American retirees who would rather age in place than live in a nursing home or assisted living facility will need a lot of money to pay for it. It’s not a problem for the rich. For everyone else, you need long-term care insurance or some other way to cover the cost of home help, equipment, and medical services.
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Although most Americans (70%) prefer to age in place, only 10% have long-term care insurance, CNBC reported, citing an HCG Secure/Arctos Foundation survey. This is mainly due to the cost of insurance,
As AARP noted, the average annual premium in 2021 for a 55-year-old couple was $2,050 for a long-term care policy that would pay up to $165,000 in future care costs for each. , according to data from the American Association for Long-Term Care Insurance. This figure does not include any inflation-related adjustments that could push the cost even higher. The averages for a man and a woman at this age are $950 and $1,050 respectively.
Even people who can pay the premiums might not be covered. About one in five applicants under the age of 60 are turned down – and that ratio increases dramatically as you get older.
So what options do you have for aging in place if you don’t have a huge nest egg and can’t afford long-term care insurance? Here are five ways to plan ahead to cover costs.
Count your assets
A good first step recommended by AARP is to establish a home care budget based on your financial assets. These can include annuities, investments and savings as well as life insurance policies that can be used for eligible home care expenses through cash value.
You can also consider taking out a reverse mortgage or home equity loan, although this is risky. You may be low on equity while you still need care, and older homeowners are frequent targets of reverse mortgage scams.
Seeking government assistance
Financial assistance is available to help pay for home care if you don’t have long-term care insurance coverage and can’t afford to pay with existing financial resources, according to the AARP. Search the US government’s Eldercare Locator to find your local agency on aging. This may lead you to agencies or non-profit organizations that could help pay for home care.
You can also research the National Council on Aging’s BenefitsCheckUp program to find out which programs you may be eligible for.
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Check your health insurance benefits
As AARP noted, Original Medicare may cover the full cost of medically necessary home health care on a limited basis if you cannot leave your home without assistance. These services may include skilled nursing; occupational therapy, physiotherapy and speech therapy; and home help services.
Original Medicare will also cover routine home care such as bathing and dressing assistance, as well as basic medical care such as checking vital signs and dressing wounds. You could get even more care under a Medicare Advantage plan.
Find out what Medicaid covers
Similarly, Medicaid pays for some home care services. More than half of all Medicaid spending on long-term care goes to home and community services, AARP said. Keep in mind that each state has different rules for Medicaid services, eligibility, and benefits.
Offer room and board to caregivers
If you have room at home, you can offer room and board in exchange for home help. Taylor Kovar, CFP and CEO of Kovar Wealth Management in Texas, told CNBC it’s been an especially popular option in college towns. Just be sure to vet caregivers before welcoming them.
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This article originally appeared on GOBankingRates.com: No long-term care insurance? 5 more ways to plan ahead for aging at home in retirement
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