There are several sources other than insurance that are available for providing long-term care, however, there are drawbacks associated with each. One source is to rely on personal savings. Unless a person has substantial resources, however, this approach may force an individual and his or her dependents into poverty. It may also mean that the person will not meet the financial objective of leaving assets to heirs.

A second source is to rely on welfare. The medicaid program in most states will provide benefits, which usually include nursing home care, to the "medically needy." However, a person is not eligible unless he or she is either poor or has a low income and has exhausted most other assets (including those of a spouse). There is also often a social stigma associated with accepting welfare. One strategy that is sometimes used is to give a person�s assets away at the time nursing home care is needed and ultimately rely on medicaid. (This will work only if income, including pensions and social security, is below specified limits). However, medicaid benefits are reduced (or their onset postponed) if assets were disposed of at less than their fair market value within a specific time period (called the look-back period) prior to medicaid eligibility. One approach is to purchase long-term care insurance in an amount sufficient to provide protection for the length of the look-back period. If care is needed, a person can rely on the insurance coverage and transfer assets to heirs. When the insurance coverage runs out and the look-back period is over, the person can apply for medicaid. Because of recent tax law changes that extend the medicaid look-back period, anyone using this strategy should reevaluate its viability.

Several states have attempted to encourage better coverage for long-term care, often with grants provided by The Robert Wood Johnson Foundation. One aspect of these experiments has been to waive or modify certain medicaid requirements if a person carries a state-approved long-term care policy. For example, in Connecticut a person can apply for and receive medicaid benefits without having to exhaust current assets if the individual had maintained an approved long-term care policy and its benefits have run out. In essence, these programs increase the assets that a person can retain and still collect medicaid benefits, with the increase in the allowable asset threshold related to the amount of long-term care coverage carried and exhausted.

Life-care facilities are growing in popularity as a source of meeting long-term care needs. Residents in a life-care facility pay an "entrance fee" that allows them to occupy a dwelling unit but usually does not give them actual ownership rights. The entrance fee may or may not be refundable if the resident leaves the facility voluntarily or dies. As a general rule, the higher the refund is, the higher the entrance fee will be. Residents pay a monthly fee that includes meals, some housecleaning services, and varying degrees of health care. If a person needs long-term care, he or she must give up the independent living unit and move to the nursing home portion of the facility, but the monthly fee normally remains the same. The disadvantages of this option are that the cost of a life-care facility is beyond the reach of many persons, and a resident must be in reasonably good health and able to live independently at the time he or she enters the facility. Therefore the decision to use a life-care facility must be made in advance of the need for long-term care. Once such care is needed or is imminent, this approach is no longer viable.

A few insurers now include long-term care benefits in some cash value life insurance policies. Essentially an insured can begin to use these accelerated benefits while he or she is still living. For example, if the insured is in a nursing home, he or she might be able to elect a benefit equal to 25 percent or 50 percent of the policy face amount. However, any benefits received reduce the future death benefit payable to heirs. One potential problem with this approach is that the acceleration of benefits may result in the reduction of the death benefit to a level that is inadequate to accomplish the purpose of life insurance�the protection of family members after a wage earner�s death. If benefits are accelerated, there is less left for the surviving family. In addition, the availability of an accelerated benefit may give the insured a false sense of security that long-term care needs are being met when in fact the potential benefit may be inadequate to cover extended nursing home stays.