How to Pay for Senior Housing

Finances may at first appear to be a stumbling block in your move. Many families automatically assume that they can not afford senior living. While the cost of care can vary greatly depending on location, type of care, and services needed, the average cost of assisted living in the United States is $3,628.00 per month. That number can feel staggering, but the truth is, that there are several option to help you and your family fit senior housing into your budget.

Living at a Leisure Care community is like being on a permanent vacation, but without the cost and maintenance of owning your own home. With most things included in your monthly rent (housekeeping, maintenance, transportation, meals, and entertainment), you’ll find senior housing is much more comparable than you may have originally thought.

Whatever your current financial situation, there are various paths to take and ways to help fund your move to senior housing.

1. A Traditional Approach: This may be the most straightforward and best option for those who have the savings or income to pay outright for senior living. Many seniors in independent living continue to work and use their current income to pay for housing. Others have saved for these years throughout their life and are able to use savings to pay for housing through retirement. This option also could include support from family members and others who want to see their loved one happy and safe.
2. Long-term Care Insurance: Long-term care insurance is a type of insurance policy that will reimburse residents a specified daily amoung for assistance with activities of daily living (ADLs). Policies must 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 outline your coverage.
3. VA benefits: Eligible United States military veterans may be able to use their benefits to pay for long-term care. Veterans may be eligible through standard medical benefits for a health evaluation, adult day health care, respite care, and skilled home health care.  Veterans may also be able to use disability pay and their veterans pension to fund long-term care. A quick two-minute questionnaire from VeteranAid.org can help you determine eligibility for the Aid & Attendance Allowance that may also pay for additional assistance.
4. Medicaid: Medicaid is a federal and state-run program that helps people with low income afford medical care. Eligibility and coverage differs depending on each state. 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 may vary depending on location and needs.
5. Medicare: Medicare can help pay for medical care for people over the age of 65, people with specific needs under the age of 65, and care for people of all ages who have end-stage renal disease. While Medicare does not typically cover long-term care costs, including memory care costs, they will pay a percentage of costs for a shorter stay in a skilled nursing facility and hospice care if certain conditions are met.
6. Working with Real Estate Assets:  There are two major 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. For example, if you buy a home for $100,00 and made a 20% down payment on the home, your home equity is $20,000 (20% of the total cost of the home). 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. The second is known as a  reverse mortgage and is similar to a home equity loan in that borrowers can convert all or some of their home equity into cash, but is only available to people over the age of 62 and does not require monthly payments. In fact, the loan does not have to be repaid until the home is sold. In this type of loan, the lender would pay the borrower a monthly amount, thus the name, “reverse mortgage”.
7. Life Insurance: 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.