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How long-term care insurance can cut the cost of home health aides

How long-term care insurance can cut the cost of home health aides
A long-term care insurance policy could help you reduce the cost of home health aides later in life. 

Franziska Richter / Getty Images

The majority of Americans ages 65 years old or older — or about 70% — will need long-term care services at some point in their lives. But that doesn’t necessarily mean that the majority of Americans will find themselves in a nursing home or assisted living community. There are care options for those who want to age in place, too. 

One of the most expensive aspects of aging in place can be the need for a home health aide. However, if you make wise financial decisions before it becomes a necessity, you may be able to reduce the cost of your home healthcare services. And, long-term care insurance can help

Find the right long-term care insurance policy to reduce home health aide costs

How long-term care insurance can cut the cost of home health aides

Home health aides can be quite expensive. According to the Genworth cost of care survey, the annual cost of a home health aide could grow to $69,529 by the year 2025. So, does long-term care insurance cover this cost?

“Long-term care insurance usually does cover home health aides, but only under specific requirements,” says Joseph Fresard, elder law and estate planning attorney at Simasko Law. 

That doesn’t mean all policies will offer this coverage, though. “You should check the policy to see if it does cover home health aides and if so, what conditions there may be” before you purchase coverage, Fresard says. 

So, as long as you choose a policy that offers home health aide coverage, you can typically use it to reduce the cost of a home health aide. That generally works in one of two ways: 

Long-term care insurance may cover the entire cost of a home health aide

One way to use long-term care insurance to reduce the cost of a home health aide is to purchase enough coverage to pay for the full expense. To do this, it can help to estimate when you might need a home health aide. You can then use data on the average cost of care to determine a cost estimate for home health aides in the year you may need one. 

It may also help to plan for a few years of coverage. For example, if you find that your home health aide may cost $70,000 per year, it could benefit you to purchase $210,000 in long-term care insurance — or three times your expected annual cost of care. 

Explore your long-term care insurance policy options online now

Long-term care insurance can also provide supplemental coverage

As with most types of insurance, long-term care insurance gets more expensive as the coverage amount increases. For example, you would probably pay much higher premiums for a $250,000 policy than you would for a $150,000 policy. So, premiums may be too high if you plan to cover 100 percent of your home health aide expenses with long-term care insurance. 

There’s a way to bring costs down, though. 

Rather than leaning on long-term care insurance for 100% of your home health aide costs, consider using the policy as a supplemental resource instead. For example, you may have accounted for some increased healthcare costs as part of your retirement plan. Let’s say you expected to spend $25,000 per year on increased healthcare expenses. 

You probably won’t need as much long-term care insurance coverage when you consider the $25,000 per year you’ve already saved. For example, if you determine your home health aide costs will be $70,000 per year, you may only need about $45,000 per year in coverage — which could lead to a significant reduction in your premiums. 

Other ways long-term care insurance can help you age in place

Whether or not you need a home health aide, long-term care insurance can make it easier to age in place instead of moving to a nursing home or assisted living community. Here are a few ways this kind of coverage can help: 

  • Home renovations: As you age, you may develop conditions that make your home less accessible. Long-term care insurance might cover the cost of renovations to improve accessibility. For example, your coverage could pay for the installation of handles in your shower or a ramp to your front door. 
  • Family caregivers: Your policy may offer your family compensation for providing your care. If you plan to lean on your family for your care, be sure your insurance policy covers formal and informal caregivers. 
  • Equipment: Long-term care insurance may help cover the cost of equipment that’s not covered by another policy. For example, your coverage may pay for traction equipment or stair elevators if these types of equipment become a medical necessity.  

Get long-term care insurance to help you age in place today

The bottom line

Home health aides can be expensive, but if you act before you need one, you may not need to cover the bill on your own. Many long-term care insurance policies help to cover the cost of home health aides as well as other costs associated with aging in place. By purchasing a long-term care insurance policy now, you may be better prepared to afford the cost of your care later.