The need for additional care as a person ages can put retirees and their loved ones in a difficult spot. All parties want to ensure the best possible care, but costs can be a significant worry for people on a fixed income as well as their families.
The high probability of expenses tied to care can leave retirees wondering: How much does assisted living cost? Will insurance coverage take care of assisted living, or will I be paying out-of-pocket? How confident am I that my retirement income will cover any assisted living needs that might arise?
Here's what you need to know about planning ahead for long-term care and other assisted living needs so you can rest assured that you'll receive the care you need without breaking the bank.
How Much Does Assisted Living Cost?
Assisted living is a specific type of long-term care that is defined as non-medical daily living care, such as assistance with bathing, dressing, eating and mobility. Generally, neither private health insurance nor Medicare covers this sort of non-medical care, and the costs can vary greatly depending on the specific needs of the individual. According to the U.S. Department of Health and Human Services in 2016, the average costs of different types of long-term care were as follows:
- $7,698 per month for a private room in a nursing home.
- $6,844 per month for a semi-private room in a nursing home.
- $3,628 per month for care in an assisted living facility.
- $20.50 per hour for a home health aide.
- $68 per day for adult day care.
Depending on your needs and budget, there are a variety of options and strategies to suit your long-term care needs.
What About Insurance Coverage?
Because long-term care is specifically for non-medical help, most medical insurance (including Medicare) does not pay for this type of care. However, there are other types of insurance that can help you pay for assisted living or other long-term care needs.
For instance, long-term care insurance can help you pay for assisted living, nursing home care or home health care. This form of insurance will reimburse you for the cost of your long-term care after an elimination period, which typically lasts about 90 days. After that waiting period, the insurance will kick in to pay for the long-term care you need, which may include assisted living.
If you choose to explore long-term care insurance, make sure you understand the insurer's payment limits. Many policies will have a daily dollar limit as well as a time limit, after which the policy will no longer pay.
Another potential insurance option is to use life insurance to pay for your long-term care needs. Some life insurance policies offer what's known as an accelerated death benefit, which would allow you to take a tax-free advance on your death benefit while you are still living. The need for long-term care can qualify as one of the triggers for such an advance.
Finally, some Medicare Supplement insurance policies (also known as Medigap plans) will cover certain types of assisted living. While no Medigap plan covers general long-term care, if you have to stay temporarily in a skilled nursing facility because of a medical need, some Medigap policies can extend your coverage period and reduce your out-of-pocket expenses.
Protecting Yourself and Your Retirement
While planning ahead for the potential financial costs of assisted living is a savvy move for retirees, financial planning isn't the only way to ensure a happy and healthy retirement. Focusing on the positive lifestyle changes you can make now, such as getting adequate sleep, exercising frequently and choosing healthy food, can help you feel great in the present and may reduce your odds of needing assisted living or other long-term care as well.