What Are Alternatives to Long-Term Care Insurance

Seniors can finance their long-term care through a reverse mortgage or deferred lifetime annuity. In addition, those with a very low income and limited assets may qualify for support with long-term care costs through Medicaid. Most seniors spend around three years receiving some form of care, so having a plan to pay for that care is important.

A Reverse Mortgage Unlocks The Equity in a Property

Homeowners who would prefer to remain in their own homes and receive home health care may be able to unlock the equity in their home through a reverse mortgage, then use the equity to pay for the care services they require. This is a good option for those with a lot of equity in the property. The fees for reverse mortgages can be substantial, however, so this option only makes sense if the senior will be able to remain in the property for a long time. Those who are likely to need to downsize or move into a care facility may find selling outright more cost-effective.

Life Insurance and Deferred Annuities As a Retirement Income Option

Seniors who have a life insurance policy may be able to borrow against the policy or even sell it for cash and use that cash to fund their long-term care. The amount a life insurance policy sells for is usually around 20 to 25% of the policy’s value, so it’s important to seek financial advice before selling, especially for those who have dependents.

Deferred lifetime annuities offer an income stream during retirement. These annuities can be bought with riders that guarantee a return on the principal, and income adjustments. A deferred lifetime annuity isn’t limited to covering the cost of long-term care, it can be spent on anything, so seniors who don’t require care can use them to cover living expenses or leisure activities. 

Medicaid Supports Those With Limited Assets

Seniors who do not have a long-term care insurance policy because they haven’t been able to afford one may qualify for Medicaid. This is a benefit aimed at those who have a low income and have little in the way of savings or assets. For someone to qualify for their long-term care services covered by Medicaid, they must be assessed as clinically eligible for that level of care. Not all nursing homes and other care facilities accept Medicare and Medicaid, so the choice of facilities may be limited compared to self-funding.