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Finding Money for Long-Term Care

Posted: 8/17/2017 11:44 AM by Interim HealthCare

Dear Savvy Senior,
What resources can you refer me to for long-term care financial help? My 84-year-old mother needs assisted living or nursing home care, but we don’t have a lot of money and she doesn’t have long-term care insurance.
Searching Daughter

Dear Searching,
If your mother does not have a long-term care insurance policy, depending on her circumstances, here are several other sources you should check into that can help pay for her care.

Medicaid: The first thing you need to understand is that Medicare (the government health insurance program for seniors 65 and older and those with disabilities) does not cover long-term care, which includes nursing home care, the costs of assisted living facilities and home aide services, unless your mom is receiving skilled nursing or therapy services too. It only provides limited short-term coverage, up to 100 days for skilled nursing or rehabilitation services after a hospital stay.

However, Medicaid (the joint federal and state program that covers health care for the poor) as it currently stands, does cover long-term care facilities and it covers in-home care too. But to be eligible for coverage, your mother must be very low-income. Her countable assets can’t be more than around $2,000, including investments.

Note that most people who enter a nursing home don’t qualify for Medicaid at first, but pay for care out-of-pocket until they deplete their savings enough to qualify. Contact your state Medicaid office (see Medicaid.gov) for eligibility details.

Veterans aid: If your mom is a wartime veteran, or a spouse or surviving spouse of a wartime veteran, there is a benefit called Aid and Attendance that can help pay between $1,153 and $2,127 a month toward her long-term care.

To be eligible, your mom must need assistance with daily living activities like bathing, dressing or going to the bathroom. And her yearly income must be under $13,836 as a surviving spouse, $21,531 for a single veteran, or $25,525 as a married veteran – after her medical and long-term care expenses. Her assets must also be less than $80,000 excluding her home and car.

To learn more see Benefits.VA.gov/pension, or contact your regional VA office, or your local veterans service organization. Call 800-827-1000 for contact information.

Life insurance: If your mom has a life insurance policy, find out if it offers an accelerated death benefit that would allow you to get a tax-free advance to help pay for her care.

Or, consider selling her policy to a life settlement company. These are companies that buy life insurance policies for cash, continue to pay the premiums and collect the death benefit when she dies. Most sellers generally get four to eight times more than the policy cash surrender value.

If you own a policy with a face value of $100,000 or more and are interested in this option, get quotes from several brokers or life settlement providers. To locate some, use the Life Insurance Settlement Association member directory at LISA.org.

Tax breaks: If you’re helping out your mom financially, you may also be able to claim her as a dependent on your taxes and reduce your taxable income by $4,050, which you could use for her care. To qualify, you must pay at least half of your mom’s yearly expenses, and her annual income must be below $4,050, not counting Social Security. For more information, see IRS Publication 501 at IRS.gov/pub/irs-pdf/p501.pdf.

If you can’t claim your mom as a dependent because her income is too high, you may still be able to get a tax break if you’re paying at least half her living expenses including her medical, dental and long-term care costs, and they exceed 7.5 percent of your adjusted gross income. You can include your own medical expenses in calculating the total. See the IRS publication 502 (IRS.gov/pub/irs-pdf/p502.pdf) for details.