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Paying for Long-Term Care

Long-term care can be paid for in several ways, including private payment, long-term care insurance, and government programs such as Medicaid. Private payment involves using personal funds, such as savings or retirement accounts, to cover the cost of care. Long-term care insurance is a policy purchased specifically to cover the costs of long-term care, and government programs like Medicaid provide financial assistance for those who meet eligibility criteria, such as low-income seniors or those with disabilities.

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Paying For Long-Term Care

Most people confuse Medicaid with long-term care insurance, and they therefore believe Medicaid will cover all of their long-term care costs. However, Medicaid is specifically for low-income individuals and has very strict income and asset limits in order to qualify.


Long-term care insurance, on the other hand, offers financial support specially tailored for the needs of individuals with a persistent, long-lasting illness or disability, such as Parkinson's disease, dementia, and Alzheimer's. Long-term care insurance does not go based on needs, it is an insurance policy that is purchased ahead of time, well before the time of need. Although long-term care insurance policies are costly,  and do not cover the full cost of care, they are a valuable tool, since health insurance does not cover long-term care needs.  Unfortunately, by the time most people figure out they need Long Term Care insurance, it is too late.




Medicaid, on the other hand, is in fact a need-based program, meaning those who qualify have met Medicaid’s asset and income criteria, as well as have a functional need for long-term care. For those who meet Medicaid’s criteria, the cost of nursing home care is fully covered. This is called institutionalized medicaid, which is an entitlement, meaning as long as the beneficiary meets the eligibility requirements, they will not be denied benefits.

Since not all facilities accept Medicaid payment, it must be noted that in order to receive these benefits, an individual must be in a facility that accepts Medicaid.




HCBS Medicaid Waivers


In order to provide long-term care services within the community and not just in nursing homes, Home and Community Based Services (HCBS) were implemented. This is a more cost-effective option for the state, and beneficial to the community since most seniors would prefer to age in their own home.

As opposed to state Medicaid programs, HCBS waivers are not entitlements. This means that these waivers only have a limited number of enrollment spaces available at one time. Once all spaces are occupied, new applicants are placed on a waiting list until another space opens up.

There are also stipulations attached to waivers, and they are limited to certain groups, including:


  • Citizens over the age of 65

  • Alzheimer’s and dementia patients

  • Disabled citizens between the ages of 19 and 64


Waivers are not always statewide and may be limited to specific locations within a state.



Services provided by HCBS Medicaid waivers include:


  • Home health aides

  • Personal care

  • Adult day care

  • Medical equipment

  • Respite care

  • Emergency response systems

  • Homemaker services



HCBS waivers do not cover the cost of room and board in a facility.



Regular State Plan

A number of states have also begun providing long term care through their normal Medicaid programs to provide access to uninsured people, as well as to prevent the need for more costly services. Remember, Medicaid applicants who meet all the eligibility requirements will not be denied services under the regular state Medicaid plan, which means there will never be a waitlist for benefits. Depending on the state, Medicaid may cover personal care services at home (assistance with bathing, dressing and undressing, and toiletry) under the state Medicaid program.


Another option, Community First Choice (CFC), or the 1915(k) state plan option, enables states to offer more attendant care services to eligible applicants. These services may include personal care, light housekeeping, laundry, grocery shopping, meal preparation, and medication management.


Some states may opt for the 1915(i) state plan home and community based services program.


With this option, states are able to offer a much broader array of long-term care benefits. HCBS Medicaid waivers provide a great deal of flexibility to states when it comes to offering their citizens the same services, however applicants are not required to demonstrate a high degree of functional need. However, only certain groups may be eligible for this option. For example, some states may set a limitation stating that only frail, elderly citizens may qualify for benefits.



With a 1915(i) state plan, recipients will qualify for assistance with ADLs, non-medical transportation, adult day care, respite care, case management, and assistive technology.

Veteran's aid and attendance

While this is a valuable program, it too will not cover the full costs of long-term care, and with recent changes in the eligibility criteria, can be very difficult to qualify for.

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