If you’re like most people, you might assume Medicare covers long-term care like a nursing home stay or assisted living facilities. But this isn’t the case.
Medicare—government-sponsored health insurance for people 65 years and older—doesn’t pay for long-term care. It never has. This is one of those pervasive myths floating around out there. And just like Bigfoot or Flat Earth theories, this myth can cause serious confusion. It becomes a big problem if you’re relying on something that isn’t there for you when you need it.
Let’s see why people think Medicare will cover long-term care. And let’s look at how you can put together a plan for your golden years.
Does Medicare Cover Long-Term Care?
Since long-term care isn’t considered medical care, it’s not covered by Medicare. So if you’re wondering, Does Medicare pay for a nursing home?—the short answer is no.
Medicare covers doctor visits, hospitalizations and medication. It does cover some long-term care like a short stay in a skilled nursing facility, medically necessary in-home care or hospice care. But your options will be very limited, and it won’t help with deductibles and copays. This is a big deal since the largest medical expense during your retirement years is long-term care.
And frankly, assuming you’ll be taken care of by a government program is never a good plan for anything in life. What happens in your house is way more important than what happens in the White House. Don’t rely on the government when it comes to something as important as long-term care.
Why Do So Many Believe Medicare Covers Long-Term Care?
It kind of makes sense—that a government-backed program to provide medical care for the elderly would provide for things like a nursing home stay or an in-home caretaker. In fact, 56% of boomers believe Medicare covers long-term care.1
But here’s the catch. Long-term care is not considered a medical expense. This is why it’s also not covered by your regular health insurance.
Many people probably assume Medicare helps pay for long-term care because both have to do with elderly care. But this is the only connection between the two. And this assumption can cause real problems when people don’t create their own plan for long-term care.
There’s also a ton of confusion about Medicare out there. So it’s easy to simply fill-in-the-blanks and assume long-term care is covered. But Medicare only covers skilled care and long-term care can generally be done by anyone. For example, it doesn’t take a registered nurse to help someone get in and out of a wheelchair.
Does Medicaid Cover Long-Term Care?
Medicaid is a government program for those who have no money or low income. While Medicaid does cover some long-term care expenses, there’s some fine print.
First, for Medicaid to even cover long-term care, you have to first spend down whatever assets you have. So to qualify for care you have to first be broke. That’s not a good plan. And even after you qualify, you still won’t have the quality of care you would want. When it comes to long-term care, you definitely want to have options.
Bottom line? Don’t rely on Medicare or Medicaid for your long-term care needs.
Who Needs Long-Term Care?
The majority of people will need some kind of long-term care. Research shows that of 65-year-olds alive today, 70% will need some kind of long-term care and an estimated 20% of Americans will need it for longer than five years.2
Long-term costs are typically for things like:
- Nursing home care
- Assisted living facilities
- Adult day care services
- In-home care
- Home modifications
- Medical equipment
- Care coordination
Chances are good you’ll eventually need long-term care. Health conditions like arthritis, Alzheimer’s disease and other dementias are some of the most common reasons people need it. And you need a plan to pay for it. If you don’t think ahead and just assume the government will handle it, you could be left pulling from your savings or a Health Savings Account (HSA) to pay for long-term care. Not good.
How Much Does Long-Term Care Cost?
Long-term care is expensive. Like really expensive. The average American pays a whopping $172,000 for long-term care.3 And the estimated cost for care in the last five years of life is $234,000 and $367,000 for those with dementia.4
Long-term care is an important decision. Connect with a trusted pro to make sure you have the right coverage.
A semi-private nursing home stay in the United States will set you back $7,756 for just one month.5 Just one month! And if you want your privacy it rises to $8,821.6 That’s a big jump just to be able to close your door and get some peace and quiet.
How Can I Pay for Long-Term Care?
The best way to cover the increasing costs of long-term care is through long-term care insurance. Depending on your age and health conditions, it can be very affordable. You’ll have peace of mind knowing you have a solid plan in place to protect your future. Long-term care insurance is worth whatever you end up paying in monthly premiums.
Some people also assume their family or friends will handle all their long-term care needs. While your loved ones can certainly pitch in, it isn’t realistic to expect them to take on 100% of your care. They’ll need a break. And caring for an elderly person is not the same as caring for a young child. Long-term care insurance takes the burden off family members so they don’t have to handle everything.
So, how much does long-term care insurance cost? Your premium will be based on a couple different factors—your age, your marital status, your health and your family’s health history, among other things. The average 55-year-old man will pay $1,700 per year for a three-year policy that covers $164,000 in care and a daily max of $150.7 The average 55-year-old woman will pay $2,675 for the same level of coverage.8 You can also add an inflation rider that will compound the benefit as the years go by.
How Can I Start Planning for Long-Term-Care?
Now that we’ve debunked the myth that Medicare covers long-term care (we’ll take on the Flat Earth myth another time), how can you start working on your long-term care plan?
First, get educated about long-term care options. You’re already doing this by learning the truth about Medicare and Medicaid. Great job!
Next, figure out which family members and friends might be able to help you when the time comes. While these conversations can be hard, it’s better to have them well before you actually need the help. And, again, make sure you’re not relying on your loved ones for 100% of your care. This is usually not realistic.
Finally, we recommend getting long-term care insurance when you turn 60 years old. The older you are, the more likely you’ll be denied coverage. Assess how much care you might need and think about what your expectations are during retirement and beyond.
Get a Plan in Place
Avoid a big mistake. Don’t assume Medicare or Medicaid will cover your long-term care. It won’t. Instead get long-term care insurance so you’ll actually be covered.
We recommend working with an experienced and trusted insurance agent like one of our Endorsed Local Providers (ELPs). They’re RamseyTrusted and can look at your unique situation to figure out what policy would best set you up for success. They’ll shop long-term care insurance plans for you and help you understand what you’re paying for.
Take control of your future and connect with an ELP today to get started.