Although health insurance and rising premiums seem to be a recurring news story, not enough attention is paid to the fact that chronic care is NOT covered by Medicare or other health insurance. By its very nature, chronic care is an ongoing long-term expense that can drain savings accounts and jeopardize the lifestyles of otherwise financially secure Americans.

The kind of care needed by people who have suffered an accident, a progressive illness, cognitive issues, or the frailties of advanced age is often referred to as chronic or long term care: when assistance is needed to perform common daily activities like bathing and dressing. Although this care is usually provided by aides – not nurses or doctors, it is very expensive because so many hours of care are needed.

In previous generations, care was traditionally provided by family members – often daughters and daughters-in-law. Today, however, most women work outside the home and parents are often not living near their grown children. So more and more people now have to pay for care and the annual costs can be staggering, especially here in Westchester: ranging upwards of $40,000 annually for part-time care at home to over $140,000 in a nursing home, with costs further escalating for prolonged periods of care.

In the past, Medicaid, the insurer of last resort, could be counted on to take care of those who had depleted their resources or had consulted an Elder Law attorney for Medicaid planning. However, federal and state resources have been stretched thin and going forward, it will be difficult for people to receive the actual amount of care they need.

With government estimates that 70% of those aged 65 and older will need long-term care in the future, it’s important we all understand the risks of delaying the planning process.

To the best of my knowledge, there are only seven ways to pay for care:

means using your own income and/or assets, drawing down retirement plans, and/or purchasing an annuity to guarantee income to pay expenses.

uses the built-up equity in your home to pay whatever expenses you choose including insurance premiums.

provides flexible benefit features designed specifically to pay chronic illness costs.

with long-term care or chronic illness riders allows the insured to advance the death benefit of their life insurance to pay for care.

is a federal and state program created to pay nursing home expenses and in some states – like New York – care at home (referred to as Community Medicaid) is covered as well.

is the sale of your life insurance to a third party that assumes the premium payments. It may be available to those who no longer need their life insurance or want to pay premiums.

may be available to those who have served in the Armed Services during wartime.

Each of these funding strategies has positives and negatives and will not be appropriate for everyone. Many people will have to rely on more than one method – a patchwork solution – to get the care they may need in the future.

Selecting the right option(s) for you will depend upon your individual financial situation, your age, your health, family history and tolerance for risk. Start doing your homework now, if you haven’t already, to prepare for your potential financial needs down the road.


Lynn Lavender, CLTC, is Principal at Guide Insurance and has been handling the insurance needs of individuals and businesses for over 20 years. She can be reached at:914.478.7640 or