Understanding Private Pay Alternatives for Long Term Care

Understanding Private Pay Alternatives for Long Term Care

Paying For Long Term Care

Statistics show that the majority of people do not understand the various forms of long term care, the different means to pay for it, and most do not plan for long term care until they are hit by a health care crisis. Today, Social Security, Medicare and Medicaid are all in the red and creating havoc for government budgets at the federal and state levels. State budgets have been impacted particularly hard by shrinking tax dollars and growing Medicaid enrollment brought on by an aging population. Over 10 million Americans now require long term care annually, and Medicaid is the primary source of coverage.

Seniors and their families are already struggling with the costs of everyday living, if you add the costs of long term care to the picture it is a back breaking scenario for most Americans. The simple fact is more responsibility is going to be placed back on the individual and their families to find the resources necessary to handle the costs of long term care. Understanding the growing array of alternative private pay solutions is a critical part of long term care planning for any senior care advisor and provider.

The Solution

Twenty years ago the only real alternative to Medicare and Medicaid was long term care insurance. Today, a variety of private pay options exist in the market that can help a person remain financially independent, preserve assets, maintain more control of the type and location of care they access, and will go a long way towards preserving dignity for an individual and their family when confronting the need for care.

Among the options that a senior care advisor and provider should have familiarity with, are:

  • Veterans’ Aide & Attendance Benefit: A monthly benefit for low income veterans (and their spouses) who served at least one day during a wartime period.
  • Converting life insurance into a Long Term Care Benefit Plan: A Long Term Care Benefit Plan is the conversion of an in-force life insurance policy into an irrevocable, FDIC-insured Benefit Account that is professionally administered with tax-free payments made monthly on behalf of the individual receiving care.
  • Reverse Mortgages: A reverse mortgage is a loan that enables senior homeowners, age 62 and older, to convert part of their home equity (primary residence only) into tax-free income without having to sell their home, give up title to it, or make monthly mortgage payments.
  • Viatical/Life Settlements: A life or viatical settlement is the sale of an existing life insurance policy to a third party for more than its cash surrender value, but less than its net death benefit.
  • Senior Living Loans: Senior Care Bridge Loans are designed to help seniors and their families with the cost of assisted living, home care or skilled nursing on a short term basis. The loan is unsecured with up to 6 co-signers permitted instead of collateral and the loan payments are made directly from the loan account to the care provider.
  • Single Premium Immediate Annuities (SPIA): An immediate annuity is a contract with an insurance company under which the consumer pays a certain amount of money to the company and the company sends the consumer a monthly check for the rest of his or her life. In most states the purchase of an annuity is not considered to be a transfer for purposes of eligibility for Medicaid, but is instead the purchase of an investment.
  • Long Term Care Insurance: Long-term care insurance is designed to cover a wide range of long-term care services. Most long-term care services are NOT covered by any other kind of insurance, including health insurance, long-term disability insurance, Medicare, or Medicare supplemental coverage.


When it comes to private pay financial solutions for long term care it is not about selling a product; rather, it is about providing information and access to resources that will allow for effective long term care financial planning. Advisors should be focused on understanding the crisis situation we are dealing with as a country and the variety of resources that can help people both plan for the future and react to an immediate situation. The seven private pay funding solutions presented in this article are all viable alternatives to going onto Medicare and/or Medicaid. It is the responsibility of every advisor to be familiar with how they can benefit a family confronting the realities of long term care.

Reprinted by Always Best Care Senior Services with permission from Senior Spirit, the publication of the Society of Certified Senior Advisors.

The Certified Senior Advisor (CSA) program provides the advanced knowledge and practical tools to serve seniors at the highest level possible while providing recipients a powerful credential that increases their competitive advantage over other professionals. The CSA works closely with Always Best Care Senior Services to help ABC business owners understand how to build effective relationships with seniors based on a broad-based knowledge of the health, social and financial issues that are important to seniors, and the dynamics of how these factors work together in seniors’ lives. To be a Certified Senior Advisor (CSA) means one willingly accepts and vigilantly upholds the standards in the CSA Code of Professional Responsibility. These standards define the behavior that we owe to seniors, to ourselves, and to our fellow CSAs. The reputation built over the years by the hard work and high standards of CSAs flows to everyone who adds the designation to their name. For more information, visit www.csa.us.

Always Best Care Senior Services

Always Best Care Senior Services is based on the belief that having the right people for the right level of care means peace of mind for the client and family. Always Best Care Senior Services has assisted over 25,000 seniors, representing a wide range of illnesses and personal needs. This has established the company as one of the premier providers of in-home care, assisted living placement assistance, and skilled home health care in the Midlands of South Carolina. For more information, or to speak to a Certified Senior Advisor, call us at (803) 403-1895.

May, 2015

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