Does Medicare Cover Long-Term Care?
July 2, 2024 | Kari Mellone
Recent studies estimate that at least 70% of older adults aged 65 years and older will require long-term care at some point. Long-term care costs vary throughout the country, but according to the annual Cost of Care Survey from insurance company Genworth, estimates that the average yearly cost for a private room in a Minnesota nursing home in 2024 is $171,404, and $152,120 for a semi-private room.
What is Long-Term Care
Long-term care, or custodial care, involves hands-on care and support on an ongoing basis. Long-term care may entail some medical care, but there is a greater focus on personal care needs or daily tasks like dressing, bathing, and using the bathroom. Sometimes, it may also include services like home-delivered meals and adult day care.
How Does Medicare Cover Long-Term Care?
Original Medicare, as well as most Supplemental Medicare plans, such as Medigap and Medicare Advantage, typically do not cover the costs associated with long-term care. Because of this, it’s important to carefully review your options and consider your individual needs when planning for potential long-term care expenses.
How to Pay for Long-Term Care
There are several ways to cover the costs of long-term care. Some methods include self-funding, but it can be challenging for many individuals to set aside enough extra money to cover the high and rising costs of long-term care. Because the costs can quickly diminish savings and retirement accounts, many individuals will elect to purchase a long-term care insurance policy or a long-term care annuity.
Long-Term Care Insurance Policy
A long-term care insurance policy provides financial coverage for extended care services needed due to chronic illnesses, disabilities, or age-related conditions. It helps pay for care in various settings, such as assisted living facilities, nursing homes, or in-home care.
Long-Term Care Annuity
A long-term care annuity combines an annuity with long-term care insurance benefits. It provides regular income payments or a lump sum payment, while also offering funds specifically reserved for long-term care expenses if needed. When used for long-term care, annuities can offer a multiplication factor, significantly increasing their value and benefits.
Find out More: Long-Term Care Annuity: How Does it Work?
Long-term care insurance provides coverage that is specific for long-term care expenses, while a long-term care annuity combines an income stream with additional funds designated for long-term care needs. Both of these products are intended to help protect your savings by providing additional funds to pay for care services if you develop a chronic illness or disability.
LTC insurance covers long-term care costs directly, while a LTC annuity provides regular income and extra money for care if needed. The insurance is solely for care, whereas the annuity combines savings with care coverage. Unlike traditional LTC insurance, if you don’t end up needing long-term care, the annuity still provides a steady income stream or can be passed on to heirs. Additionally, if the LTC portion is unused, you will receive the money back along with any earned interest, offering greater financial flexibility and security.
While Medicare may not cover long-term care, the options listed above are alternative ways to ensure coverage for ongoing care needs as they arise. Long-term care insurance or a long-term care annuity can offer financial protection and peace of mind for both yourself and your loved ones as you plan for the future.
At Twin City Underwriters, we know that individualized attention to a client’s personal situation and needs are especially important, which is why we take the time to understand you and your financial goals. Contact us to schedule an appointment with one of our experienced insurance agents.
Are you ready to have a meaningful discussion about your financial needs? Call or email TCU today to set up a free, no-obligation appointment with one of our dedicated agents.
Call Twin City Underwriters to learn more: 651-488-0172 or 800-507-6778.
