Long-Term Care Solutions: Understanding Your Options

Planning for retirement can be fun and exciting, but not many people like to plan for a time when they might need extra help. The fact of the matter, though, is that people who are 65 and older have a 70% likelihood of needing some long-term care in their life, according to the Department of Health and Human Services.

Many long-term care options are not cheap, either. So, what options do you have for paying for long-term care? Here are some of the main ways you can pay for long-term care.

Long-Term Care Cost

Your cost of long-term care will vary greatly depending on the type of care you need, how long you need it for and the state in which you live. That being said, most long-term care can be expensive.

The Genworth Cost of Care Survey 2020, for instance, reported the median national cost of a home health aide to be $54,912. The median national cost of an assisted living facility was $51,600, and that of a private room in a nursing home was $105,850.

This, of course, covers just the basics of your care. It doesn’t include any other ancillary medical expenses you may have. And even if it did, it’s still a pretty penny that not many people can afford.

That’s why planning for long-term care solutions early is a good idea.

Your Options

Traditionally, you have four main options for paying for whatever long-term care you might need. Here’s a description of each of those.


You can use any personal savings you have to pay for your long-term care. This includes any “rainy day” money you set aside and any funds in retirement plans and/or Social Security that you may have.

Using your own savings does provide you with flexibility in choosing your long-term care providers and the care that you get. The challenge, of course, is whether your personal savings can completely fund your long-term care.

There are some downfalls to this route, though. The first is that you might have to pay taxes to withdrawal money from retirement accounts. The second is that using your personal savings won’t shield your other assets, such as your home, from going toward your long-term care costs.

Government Assistance

The federal government assists some people who can’t afford the cost of long-term care. People with a lower income and veterans could potential qualify for assistance through Medicaid or the Veterans Health Administration, as well as some additional programs run through the state.

Medicare won’t cover your long-term care costs. The plan only provides very limited coverage for short-term health care, and no coverage for any long-term care.

While you may be able to qualify for coverage through Medicaid, you’ll have to go through an asset and income test to find out how much, if any, coverage you can get.

In addition to the qualification requirement, another potential downfall is you may not have complete freedom to choose where you go to get your care. The government will often dictate which facilities you can go to, based on which ones are part of the Medicaid or VA programs.

Long-term Insurance

Another option is to purchase a long-term care insurance plan. These policies work similarly to life insurance plans. You will choose the level of coverage that you want, how long the policy will last for, and the waiting period before you can start to receive benefits. Then, the insurance company will set the premium you’ll pay for the policy.

You may have trouble finding an insurance company that still offers these types of policies, though. And companies that do still offer them will typically increase your premiums on an annual basis.

Hybrid Insurance Plans

A popular alternative to the traditional long-term insurance plans are hybrid insurance plans. This is a combination of long-term care insurance and life insurance.

The nice part about these plans is that they will pay toward any long-term care you might need in your lifetime. However, if you don’t need this long-term care, the plan won’t go to complete waste. That’s because it’ll still pay out a death benefit to your chosen beneficiary if you don’t use it for long-term care.

Many insurance plans allow you to draw on the hybrid plan to pay for your long-term care or allow you to accelerate the amount of your death benefit, up to a certain maximum per month. In these cases, if you use up all of your death benefit, the hybrid insurance plan will still cover the cost of your long-term care.

Some hybrid insurance plans will also have an annuity option, serving as a way to grow an investment on a tax-free basis. If the funds are eventually used to pay for the expenses of long-term care, any gains on the plan will be received without having to pay any income taxes on it.

With the cost of long-term care increasing every year, it’s very important that you understand your potential long-term care needs so you can come up with a realistic plan for how you’re going to pay for it. In many cases, a hybrid life insurance and long-term care insurance plan might be right for you.

Work with an Insurance Marketing Organization

As a leading Insurance Marketing Organization (IMO), Good Life Insurance Associates (GLIA) provides a full range of insurance products, back-office services, and tools to support your individual clients’ wants and needs. We provide financial advisors and insurance agents in our network across the country with access to a full range of premium carriers, expert support services, and an industry-leading compensation plan.

Contact us today to learn how we can help you establish and grow your insurance business!