaning the yearly cost of care can add up to nearly $110,000.

Why do only a few million people carry private long-term care insurance?

The low number of individuals with LTC insurance is mainly because premiums have increased while the average policy benefit has decreased. To illustrate, the average annual premium for LTC insurance for people aged 55 to 64 has increased from $1,900 in 2005 to $2,600 in 2015.

Can you cash out a long-term care policy?

Long-term care insurance policyholders usually have two choices when cashing out their policy: 1) get a partial refund of the premiums paid or 2) sell the policy through a life settlement for its current market value.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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