Seven Ways to Pay for Assisted Living
A new year brings hope and possibility. It’s a time to set goals and plan for the year ahead. While the pandemic has understandably adjusted some of our planning, it’s always a good time to plan ahead as it relates to the care of elderly family members.
One of the key pieces to the conversation about senior living housing is cost. It’s no secret that long-term care can be expensive. The average cost of assisted living in the United States is $3,628 per month. Although the cost of care varies based on care setting, geographic location and level of care required, it’s still a hefty price tag.
The thought of paying such a monthly sum can be overwhelming and burdensome. But it doesn’t need to be. There are a variety of ways a family can finance a loved one’s care at an assisted living facility. When discussions happen early and well before the need arises, families find creative ways to incorporate senior living costs into their budgets.
Much like planning for kids to attend college, many families will create a nest egg for senior care expenses. The senior care line item is treated as a bill with monies set aside in a savings account years before the need arises. This approach involves the least amount of work for the adult children making the decisions to entrust their parents’ care to an assisted living facility.
Long-Term Care Insurance
Unlike traditional health insurance, long-term care insurance is designed to cover services in a variety of settings – including, but not limited to, assisted living facilities. Planning is necessary, as such policies are generally purchased in advance of needing care and will require medical underwriting. Many long-term policies will have limits on how much or how long they will pay. Some policies cover a range of two to five years, and others cover length-of-life benefits. The latter is rare.
A perk for those who have served our nation is the ability to use their VA Aid and Attendance program.
Who is eligible?
A veteran or widow of a deceased veteran who was discharged from service under other than dishonorable conditions. A veteran who served 90 days or more of active duty with at least one day during a period of war. A veteran’s or widow’s countable income must be below a yearly income limit set by law. And they must have limited available assets or resources. The VA usually looks favorably on applicants with under $80,000 combined assets.
Although benefits vary from state to state, Medicaid is a joint federal and state program that helps low-income individuals pay for medical expenses. Included in these expenses is custodial or personal care in long-term assisted living facilities. Custodial care can include assistance with eating, dressing, bathing, moving around and other general nonskilled services.
State medical assistance offices are the best source for information about how to qualify for Medicaid and long-term care services.
While Medicare generally doesn’t cover long-term care in an assisted living facility, it will cover hospital care, doctor services and medical supplies while in such a facility. However, if the senior is enrolled in a Medicare Advantage Plan (Part C), they may receive additional benefits that can be applied to assisted living care expenses. Plans and coverage by facility will vary.
Real Estate Assets
There are two major ways to use real estate assets to pay for long-term care. The first, home equity, is the market value of your home less the balance of all liens on the property. Home equity loans allow the borrower to take a loan against their home equity and then the borrower would use that money to pay for long-term care services.
The second way, often advertised on TV commercials, is known as a reverse mortgage. It is similar to a home equity loan in that borrowers can convert all or some of their home equity into cash. In this type of loan, the lender would pay the borrower a monthly amount; thus the name reverse mortgage. Additional details can be provided by an accredited lender.
If your life insurance policy has a cash value, policy owners can access cash through withdrawals to pay for long-term care. The policy could also be sold to pay for care in what is called a “life settlement option.” This can produce up to three times the amount of money as accessing cash through withdrawals.
The basic common denominator for all of these options is simple: Have a plan!
While we might not have the exact answer to all of your financing questions, Windsor House professionals can point you in the right direction to ensure your loved one has a home away from home.
If you have any questions, contact us at 330 545 1550 or visit WindsorHouseInc.com.
The Scoop on Senior Living is sponsored editorial content produced by Windsor House.
Copyright 2022 The Business Journal, Youngstown, Ohio.