Edited by: David Atashroo, MD.

Apr 12, 2023

According to LongTermCare.gov, did you know that 70% of individuals over the age of 65 will require long-term care in their remaining years? As a caregiver, it's important to understand that the cost of long-term care can be staggering, with some regions seeing the average cost of a private room in a nursing home exceed $100,000 per year. Without proper planning, these expenses can quickly deplete your savings and jeopardize your family's financial security. By taking proactive measures, however, you can optimize your time and savings, and ensure that you're prepared for the costs associated with long-term care. With this in mind, it's crucial to begin planning as early as possible and to seek guidance from financial and healthcare professionals to develop a comprehensive strategy that's tailored to your unique needs and circumstances.

While most people will need long term care at some point in their life, very few know how to prepare for and fund their family members’ care. The goal of this article is to help caregivers combat the risks of going through a long term care event through a comprehensive list of 9 long term care strategies that will optimize your time and savings, as well as help you to avoid painful surprises.

1. Understand Your Loved One’s Personal Risk Factors

Do you have a loved one with chronic or acute medical conditions? If so, it's important to understand that when planning for long-term care, the risks and costs vary greatly from person to person. For example, someone with an exceptional medical history and no predisposition to diseases or injuries will require different care than someone with Alzheimer’s or dementia. These conditions require additional assistance and specialized care, which can increase the cost of long-term care by as much as $1,000 per month, according to Paying for Senior Care. By understanding your loved one's medical history and personal risk factors, you can proactively manage any potential risks and better prepare for the care they may need in the future.

For example, let's say person A is someone with an exceptional medical history, who is not prone to any diseases, conditions, or injuries. They are in other words: in perfect health, while person B suffers from a recent onset of Alzheimer’s and dementia.

Because Person B has these conditions, they will require additional assistance and specialized care such as Memory Care. According to Paying for Senior Care, the cost of Alzheimer’s care in assisted living communities “is approximately $1,000 more each month”. Therefore, person B must set aside a greater amount of money to account for the care they will need in retirement, while person A will not.

It is important to keep your loved one’s medical history in mind when planning for long term care, as certain illnesses, injury, disease, and conditions will play a defining role in the type of care you need, and its cost. Certain risks have the potential to increase your loved one’s cost of care and narrow their options depending on if they will require special services or accommodations.

In order to proactively manage any risks your loved one is prone to you should:

Do a deep dive through their medical history and consult their physician. You should track their personal history, as well as other relatives’ because some conditions, such as Huntington’s and some cancers, are inheritable and have the potential to affect your loved one.

1. Look for risks that have the potential to alter the care they need as they age. This may include hip or knee injury, increased risk of Alzheimer’s or dementia, diabetes, stroke, arthritis and heart or respiratory disease, Goldencare.com.
2. Once you have identified their risk factors, look for care that will best accommodate your loved one’s needs and possible medical events. This search may include specific facilities, in-home care, or additional services your loved one may need access to in the future.
   

Once you understand the personalized care your loved one may need, you will gain a better understanding of the costs your family must plan for, and how much money to set aside. Your loved one’s individual risks will also help you to understand how early they will need long term care and for how many years.

Understanding your loved one’s personal risk factors will allow you to fully prepare for the long term care they will require, as your family can account for additional costs and set a plan that will allow you to set money aside ahead of time, rather than being thrown into crisis mode when risks become reality.

2. Identify the Type of Care That Will Best Serve Your Loved One

There are many types of long term care, and certain types will be a better fit for your loved one based on what they would like to get out of long term care. There are five basic types of long term care that you should consider:

1. Independent Living Communities
2. Assisted Living Communities
3. Nursing Homes
4. Residential Care Homes
5. Home Care
   

Many of these types of long term care provide similar services, but differ greatly based on price and the lifestyle your loved one would like. Independent living communities often allow for independence and choice, as they provide their residents with many living options. The website Explore Retirement Living shares that independent living communities are specially known for “congregate care, retirement villages, 55+ communities, and senior apartments”, demonstrating the wide range of living styles they offer. Depending on your state, these facilities often cost between $2,000 and $5,000 per month in the US, Five Star Senior Living.

On the other hand, nursing homes offer constant assistance and care, and are typically for individuals who deal with more limitations from their aging. The Senior List shares that in 2022, these costs averaged $8,000 to $9,300 dollars per month, depending on the type of room your loved one would like.

Nursing homes are often necessary for individuals who require more extensive assistance with daily living. However, it's important to consider the cost of nursing homes, which can range from $8,000 to $9,300 per month, depending on the type of room your loved one would like, according to The Senior List. If you do the math, that's over $90,000 per year and over $630,000 for the average seven-year stay. Do you have $630,000 saved up to cover the cost of long-term care for your loved one?

For most people, the answer is no, and that financial burden often falls on the caregiver. It's crucial to plan ahead and consider all available options to avoid being caught off guard by the high costs of long-term care. Seeking guidance from financial and healthcare professionals can help you develop a comprehensive strategy that's tailored to your unique needs and circumstances.

In- home care differs greatly from the previous two, as care professionals come to your loved one’s home as frequently as they decide, offering medical and non medical assistance. Cost varies greatly for this type of care because you have the ability to decide how many hours or days you pay for, however, home care assistance typically costs between $4,957 and $5,148 per month -according to Genworth’s 2021 Median National cost of care calculations.

Each of these options accommodates a different set of needs and expected lifestyle. It is important to identify how your loved one would like to live when looking into long term care. Once you have identified what they want and need, it will be much easier to compare service and living options that are within your price range, while providing them with the best care possible.

3. Discuss Responsibility With Your Family Members

Long term care is a large responsibility, and you will need to share it with additional family members. Let’s say you are looking for help caring for your aging parents. People that may step in, as well as the percent of caregivers that provide care in this relationship are listed below, from aPlaceforMom’s caregiver statistics.

Your Children: 10% of caregivers provide care for their grandparents. They are likely to spend limited time and money on care as secondary caregivers.

• Your Siblings: 48% of surveyed caregivers provide care for their parents. They are typically primary caregivers and spend both time and money caring for their parents.
• Your Aunts and Uncles: 5% of caregivers care for their siblings. As they are also aging, they will typically step in financially and take a limited role in care.
• Parent in Law: 11% of caregivers care for their spouse or partner. People typically take primary or secondary roles in their Spouse’s care, providing and funding when possible, partially dependent on if they also need care.
  

The responsibilities each family member will take on include funding, care they can provide, and ways they may service your aging loved one. The best way to delegate responsibility is through discussion.

The first conversation you must have surrounding long term care is: “Who will step in?”. If the other members of your family have not reached out about care for your loved one, take the initiative to connect with them and identify who has the means and is willing to assist in their care. It is important that your loved one has a solid support structure and the more family members willing to help out, the better.

The second conversation you will need to have is: “What role will each family member play in your loved one’s care?”. This conversation will be more complex, as certain family members may not live directly near your aging loved one, or have the means to support them financially. This is why it is important to identify how each family member can reasonably contribute. Some may be able to play a large financial role in the funding of their care, while others may have 2-3 hours of freetime that they would be willing to dedicate to your loved one each week.

Creating a plan for what each person in your family can contribute will allow you to spend less money on outside care resources and maintain a feeling of normality and comfort for your loved one. Once you are aware of the role each of your family members can play in your loved one’s care, you can fill in the gaps with care services or by taking on some of the extra needed hours yourself.

4. Identify How You and Your Loved One Will Insure Their Long Term Care

Insuring your loved one’s long term care will allow you to save a great deal of money. Long term care insurance works in the same way other insurances do. You pay a consistent premium for years, and in return the insurance covers all long term care costs when you find your loved one experiencing a long term care event. Fidelity shares four main ways that people insure long term care. These ways include:

1. Traditional long term care insurance
2. Hybrid Insurance
3. Self insure
4. Government assistance
   

Each of these options for long term care insurance will provide different benefits and some may be better for your family than others. For example, Carrie Shwab shares that traditional long term care insurance is most beneficial when purchased before the age of 60. The American Association for Long Term Care concluded that the average annual premium in 2021 for a couple of two 55 year old people is about $5,025. This may seem like a lot, but LTC insurance will cover the much greater expenses of the care your loved one will need in retirement, these expenses typically ranging from $20,000 to $96,000 per year, according to Genworth’s 2021 Care Survey.

Hybrid policies come with different benefits than traditional LTC insurance. There are many variations of hybrid policies, but one common type combines long term care insurance with life insurance. In this policy, the premium your family pays will cover any long term care your loved one needs in their retirement. This policy differs because if your loved one does not experience a long term care event and does not need this insurance, the premiums you pay will be used for life insurance after your loved one’s passing. According to Forbes Advisor hybrid insurance plans can “alleviate the concern about paying for long-term care insurance that you may never use.” In other words, this option provides additional security for those who are unsure if they will need LTC.

Self Insuring will provide your family with the greatest amount of flexibility. However, as described above, long term care is very expensive, and you will want to think about if it is within your family’s financial capability to cover every expense. By self insuring, your loved one will have to rely entirely on their own, and your family’s contributions.

The final of the four main options for insuring long term care is government assistance. Government assistance is typically received through Medicaid, Medicare, and the Veterans Health Administration. Medicare only covers short term care such as 100 day or less stays in skilled nursing facilities or short term therapy. However, for those that qualify, Medicaid covers most long term care services. In fact, Medicaid is “the primary payer across the nation for long-term care services”. More information on the benefits of Medicaid for long term care can be found here, on Medicaid’s website.

Veterans can qualify for long term care through VA Health Care if they need a specific service to help with their continuous treatment and personal care. If your loved one is a veteran, make sure to look into the specific benefits they may receive, so that you can avoid spending money on LTC when it is not necessary.

5. Explore Government Programs and Understand Your Loved One’s Eligibility

Since Medicaid is the primary payer for long term care services, it is important to determine if your loved one qualifies for this insurance. Each state has specific, differing, asset and income requirements to be eligible for medicaid. More information on state by state eligibility can be found here, on Medicaid’s government website.

If your loved one is close to qualifying, there are many strategies that people use to lower their assets and qualify for government assistance. Investopedia offers great strategies for this. One common strategy listed is when people pay for their own care until their assets are depleted. At this point, they have typically reached the threshold needed for Medicaid, and receive care through Medicaid insurance moving forward.

Another option that Investopedia mentions is how others will create asset protection trusts such as irrevocable trusts. To do this, your loved one would irrevocably give up control of their assets and place it under a trustee’s control. This means that the trust can only be altered by the beneficiary, and your loved one will no longer own their assets. In this way, they are able to shelter their assets so they will not harm their Medicaid eligibility.

6. Utilize Additional Resources For Planning and Funding

Even after purchasing long term care insurance or identifying the care your loved one would like to receive, additional help can be very beneficial. It is good to have someone who knows the space to work with you when planning your loved one’s retirement and working to manage your wealth. Working with a professional can help you make educated decisions for your loved one and learn how to invest their money.

This help is typically found in financial advisors, wealth managers, and elder law attorneys. Financial advisors and wealth managers will help you to identify the best practices surrounding funding your loved one’s long term care. They will also be able to help you manage your loved one’s assets and savings. This means that these advisors will help your loved one decide where to invest their money and how to fund for long term care. The main difference between financial advisors and wealth managers is that wealth managers typically work with clients of a higher net worth with specific needs.

Elder law attorneys help plan for the rest of retirement. They can help guide your family through the important decisions we mentioned above, as well as other retirement concepts; long term care options, wills and estate planning, patient rights, durable power of attorney, long term care facilities, and medicaid insurance. In fact, an elder law attorney would be the person who can help you qualify for certain benefits, with their extensive knowledge on rights and eligibility.

Conclusion

As you can see, long term care is a complex concept that can be very confusing and strenuous to manage. We hope you will move forward with these six strategies:

1. Understand Your Loved One’s Personal Risk Factors: Look into your loved one’s medical history, as well as your family’s, and identify medical risks such as Alzheimer’s, diabetes, hip or knee injury, respiratory or heart disease, arthritis, and stroke.
   
2. Identify the Type of Care That Will Best Serve Your Loved One: Discuss their physical and mental needs and plan for the type of care that will best fit these needs.
   
3. Discuss Responsibility With Your Family Members: Reach out to your family members and identify who will step in, and what role they will play in your loved one’s care.
   
4. Identify How You and Your Loved One Will Insure Their Long Term Care: Analyze the four main types of LTC insurance; traditional LTC insurance, hybrid insurance, self insuring, and government assistance, and begin to invest in the insurance that will best support your loved one financially.
   
5. Explore Government Programs and Understand Your Loved One’s Eligibility: Review your state’s specific Medicaid eligibility guidelines and determine if your loved one is eligible to receive LTC insurance through Medicaid.
   
6. Utilize Additional Resources For Planning and Funding: Consider working with a professional who can help you prepare for your loved one’s LTC, such as financial advisors, wealth managers, or elder law attorneys.
   

With these six strategies, we hope that you can better support your loved one through this journey, helping your family optimize their money, time, and well being while caring for your aging loved one.