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Ways to Pay for Assisted Living


As more than 77 million baby boomers move into their retirement years, their adult children will quickly learn what the term Assisted Living means.  An Assisted Living Facility (ALF) is a community that provides assistance with activities of daily living (ADLs) while offering seniors a safe and supervised living space where they can remain independent.

The U.S. Census Bureau estimates that approximately 6.5 million seniors currently need assistance with their ADLs, and that number is expected to double by 2020. Similarly, the number of Americans who will join an ALF is also on the rise.

Faced with the reality of their parents needing to move into an assisted living community, many families worry how they canafford their care.Many seniors who need care services put it off because they are unsure of how they´ll pay for it.

Choosing an assisted living home and helping your loved one transition to life in an assisted living community can be a taxing time, both emotionally and financially.  Depending on your loved one’s care needs, the average monthly rate at an assisted living community starts around $3,500 per month and in some areasis even higher. Understandable, many families are concerned about how to pay for assisted living.

Assisted Living Locators is a no cost referral and placement service for you and your family during these difficult times.  We have been helping families to evaluate senior care choices for well over a decade nationwide.  We are locally owned and operated serving Manatee, Sarasota, Charlotte and North Lee County families, based out of Venice.  Our goal is to help you effectively and efficiently navigate the seemingly endless choices in senior care and resources, and we want to share some creative financial options available to help pay for assisted living.

Below are some financial options you may want to consider.

Income and savings

The simplest method for paying your assisted living costs is to pay for it out of pocket with your own income and savings. Private funds can come from personal investment portfolios, like 401k plans or Individual Retirement Accounts (IRA), pensions and social security. Many people sell their homes and use the equity that has built up to fund their time at an assisted living facility.

Veterans benefits – Aid & Attendance

If your senior was a veteran, you may be able to use veterans benefits to pay for residential care. In order to get access to these benefits, you must go through the Department of Veterans Affairs (VA).  A little known benefit called “Aid and Attendance” is available to veterans or a surviving spouse who is disabled and whose income is below a certain limit.  A veteran must have served at least 90 days on active duty, with one day during a wartime period and received an honorable discharge.  The medical condition doesn’t need to be service related, but you must meet medical qualification. To qualify financially, an applicant must meet both Asset and Income Limits.  The benefit amount varies depending on circumstances and can increase slightly each ranging, but currently ranges from a maximum benefit of $2,126 a month for married veterans to $1,152 for a surviving spouse.

Long-term care insurance

Long term care insurance, an umbrella term for insurance that covers nursing home care, assisted living care and sometimes home health care in addition to other medical services, can help shoulder the cost of assisted living services for those who have a policy, with a few restrictions.

For example, most long-term care insurance policies won’t cover the costs unless the policy holder is unable to perform two or more ADLs. Some examples of ADLs include bathing, dressing, eating, getting from a bed to a chair or walking. Some insurers may evaluate with a physician of their choice—not the policy holder’s—to see if their condition qualifies for coverage.

Long-term care insurance needs to be purchased when you’re middle-aged or in your younger years. If you don’t already have coverage, getting covered in the later stages of life would be prohibitively expensive.

Life insurance policy

When we think of life insurance benefits, we typically think that the funds only help with end of life expenses.  But a life insurance policy can provide financial support now, if that's when the money would be most helpful.  There are several different ways that policies can be used to pay for care while the person is still alive.  Ask your life insurance agent about cashing out the policy, acceleratedor living benefits, or policy conversion.  It can be called any of those terms.  What usually happens is the company will buy the policy back for 50 to 75 percent of its value. The rules will be different depending on the company and type of policy. Some policies can only be cashed in if the policyholder is terminally ill; others are much more flexible. Another option is to sell the policy to a third-party company.

Reverse mortgage or home rental

Seniors who do not want to sell their home may consider paying for services through a reverse mortgage, where long-time homeowners essentially borrow against the value of their home. You will have to pay the money back when you sell the home or move out. The U.S. Department of Housing and Urban Development has a good analysis of reverse mortgages. Alternatively, you might consider renting out your home or that of your loved one to create the income needed to pay for assisted living.

Bridge loan

If your senior doesn't have a lot of free cash or financial assets that are easily liquidated, the answer might be a bridge loan. Bridge loans are short-term loans of up to $50,000 designed specifically to provide the funds for a move to an assisted living community.  Itis typically an unsecured (no collateral required) line of credit intended to finance the first months of living expenses while seniors sell their home, obtain veterans benefits, or take other actions to free up funds.

Interest rates for these lines of credit range from 8.25 to 12.5 percent, so this option is best used when the time to payback is relatively short. Borrowers have up to five years to repay, but most repay the loans within a year.

Making the decision of how to pay for assisted living and choosing the right community can be challenging.  Have a knowledgeable resource to help you find the right assisted living solution for your aging parent or loved one. Assisted Living Locatorsis a free community-oriented service that can provide you with the best fully-vetted senior living options and elder care resources available in your community.

If you are a senior or a family member looking for help navigating the many options in assisted living or memory care, we can help.  We’ll discuss the best fit for your family and even tour with you at our pre-certified partners if you’d like.  Contact Jaime Daniels and her team at Assisted Living Locators at 941.479.3500 or via email at JDaniels@AssistedLivingLocators.com.  Or you can visit us online at:  www.AssistedLivingManasota.com and be sure to LIKE us on Facebook
at: www.facebook.com/AssistedLivingLocatorsManasota.