How to pay for LTC Expenses

The best way to ensure that you’ll have access to high-quality long-term care services is to have long-term care insurance coverage. There are two main ways to get coverage – buy it on your own or obtain it through an employer-sponsored insurance program that your company may offer. 
Some benefits also are available from the government, through Medicare and Medicaid. 

However, you should be careful about relying on government programs. Medicare covers only short-term skilled nursing home care, and Medicaid will pay for your care only if your assets are very limited. Some states have Long-Term Care Insurance Partnership Programs that allow you to buy private long-term care insurance and remain eligible for Medicaid benefits if your private insurance runs out. Read on to learn more about the various sources of protection.

Buy It on Your Own

This is the most reliable way to cover the potential costs of long-term care while protecting your savings. You can purchase coverage from any number of companies, and there are policies and features to fit most price ranges. Because there are so many options to weigh when considering a purchase, you’ll want to find an agent who specializes in long-term care insurance. That person will be able to explain the many features of long-term care insurance and help you strike the appropriate balance between the benefits you desire and the money you have to spend.

Get It through Your Employer

A growing number of employers offer group long-term care insurance as a voluntary employee benefit. Typically, an employer will contract with a particular insurance carrier and allow its employees to purchase coverage, often through automatic payroll deductions. Because employees pay for coverage out of their own pockets, the policies are almost always portable, meaning you can keep them in force if you change jobs. One potential advantage of buying through your employer is that you can sometimes get coverage that would have been more difficult to obtain on the open market. This is especially true of employees whose have health problems or a poor family health history. 

Why? Because with most group plans, employees are offered the same premium as others in their general age bracket (e.g., 45-54 year olds), regardless of their health status or actual age. So if you’re an older employee or perhaps have some health issues, the one-size-fits-all premium offered through your employer may be lower than what you’d be able to obtain if you tried to get coverage on your own. A downside of buying through work is that you’re limited to the companies and products that your employer makes available to you through your benefits package, and you might be able to find a better price or policy by shopping on your own.


Medicare is the federal government’s program that pays healthcare bills for older Americans. When it comes to long-term care, there’s a common misconception that Medicare will pay a good chunk of the cost of long-term care. Not true. Medicare only covers short-term skilled nursing home care that you receive after being hospitalized for at least three days. 

For instance, if you get in a car accident, Medicare may cover your care in a rehabilitation facility for a period of up to 100 days. Medicare also pays for some skilled at-home care but only for short-term unstable medical conditions and not for the ongoing assistance that many elderly people need. Medicare will not pay for any custodial care, and 95 percent of all long-term care is custodial, not skilled. For more information, visit the Medicare Web site.


Medicaid is the federal government’s program that pays healthcare bills for Americans who meet federal poverty guidelines. In addition to covering doctor visits, hospital stays and other standard medical expenses, Medicaid pays for about half of all nursing home costs in the U.S and a smaller, but growing, portion of the nation’s home care costs. But remember, Medicaid will only pay for care if you have very limited assets. 

Qualifications vary by state, but generally you may keep only the house in which your spouse or dependent resides, the furniture, a car, a burial plot and funeral funds, and a modest amount of cash. Having Medicaid pay for your care also means you may not have much of say in choosing the facility that will provide your care. For more information, visit the Medicaid Web site.

Partnership Programs

The Long-Term Care Insurance Partnership Program began in the 1980s as a demonstration program in four states (California, Connecticut, Indiana and New York) to encourage people who might otherwise rely on Medicaid to buy long-term care insurance. 

Participants who deplete their policies can retain a certain amount of their assets and still qualify for Medicaid – provided they meet all the eligibility criteria. This is an important distinction. Medicaid eligibility is not automatic. To qualify, you must meet your state’s income and functional eligibility requirements. A state’s functional eligibility requirements for Medicaid may be stricter than those for private long-term care policies, which typically require that you be cognitively impaired or required help with two or more activities of daily living. 

In 2005, Congress expanded the partnership program to allow all states to participate. At least 21 states have enacted legislation that would allow them to establish partnership programs. They are Arkansas, Colorado, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Maryland, Massachusetts, Michigan, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, Virginia and Washington. For more information on your state’s Partnership Program, contact your state insurance department.