If you or a loved one is staring down the possibility of paying for assisted living in the near future, money may be a serious sticking point. According to one source compiled by medical professionals, assisted living can cost anywhere from $2000 to $5000 a month, depending on where you live.
Fortunately, there are options available to make paying for assisted living less painful, so you or your loved one can get back to enjoying the golden years.
How to Pay for Assisted Living
First of all, if you have a lot of assets, you should consider an eldercare attorney. These attorneys can give you specialized advice for your financial situation. Some assisted living facilities also have a staff member that can help you pay for living there, including helping you find benefits you qualify for. You can get similar results by investing a lot of time and research, however, especially if you have fewer assets.
You can, of course, pay for assisted living out of your existing assets–savings, 401k, investments, etc. Paying out of pocket is far from your only option, however.
If you’re going to be leaving an empty house behind when you move into assisted living, then selling that house is an obvious choice. The profit from selling your home can finance years of assisted living.
If someone is still living in that house, on the other hand, you may consider a reverse mortgage. According to the US Department of Housing and Urban Development, a reverse mortgage is a special loan available to seniors that converts part of your home’s equity into cash. The loan is due six months after the last resident in the house dies or moves out; you’ll typically have to sell the home in order to repay the debt. Because of this, a reverse mortgage isn’t a good option if you want to keep a house in your family.
You might consider buying an annuity, if you don’t already have one. These are useful for if you have a lot of savings, but you don’t want to outlive them. An annuity, once bought, will provide a steady stream of income for either a set amount of time or for life.
You may also consider investing in long term care insurance, especially if you’re anticipating paying for assisted living 30 to 40 years down the road. It’s cheapest when you buy it while you’re young and healthy. You may not be able to buy it if you’re over 85 years of age, already living in a long-term care facility, or if you’re diagnosed with a condition that requires constant long-term care. Payouts from long term care insurance can vary widely, so don’t just assume your insurance will cover your monthly costs without doing the math. Finally, once you do move into assisted living, be persistent with your insurance representatives. Many companies will refuse to pay benefits the first time around, even if you’re qualified.
Depending on your policy and what company you bought it from, you may be able to cash out your life insurance early for 50 to 75% of its value. There are also third party companies that will buy your life insurance policy for approximately the same value range. Additionally, some life insurance companies can convert your policy into long term care insurance.
If you or your spouse is a veteran, talk to your local Veteran Affairs representative. If you or your veteran spouse meet the requirements, you can get the department to cover part or all of your assisted living costs. This program is available for both single and married veterans, as well as the surviving spouses of veterans. Often, you’ll be told you have too many assets to qualify; don’t despair! You’ll be able to qualify if you reallocate your assets in ways such as having an heir manage it in your name. You can also check your options within an appropriate Medicare Supplement Plan.
If you’ve taken one or more of the above options, but the money won’t come in fast enough to make your first assisted living payment, consider a bridge loan. As the name suggests, these loans serve as a bridge between now and when your other sources of money come in.
Finally, there’s Medicaid. Every state’s policy on Medicaid used to pay for assisted living will be different; in some states, you can’t use Medicaid to pay for assisted living at all, and some facilities won’t accept Medicaid patients. You’ll need to do your research ahead of time to determine whether Medicaid will pay for your assisted living, how much it will pay, and how to qualify for it. The fewer savings, fewer assets, and less income you have, the easier it will be to qualify for Medicaid. However, you shouldn’t try to hide any assets; you can’t fool Medicaid workers, and you could get disqualified for a number of years.
Other Tips for Financing
The importance of research cannot be overstated. In addition to your financing options, you need to know what assisted living options are available, how much they cost, and what factors into that cost. Rent, meals, utilities, maintenance, and personal care costs will all vary from facility to facility. Many assisted living facilities will even offer a variety of packages, everything from comprehensive care to a la carte options, so you only pay for what you need.
You should also find out if they’ve ever had any health or safety violations, and make sure an attorney reviews the housing contract. This is because getting your assisted living choice right the first time is absolutely vital. It costs much more to get it wrong and have to move than to bite the bullet and pay for a more expensive home that’s right for you.
Do your research as early as possible. The later you start, the greater chance you’ll have to settle for what’s available, instead of what’s right. You may end up paying for a facility that doesn’t fit your needs, strains your budget, or both. Visit the facility multiple times and don’t be afraid to ask if they have financing options or are willing to negotiate the monthly price.
Transitioning to assisted living can be a stressful time, both emotionally and financially. You can minimize that stress by doing your research and knowing your options.