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3 ways that older adults can plan to cover nursing home costs

As people develop physical limitations or experience cognitive decline in response to aging, they may find themselves in need of increased support on a day-to-day basis. Even those who have always been staunchly independent may eventually need to consider moving into a nursing home after a diagnosis of Alzheimer’s disease or a fall that causes them serious injuries.

Covering the costs of nursing home care can be very challenging for those living on a fixed income. When looking at costs from 2021, a private room in a nursing home costs more than $15,000 per month on average, while a semi-private room costs more than $13,700 in Connecticut. How do older adults arrange to cover those costs?

They set aside resources and savings

Those who have sizable retirement accounts with seven figures of funding or more may be able to cover their own nursing home care costs as they age. They will need to budget carefully early in their retirement so that they retain enough capital to cover the cost of nursing home care when they require more intensive support later in life.

They purchase long-term care insurance

There are special forms of supplemental long-term care insurance that specifically cover the costs associated with moving into a nursing home or other forms of long-term care. Such policies often require investment long before they will need benefits. A policy might still be affordable for someone in their 40s or 50s, those closer or two or past the age of retirement may find that the monthly premiums for such coverage become prohibitively expensive.

They plan ahead for Medicaid

Although Medicare does not cover nursing home costs in most cases, Medicaid potentially will. Applicants will only qualify for benefits if they meet very strict rules regarding their monthly household income and the total value of their personal assets. Those preparing for retirement can plan ahead for nursing home costs by reducing what they hold in their own name and possibly by creating a trust. The right estate planning steps taken years before someone requires Medicaid coverage can both make it easier for them to get benefits when they become necessary and reduce the likelihood of state recovery efforts consuming what someone had intended to leave for their loved ones after their death.

Addressing the most significant cost that people may have to cover later in life during the estate planning process can give individuals more financial stability as they age and more control over the legacy that they leave when they die.