A Practical Guide for Families to Identify Funding Solutions for Home Care
One of the most common and unexpected challenges aging seniors and their families face is realizing that their long-term care insurance (LTCI) doesn’t cover everything. While LTCI is an important financial safety net, policies often come with daily or lifetime caps, elimination periods, or limits on the type of care covered. This can leave families who are policyholders scrambling to fill financial gaps—often while juggling emotional stress and caregiving responsibilities.
The good news is there are many strategies to help manage these uncovered costs, say experts like Michael Banner, the host of 62 Who Knew podcast that focuses on educating seniors and their adult children about long-term care, Medicare, elder law, and other topics related to retirement planning. Whether you’re just beginning to plan or facing care expenses right now, it’s never too late to reassess and adjust your approach. Here are several options that can provide support when long-term care insurance falls short.
Hybrid Life Insurance with Long-Term Care Riders
Hybrid life insurance policies offer both a death benefit and a long-term care benefit. If you never use the LTC portion, your beneficiaries still receive a payout. If care is needed, a portion of the death benefit is used to cover services like in-home care, assisted living, or nursing facilities.
These policies can be especially attractive because:
- Premiums are typically guaranteed and won’t increase over time.
- Underwriting is often more flexible than traditional LTCI.
- You get peace of mind knowing the funds will be used, one way or another.
This option is great for families who are planning in advance and want to ensure that their investment doesn’t go to waste.
Annuities with Long-Term Care Benefits
Annuities that include long-term care riders can be another viable solution, especially for individuals with significant retirement savings. These products allow you to invest a lump sum and receive monthly income—enhanced if used for qualified care expenses.
Key benefits:
- No need to qualify with medical underwriting for some options.
- Funds grow tax-deferred.
- If long-term care isn’t needed, the annuity still provides income.
This is ideal for retirees who want to protect against longevity risk and the rising cost of care.
Health Savings Accounts (HSAs)
If you’re still working and enrolled in a high-deductible health plan, contributing to an HSA is a tax-advantaged way to prepare for future health-related expenses—including some long-term care costs.
Advantages include:
- Contributions are tax-deductible.
- Growth is tax-free.
- Withdrawals for qualified medical expenses, including LTC services, are also tax-free.
Funds roll over year to year and can be a powerful savings tool when planned early.
Medicaid Planning
When private funds and insurance aren’t enough, Medicaid becomes a vital safety net—but qualifying isn’t simple. Medicaid is means-tested, meaning you must meet strict income and asset thresholds. Fortunately, with proper legal guidance, it’s possible to “spend down” assets in a way that’s compliant with Medicaid rules.
Why it’s important:
- Medicaid covers the full cost of nursing home care and, in some states, in-home or assisted living support.
- Planning early (ideally five years before care is needed) can preserve some assets for a spouse or heirs.
- An elder law attorney can help navigate this complex system and avoid costly mistakes.
Family Care Agreements
When a family member provides caregiving services, a written agreement ensures transparency and allows for potential Medicaid reimbursement. These agreements can:
- Help justify compensation for caregiving, especially if one family member is giving up work.
- Protect family relationships by establishing clear roles and expectations.
- Provide documentation for tax or Medicaid eligibility purposes.
Formalizing informal care arrangements can also bring peace of mind and fairness to all involved.
Life Settlements
A life settlement involves selling a life insurance policy to a third-party investor for more than its cash surrender value but less than its death benefit. The buyer continues paying premiums and collects the death benefit when the policyholder passes.
Consider this if:
- You no longer need the life insurance policy.
- You need immediate funds for care.
- You’re ineligible for more traditional forms of care financing.
Be sure to consult with a financial advisor or attorney, as this option can affect taxes and estate planning.
Cohousing and Shared Living Arrangements
Senior cohousing is a growing trend in which older adults live in a community designed for shared support and resources. Residents often share meals, caregiving responsibilities, and social activities.
Benefits include:
- Lower costs compared to institutional care.
- Built-in companionship and reduced isolation.
- Informal support networks that ease the caregiving burden.
This lifestyle is especially appealing to seniors who value independence but also want access to a community.
Emergency Savings and Liquid Assets
Even a modest emergency fund can make a big difference when unexpected care costs arise. While many retirees live on fixed incomes, it’s important to set aside funds specifically for healthcare and long-term support.
Recommendations:
- Keep at least 6–12 months of essential expenses easily accessible.
- Regularly reassess your budget to adjust savings needs.
- Consider placing emergency savings in a high-yield savings account or money market fund.
An emergency fund can serve as your first line of defense before tapping into investments or family resources.
Plan Proactively, Not Reactively
Long-term care costs can be overwhelming—but they don’t have to catch you off guard. If your LTCI doesn’t cover everything, you have more options than you might think. Whether you choose a financial product, government program, or community support model, the most important step is to plan ahead.
At [Your Company Name], we specialize in providing compassionate, non-medical care services that help seniors live safely and comfortably in their own homes. We understand how stressful it can be to manage the cost of care, and we’re here to work with you—whether it’s helping you build a care plan, navigating resources, or offering flexible support options.
Need help figuring out the next step? Contact us today at Amada Senior Care for a free consultation. As experts in long-term care insurance claims management and other funding solutions, our senior care advisors are here to support you and your family—every step of the way. CLICK HERE to find an Amada office near you.
