7 Ways to Pay for Senior Care

Mar 16, Alissa Sauer

Today’s older adults aren’t wrapping up their life’s journey; they’re seeking a new one. And Leisure Care is here to inspire them to embrace joy and purpose in their lives. For nearly 50 years, we’ve been reimagining and reinventing senior living, making sure older adults have the most fulfilling, rewarding, and productive opportunities possible.

One of the first questions that potential residents and families ask is how much those opportunities are going to cost. The average cost of assisted living can vary significantly depending on location, level of care needed, amenities offered, and facility size. According to the National Council on Aging, the average cost of assisted living in the United States is approximately $4,500 per month. Keep in mind that this is just an average, and costs can be higher or lower depending on the specific circumstances and location. Additionally, costs may increase as the level of care needed increases.

That number can feel staggering, but the truth is that there are several options to help you and your family fit senior housing into your budget. With most things included in your monthly rent (housekeeping, maintenance, transportation, meals, and entertainment) and the options below to pay for care, you’ll find senior housing is more manageable than you may have originally thought.

How to Pay for Senior Care

There are various options and ways to help fund your move to senior housing.

1. A Traditional Approach

The traditional approach to paying for senior care involves utilizing personal savings, income, or support from family members to cover the costs associated with housing and care. For seniors who have saved throughout their lives or have stable retirement income, this method can be the most straightforward and effective option. Additionally, those with retirement savings accounts, such as 401(k)s or IRAs, can tap into these funds to finance their housing and care needs.

In some cases, family members may also contribute financially to support their loved one’s senior living expenses. This could involve direct financial assistance, such as helping to cover monthly rent or care fees, or indirect support, such as providing transportation or running errands.

Overall, the traditional approach to paying for senior care prioritizes personal financial resources, whether through savings, income, or familial support, to ensure older adults can afford the housing and care options that best suit their needs and preferences.

2. Long-Term Care Insurance

Long-term care insurance provides a financial safety net for individuals who may require assistance with activities of daily living (ADLs) as they age. These policies typically reimburse policyholders a daily amount to help cover the costs associated with long-term care services, such as assistance with bathing, dressing, eating, and medication management.

It’s important to purchase long-term care insurance well in advance of actually needing care, as policies typically have waiting periods before benefits become available. By planning ahead and securing coverage early, individuals can better protect themselves against the potentially high costs of long-term care in the future.

Before receiving benefits, policyholders must undergo a health assessment conducted by a nurse or social worker to determine their eligibility for coverage. This assessment evaluates the individual’s current health status and functional abilities to determine if they meet the criteria for needing long-term care.

Once approved for benefits, policyholders work with a care manager to develop a personalized Plan of Care outlining the specific services and support covered by their policy. This plan serves as a roadmap for accessing and utilizing the benefits provided by their long-term care insurance policy, ensuring that they receive the appropriate level of care based on their needs and coverage.

3. VA Benefits

United States military veterans have access to a range of benefits that can help cover the costs of long-term care services as they age. Through standard medical benefits, eligible veterans may receive support for various aspects of long-term care, including health evaluations, adult day health care, respite care, and skilled home health care. These benefits are designed to provide veterans with the necessary medical and personal assistance to help them maintain their health and independence.

In addition to standard medical benefits, veterans may also be able to utilize disability pay and veteran pension benefits to fund their long-term care needs. These financial resources can help offset the expenses associated with assisted living facilities, nursing homes, in-home care services, and other forms of long-term care.

One valuable resource available to veterans is the Aid & Attendance Allowance, which provides additional financial assistance to veterans who require the aid of another person to perform daily activities, such as bathing, dressing, or eating. Eligible veterans can use this allowance to pay for a wide range of long-term care services, including assistance with activities of daily living, home modifications, and transportation services.

Veterans and their families can use resources like VeteranAid.org to determine eligibility for the Aid & Attendance Allowance and other veterans benefits. This website offers a simple two-minute questionnaire to assess eligibility criteria and provide guidance on accessing available benefits. By exploring these options, veterans can access the support they need to afford quality long-term care and maintain their health and well-being in their senior years.

4. Medicaid

Medicaid provides individuals and families with limited financial resources access to essential healthcare services, including long-term care. The program, jointly funded by the federal and state governments, offers coverage for a wide range of medical and personal care needs, making it an important resource for seniors who require assistance with daily activities and ongoing healthcare support.

Once individuals meet their state’s eligibility criteria for Medicaid, they may qualify for coverage of long-term care services based on their specific needs and circumstances. These services can include home health care, which involves skilled nursing, therapy, and personal care assistance provided in the individual’s home environment. Additionally, Medicaid may cover personal care services, such as help with bathing, dressing, and medication management, to support individuals with their daily living activities.

In some cases, Medicaid may also cover the cost of long-term stays in senior communities, including assisted living facilities and nursing homes, for eligible beneficiaries who require a higher level of care and supervision. However, eligibility criteria and coverage options can vary significantly from state to state, and individuals must meet specific requirements related to income, assets, and medical necessity to qualify for Medicaid-funded long-term care services.

Navigating the Medicaid system and understanding its eligibility requirements can be complex, but it offers vital support for seniors and individuals with disabilities who need assistance with their long-term care needs. By working with Medicaid specialists and healthcare professionals, individuals can explore their options for accessing Medicaid-funded long-term care services and receive the support they need to maintain their health and independence.

5. Medicare

Medicare serves as a critical healthcare program for millions of Americans, providing coverage for medical services and treatments for eligible individuals aged 65 and older, as well as for certain individuals under the age of 65 with specific medical conditions or disabilities. While Medicare offers comprehensive coverage for a wide range of healthcare needs, including hospital stays, doctor visits, and prescription drugs, it does have limitations when it comes to covering long-term care costs.

Typically, Medicare does not provide coverage for ongoing long-term care services, such as assistance with activities of daily living or stays in assisted living facilities or nursing homes. However, there are some exceptions to this rule. Medicare Part A, which covers hospital stays, may pay for a portion of the costs associated with a short-term stay in a skilled nursing facility following a qualifying hospital stay. This coverage is available for up to 100 days per benefit period and is subject to certain eligibility criteria and requirements.

Additionally, Medicare provides coverage for hospice care for individuals with a terminal illness who have a life expectancy of six months or less. Hospice care includes a range of services aimed at providing comfort and support to patients and their families during the end-of-life process, including medical care, pain management, and emotional and spiritual support. Medicare Part A covers hospice care expenses in full, with few out-of-pocket costs for eligible beneficiaries.

While Medicare plays a vital role in covering healthcare expenses for older adults and individuals with disabilities, it’s important to understand its limitations regarding long-term care coverage. Individuals who anticipate needing long-term care services may need to explore alternative options, such as long-term care insurance or Medicaid, to help cover the costs associated with extended care needs. Additionally, individuals should carefully review their Medicare coverage and consult a healthcare professional to understand their benefits and options for managing long-term care expenses.

6. Working with Real Estate Assets

Using real estate assets to finance long-term care expenses offers seniors two primary avenues: home equity and reverse mortgages. Home equity represents the difference between the market value of a property and the balance owed on any liens against it. For instance, if a home is purchased for $200,000 with a 20% down payment, the initial equity is $40,000 (20% of the total home cost). As property values fluctuate, so does home equity. Home equity loans enable homeowners to borrow against this equity, providing a source of funds to cover long-term care costs.

Alternatively, reverse mortgages offer another means of accessing home equity, particularly for individuals aged 62 and older. Unlike traditional home equity loans, reverse mortgages do not necessitate monthly payments. Instead, borrowers can convert a portion or all of their home equity into cash without immediate repayment obligations. The loan amount is typically disbursed to the borrower in monthly installments, hence the term “reverse mortgage.” Repayment is deferred until the home is sold, allowing seniors to tap into their real estate assets to finance long-term care needs while remaining in their homes.

7. Life Insurance

Life insurance can serve as a valuable resource for covering long-term care expenses through various mechanisms. For policies with accumulated cash value, policyholders have the option to access funds by making withdrawals, which can then be allocated toward long-term care costs. Alternatively, individuals may opt to sell their life insurance policy through a “life settlement option,” a process that involves selling the policy to a third party in exchange for a lump sum payment. This approach can yield significantly more funds compared to cash withdrawals, potentially up to three times the amount. Additionally, for policyholders who are terminally ill, a viatical settlement offers another avenue for financial support. Through a viatical settlement, the policy is sold to a buyer, with the proceeds typically received tax-free. These strategies leverage the value of life insurance policies to provide crucial financial assistance for long-term care needs.

Leisure Care: Your Senior Living Resource

Navigating the complexities of senior care financing can feel overwhelming, but our sales advisors are here to help you explore available options. From traditional approaches like personal savings and family support to specialized financial instruments such as long-term care insurance and VA benefits, there are numerous pathways to help fund senior housing and care needs. Additionally, government programs like Medicaid and Medicare, as well as innovative solutions like utilizing real estate assets and leveraging life insurance, offer further avenues for financial assistance.

Leisure Care communities are here to provide care, community, and connection for your whole family. Don’t let financial concerns stand in the way of enjoying the fulfilling and rewarding senior living experience you’re seeking. Contact us now to take the first step towards a brighter future.