Private Payment for Long Term Care

There are several ways in which people choose to pay for long term care. Some people choose to forgo insurance or governmental help and simply pay for the care out of their own pocket. This is a risky choice for a person who has a medium range to low range income but can be a very manageable option for those who are in the higher income brackets. This is because it takes a substantial amount of money per year to maintain long term care.

Positives and Negatives

This option has both negatives and positives. While it gives the individual and their family complete control over the amount of money spent and exactly what it is spent on, there is always the risk of unforeseen expenses crippling a long term care savings. Another upside to paying for long term care with personal savings is that if the individual never needs long term care, then the savings can be left to surviving family members. Experts recommend that couples plan ahead and be careful to ensure that there is enough savings accumulated to take care of the partner in need while still providing an adequate lifestyle to the healthy partner.

How to Save

The money that is saved for long term care should be placed in a fund that can be quickly accessed as it is unpredictable when someone’s health may decline. The fund should not impose any penalties for early withdrawal that could unnecessarily eat into savings. Individuals over the age of 62 can use their home equity to provide funding for long term care. These individuals can obtain a reverse mortgage. A reverse mortgage allows the individual to borrow money against the equity of their home and can be used for any purpose. The loan can be paid out as a line of credit, a lump sum, fixed monthly payment, or any combination of the three. There are no monthly mortgage payments and individuals continue to own their homes. The loan becomes due once the borrower no longer is the principal resident of the home and the amount owed will not exceed the value of the home.