Planning for long-term care (LTC) is an essential component of financial planning for Canadian seniors and their families. While Canada has a strong healthcare system, long-term care is not fully covered by provincial health insurance plans, meaning that individuals may face significant out-of-pocket costs for assisted living, nursing homes, and in-home care.

Here’s a comprehensive look at long-term care in Canada, including costs, types of care available, funding options, and planning tips.

What Is Long-Term Care?

Long-term care encompasses a range of services that help people with chronic illnesses, disabilities, or other conditions maintain their quality of life and daily living. This includes activities like bathing, dressing, meal preparation, and medication management.

In Canada, Long Term Care can take several forms:

1. Home Care Services

Professional caregivers visit the home to assist with daily tasks, allowing individuals to remain in their homes for as long as needed.

2. Assisted Living

Facilities where individuals have private rooms or apartments, with on-site staff for support with personal care, meals, and some medical needs.

3. Long-Term Care Homes (Nursing Homes)

24-hour care in a residential setting for people with significant medical needs who can no longer live independently.

4. Memory Care Units

Specialized facilities designed to support individuals with dementia or Alzheimer’s disease.

The Cost of Long-Term Care in Canada

The costs of long-term care vary widely across Canada, as well as between private and public care options.

Here’s a breakdown of typical costs:

1. Home Care Services

• Cost generally ranges from $20 to $60 per hour, depending on the level of care required and the region in Canada. Some provinces provide subsidized home care for eligible individuals depending on their age an income.
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• Annual Estimate: For someone needing moderate care (e.g., 20 hours per week), costs could range from $20,800 to $62,400 per year.

2. Assisted Living

• Cost: Monthly fees vary between $1,500 and $6,000, depending on location, the level of care, and the facility. Urban centers like Toronto or Vancouver tend to be on the higher end.
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• Annual Estimate: Between $18,000 and $72,000 per year, depending on region and facility type.

3. Long-Term Care Homes (Nursing Homes)

• Cost: Provincial governments often subsidize LTC homes, but residents typically pay a portion of the costs. Private rooms can range from $1,200 to $3,000 per month, while semi-private or shared rooms may cost between $900 and $2,000. This depends on the location and level of care you need in the long-term care home.
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• Annual Estimate: $10,800 to $36,000 for subsidized rooms; higher for private care homes or additional services.

4. Memory Care Units

• Cost: Ranges from $4,000 to $10,000 per month, as these facilities provide specialized staff and security features.
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• Annual Estimate: $48,000 to $120,000, often not subsidized, so these costs are out-of-pocket for most families.

Government Support for Long-Term Care Costs

Canada’s healthcare system covers many medical needs but only partially supports long-term care costs, which vary by province.

Here are some public support options:

• Provincial Subsidies: Most provinces offer subsidies for LTC homes based on income and financial need, though waitlists for subsidized spaces can be long and sometimes can take a few years before your name come up. Also, you may not get the location you desire.
  
  You may live in London Ontario, but there's an available spot at a long-term care facility in Sarnia, Ontario. If you decide not to accept, it's offered to the next person on the list.
  
  Click Here for Ontario Provincial website on Subsidies.

• Canadian Pension Plan (CPP) and Old Age Security (OAS): CPP and OAS payments provide income in retirement, which can help cover basic living expenses, though they often don’t fully cover LTC costs.
  
  Click Here for CPP and Click Here for Canada OAS.
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• Disability Tax Credit (DTC): Canadians with severe and prolonged disabilities may be eligible for the DTC, providing some tax relief.
  
  Click Here for Canada Disability Tax Credit.
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• Veterans Affairs Benefits: For eligible veterans, Veterans Affairs Canada provides financial assistance for in-home and facility-based LTC services.
  
  Click Here for Canada Veteran Affairs.

How to Prepare Financially for Long-Term Care Costs

1. Save in Tax Sheltered Accounts

Tax-Free Savings Account (TFSA) offer you the ability to have your funds grow tax-free and can be withdrawn without any paying any taxes. This means that all of your growth including dividends, capital appreciation, and interest earned, can be withdrawn tax free. This can be a great source of income in retirement and help with long term care expenses.

Registered Retirement Savings Plan (RRSP) can also help but remember that withdrawals from an RRSP are taxable. So, before you begin to withdraw, you need to convert these funds into a Registered Retirement Income Fund (RRIF) at retirement. Your RRIF will provide a steady income stream that can support LTC costs.

2. Consider Long-Term Care Insurance

Long-term care insurance is designed to help cover the costs of assisted living or nursing care. In Canada, LTC insurance policies vary widely, with some covering home care and others providing benefits only in facility-based settings.

Premiums depend on age, health status, and the level of coverage chosen. The best time to purchase LTC insurance is usually in one’s 50s or early 60s, as premiums increase significantly with age.

3. Plan with Your Estate and Will

Creating an estate plan ensures that your assets can be used to support your care needs. This may involve setting up trusts, appointing a power of attorney, and ensuring assets are distributed as needed for long-term care. Consulting a financial planner can help determine the best way to protect and allocate assets for future Long Term Care costs.

4. Leverage Home Equity

If you own a home, you may have access to the equity in your home. This can be a substantial resource for LTC funding. Options include downsizing - this is when you sell your home and purchase a smaller one or and using the difference to help fund your long-term care needs. Some people also sell their home and fully move into a long-term care facility.

You can also take out a home equity line of credit, but this increases your living expenses as you now have a debt obligation.

If you wish to remain in your home but don't want a debt obligation, you can access a reverse mortgage, which allows homeowners to borrow against the home’s value without monthly payments. These funds can then be directed toward LTC expenses.

5. Family Support and Shared Planning

Open discussions with family members about LTC preferences and costs can ease the planning process. Family members may be willing to assist in caregiving roles or provide financial support.

Planning as a family can also clarify decisions around caregiving roles and financial responsibilities.

Tips for Effective Long-Term Care Planning

1. Research Local Facilities and Options: Visit local facilities to understand what’s available and what services are offered. Most LTC facilities have long waiting lists, so early planning is essential.

2. Stay Informed of Policy Changes: LTC costs and government subsidies can change, so stay updated on both provincial and federal LTC funding options. We recommend meeting with your Financial Planner or Financial Advisor at least once a year to go over a full financial review.

3. Consider Health and Longevity: Health needs can evolve quickly. People with family histories of certain chronic conditions may benefit from proactive financial planning.

Conclusion

The costs of long-term care in Canada are significant, and government support is limited, making early and proactive financial planning critical. By understanding LTC options, leveraging public support, saving strategically, and exploring insurance, Canadians can mitigate LTC costs and secure quality care.

Taking these steps early not only protects your finances but also provides peace of mind, ensuring that you and your family are well-prepared for the future.