Long Term Care Planning

How to pay for long-term care without insurance

How to pay for long-term care without insurance

In this article

— Last Updated May 27, 2022

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7 mins
Reviewed by
Eric Berkman

Guide How to pay for long-term care without insurance

— Last Updated May 27, 2022

Stephanie Wilson

Director of Operations


Reviewed by

Eric Berkman

Nursing home care and assisted living fees can be one of the biggest financial burdens in retirement. Having to pay long-term care costs can quickly drain your savings. Many people, therefore, have long-term care insurance to help them pay for in-home care, assisted living, or nursing home care.

But what happens if you do not have long-term care insurance? There are many options available for funding long-term care including using personal savings, long-term care insurance, hybrid insurance, and Medicaid.

This article discusses your options for paying for long-term care without insurance coverage. We also address your concerns by answering your questions.

The costs of long-term care

Long-term care in nursing homes or assisted living facilities is relatively expensive and can drain a significant part of your monthly income. Costs are often covered by individual or family savings, retirement funds, pensions, annuities, Social Security, or other government assistance programs.

Since 2020, the national median cost has increased by 2.41%, according to Genworth. You can expect to pay $108,405 for a private room in a nursing home and $94,900 for a semi-private room.

How to pay for long-term care without insurance

Each person’s financial situation and the long-term care services they need will determine how they will pay for long-term care, whether that care is provided in their own home, a hospital, an assisted living facility, or a nursing home. They often use a combination of private finances, government aid, and other forms of funding to meet their financial obligations.

Costs paid out of pocket

Many seniors use their own savings to offset the cost of care. Long-term care can be paid for by using funds from their own savings, retirement benefits or retirement income, dividends and interest from investments in equities and bonds, or even from the sale of their property.

In reality, the majority of family members offer free assistance with daily activities and daily living needs at first, such as personal care and transportation using their own money. In some cases, paid assistance may be required when a person’s level of care increases which will further drain their finances.

Many senior citizens spend their own money to take part in adult day care service programs, receive meals, and engage in other types of community-based activities that are offered by local governments and nonprofit organizations. They are able to keep living independently with the aid of these programs.

Residents of assisted living facilities and continuing care retirement homes often pay privately for the professional care they receive, while Medicaid can cover a part of the cost in certain states.

Reverse mortgages for seniors

With a reverse mortgage, a homeowner has access to a portion of the equity built up in their property in exchange for a loan. No payments are due on a home equity loan until the property is sold, whether the borrower moves out, or they pass away. This is a significant difference from a standard mortgage.

The only eligibility criteria for a reverse mortgage are that you are age 62 or above and have no credit or income history. All medical costs, even those incurred throughout a lifetime, qualify as tax-deductible, as does the loan amount. On the other hand, if you already have a mortgage or other liabilities on your house, you should use the money to settle those obligations first.

Paying with annuities

A long-term care annuity is a contract between you and an insurance company that provides you with a steady stream of income to assist pay for long-term care over the course of many years. An annuity, either immediate annuities or deferred long-term care annuities, is a series of payments made by an insurance company on a monthly basis for a certain amount of time in return for a lump sum or a series of payments.


A trust is a legal arrangement wherein one party transfers ownership of assets to another party (the trustee). When a trust is set up, the person designated as the trustee is given legal authority over the assets for the benefit of the beneficiary or beneficiaries.

You or your spouse may opt to set up a trust so that you or they may have more control over your assets as you become older or if you become disabled. Long-term care expenses may be covered by either a Medicaid disability trust or a charitable residual trust.

Policies on life Insurance for long-term care

Long-term care costs can also be covered by several types of life insurance plans. Hybrid insurance policies combine life and long-term care insurance into a single plan.

Some policies allow you to access part of your death benefit while you are still alive, without paying taxes on it. If you take out an advance on your life insurance, it will reduce the amount your beneficiaries get after your passing.

If you are diagnosed with a terminal illness, have an incurable disease, or require long-term care for a longer period of time, you could be eligible for an early death benefit. Make sure you know precisely what is covered by your life insurance policy.

The money you need can be as close as the proceeds from the sale of your life insurance policy. Typically, only those who are 70 or older may qualify for a life settlement. The money may be used for anything, including long-term care costs, and is subject to taxes.

Viatical settlements are similar arrangements where a person with a terminal illness sells their life insurance policy to an insurance company in exchange for a portion of the death payment. Those with a life expectancy of two years or fewer often choose this route. While a viatical settlement might give much-needed funds quickly, it is not always easy to obtain.

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Long-term care insurance

Hospice care and palliative care are two of the varying ways of long-term care that are covered by a long-term care insurance policy. The specifics of your coverage will be determined by the insurance you choose and the services you want. Coverage for nursing homes is optional, and you could also get a long-term care policy that covers your care at home as well as at a facility.

Long-term care insurance is widely available from several providers. It’s wise to look at and evaluate several policies before settling on one. What you pay for insurance will depend on the coverage you choose, your age at the time of purchase, and any supplemental features you add.

Individuals who are younger, healthier, and less likely to need long-term care may benefit from purchasing this insurance. When a person is older, has health issues, or wants additional benefits, the cost increases. It may be difficult to get long-term care insurance if you are in bad health or are currently receiving treatments associated with the end of life.

Government Programs

Some senior citizens qualify for healthcare programs funded by the government. There are several federal and state programs that can assist with healthcare expenses.


Medicaid is a joint Federal-State initiative to assist low-income Americans. Individuals with low incomes and meeting other criteria are eligible for this program, which pays for their medical treatment and various forms of long-term care including custodial care. The requirements for enrollment and the scope of available care differ from one State to the next.

If Medicaid is paying your medical expenses, Medicaid will decide the type of care you get and from whom. It is also important to know that Medicaid has a five-year look-back period. The following basics you must understand to avoid Medicaid’s five-year look-back penalties:

  • Anyone applying for Medicaid must meet the program’s asset or resource limit.
  • The purpose of the Medicaid look-back period is to discourage applicants from dispensing with assets before applying for benefits.
  • If a transfer of assets occurred within the five-year time frame after the regulation was implemented, a penalty period will be imposed. During this time, a Medicaid-eligible individual is ineligible for benefits.
  • There is no tax to pay if the property is given away or transferred before the five-year period.

Social Security Programs

If you are under 65 years of age and disabled, you may be eligible for financial assistance via the Social Security Administration’s Disability Insurance (SSDI) and Supplemental Security Income (SSI) programs to help pay for long-term care. To qualify, you must be able to prove:

  • You’ve been medically declared that you cannot work.
  • Your health conditions are expected to last a year or could result in death.

National Council on Aging

The National Council on Aging is a privately funded group that runs a free program that can assist you in locating federal and state assistance programs. One such program is Benefits Check Up which can help you cover costs of prescription drug medications, meals, legal representation, and basic medical care.

Department of Veteran’s Affairs

Veterans who are eligible for long-term care or home care from the U.S. Department of Veterans Affairs can receive financial assistance and enrol in the VAs long-term care service. If you meet the following requirements, you could apply for long-term care services:

  • To be eligible for VA long-term care services, veterans must first be enrolled in VA health care, which involves enrolling in VA health care benefits and regularly receiving treatment at a VA hospital.
  • It is crucial to note that you are not automatically enrolled in VA health care just because you are receiving compensation for a VA disability.
  • If you served in the military and were released for a reason other than dishonourable, the VA may be able to provide you with medical treatment, better known as the Standard Medical Benefits Package.

Frequently asked questions

Does Medicare cover long-term care?

Long-term care, also known as custodial care, is not covered by Medicare. The majority of care received by nursing home residents is custodial care, which includes assistance with activities of daily living such as eating, bathing, and using the restroom. All costs associated with non-covered services, including most forms of long-term care, are entirely on your shoulders.

Does Medicare cover assisted living?

Medicare coverage includes skilled care but does not cover assisted living facilities along with other forms of long-term residential care such as nursing homes and memory care

What is penalty period?

The Medicaid penalty period is determined by dividing the entire value of transferred assets by the national average cost of nursing home care paid by the patient themselves every month. Transfers of monetary and nonmonetary value are both subject to penalties.

How many days of respite care does Medicare cover?

Medicare will pay for respite care for up to five consecutive days at a time. Hospice patients may get respite care more than once, but Medicare only covers it occasionally.

Final Thoughts

How you decide to save up for and pay for long-term care depends on your individual circumstances. Consider investing in long-term care insurance. With the help of long-term care insurance, you may rest easy knowing that your savings will last into your golden years.

Stephanie Wilson


September 29, 2022

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