These high costs lead to a lot of anxiety about how people will afford such care, says Marsha Goetting, a family economics specialist with the Montana State University Extension Service. Goetting cites four main options. Some people use their own income and assets to pay the costs, while others depend on the financial resources of adult children or other relatives.
People also purchase long-term care insurance to defray the costs of nursing home care.
A fourth major option is Medicaid. Originally designed to provide medical care for needy women and children, the program is now being viewed as an entitlement by many middle-class Americans, she says. In order to qualify for Medicaid, some people deliberately become impoverished by giving away all their property or transferring assets to an irrevocable trust where a trustee manages them. Although this can be legal, impoverishment can be psychologically and socially traumatic. Taxes can be assessed on the transferred property.