Though it might seem expensive at first, the value of an assisted living community becomes more obvious after you understand what is included in the monthly fees. In addition to an apartment or suite, monthly fees typically include meals, transportation, housekeeping, maintenance, life enrichment activities, and utilities. Senior housing is more comparable than you may have originally thought. The average cost of assisted living in the United States is $3,628 per month. That number can be overwhelming, but the truth is, that there are several options to help you and your family figure out how to pay for assisted living.
Private Pay with Personal Funds
You can pay for senior housing using your own personal income or savings, by way of a pension, other retirement fund, additional income from stocks, or proceeds from selling a home. Personal investment portfolios, like 401(k) plans or IRAs, can also be cashed in to help pay for care.
Long Term Care Insurance
Be sure to review your long-term care insurance policy to see if it covers fees at a licensed assisted living facility. Long-term care insurance is a type of insurance policy that will reimburse residents a daily amount for assistance with activities of daily living (ADLs). Policies should be purchased in advance of needing care. Receiving actual benefits will be determined by a health assessment completed by a nurse or social worker who will determine if you actually need long-term care. Once approved, your care manager will approve a Plan of Care that will let you know your coverage.
Veteran’s Aid and Attendance Benefit
Military veterans may be able to take advantage of the Veteran’s Aid and Attendance Benefit. Many families of veterans aren’t even aware it is an option. If a veteran meets the criteria, the awards can be sizable. For many of our nation’s veterans, it can make the cost of moving to an assisted living community more manageable.
Only one third of the people eligible for veteran benefits actually receive them because they don’t know they can apply. Others are rejected because they appear to have too many assets to qualify for the income threshold. However, assets can be gifted to an adult child, who can hold them for the parent. Once assets are no longer in the parent’s name, they can no longer be considered as part of the parent’s income.
Medicaid is a federal and state-run program that helps people with low income afford medical care. Once your state determines your eligibility, Medicaid can determine your eligibility for long-term care coverage. Medicaid covers home health care as well personal care services and even long-term stays in senior communities. Eligibility and coverage varies depending on location and needs.
The Medicaid Waiver program is available through the Western Reserve Area Agency on Aging (WRAAA). Contact them at 800-626-7227. While still limited, the number of state Medicaid programs paying for assisted living is increasing.
Real Estate Assets
In addition to the outright sale of your home, there are a number of ways to use real estate assets to pay for long-term care. The first, home equity, or real property value, is the market value of your home less the balance of all liens on the property. As the value of your home increases or decreases so does your home equity. Home equity loans allow the borrower to take a loan against their home equity and then the borrower could use that money to pay for long-term care services.
Reverse mortgages are loans for homeowners 62 and up based on the market value of your home. Unlike a traditional mortgage, a reverse mortgage doesn’t require any monthly repayments; its principal and interest are simply deducted after the home is eventually sold, which doesn’t even have to happen in your lifetime. Meanwhile, you receive payments that are entirely tax-free.
A bridge loan allows families to use the value of a senior’s home to finance assisted living expenses. The older adult can move, and then the family can begin the process of preparing the house for a sale.
There are a variety of ways that life insurance can help pay for long-term care. 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”. A life settlement option can produce up to three times the amount of money as accessing cash through withdrawals. If the policy owner is terminally ill, the policy can be sold through what is known as a viatical settlement. In this option, proceeds from the sale of the policy are usually income tax-free.
When you are figuring out how to pay for assisted living, consider Programs of All-Inclusive Care for the Elderly (PACE). PACE is a Medicare and Medicaid program that helps people meet their health care needs in the community instead of going to a nursing home or other care facility. With PACE, you have a team of health care professionals working with you and your family to make sure you get the coordinated care you need. Usually they care for a small number of people, so they really get to know you. When you enroll in PACE, you may be required to use a PACE-preferred doctor.
Determining how to pay for assisted living can be a challenge. With each of the scenarios presented, it’s best to consult a professional to help evaluate all the options and find a plan that best fits your personal situation.
St. Augustine Health Ministries, a leader in serving senior adults and the chronically ill for over 50 years, is dedicated to providing a continuum of health care and social services within our community. We offer affordable assisted living options at two locations for 30% less than the national average: Towers Assisted Living at the St. Augustine Health Campus in Cleveland and Emerald Village Senior Living in North Olmsted. For more information, go to www.staugministries.org/assisted-living.