The cost of Assisted Living Facilities nationwide can range from $2,000 to $5,000 per month. It varies based on the location of the facility, type and size of room, level of care required and amenities offered. The average cost in western Pennsylvania is about $3000 per month. Though that amount can be startling, there are ways to help pay for assisted living. It’s important to know right up front that Medicare will not pay for assisted living. Don't give up though. There are ways to pay for senior living that many families are unaware of.
Navigating the process of finding the right assisted living facility and then finding the funds to pay for it can be overwhelming. Some senior living communities offer a “financial concierge service” that can help guide you through the process of qualifying for benefits. Another very helpful option is a good Senior Placement Service with an experienced and skilled Senior Advisor. These people can save you a lot of time. They will have a wealth of knowledge and cut down the amount of time it takes to find out what your options are. And most of the time, the service is FREE to you.
Here are the most common ways people pay for Assisted Living. Let’s get started.
Long Term Care Insurance
If you have a Long-Term Care insurance policy, it should cover assisted living as well. If there is a policy designated for home care, it should be able to be used for assisted living too. There are “facility-only” policies which covers care only in a licensed assisted living facility or skilled nursing facility.
Although most insurance policies are hard to understand, knowing your benefits will be very helpful in making sure you get what you have paid for. It is common for insurance companies to decline payment on the first go round. Many times you or an advocate at the assisted living facility will need to contact the insurance companies and discuss these issues in order to get approval. To qualify, most companies will require that you need help in at least two areas of ADL’s (Activities of Daily Living) such as bathing, eating, dressing, transferring from bed to chair, walking, and toileting.
Long Term Care insurance benefits vary widely depending on the policy. Benefits can range from $1,500 to more than $9,000 per month.
Life Insurance
When we think of Life Insurance benefits, we typically think that the funds are not available until the person’s death. But a life insurance policy can provide financial support now. 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, accelerated, or living benefits. 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.
If the company won't cash it in, you can sell the policy to a third-party company in return for a "life settlement" or "senior settlement," which is usually 50 to 75 percent of the policy's face value. After buying the policy, and giving you the percentage, the third party company continues to pay the premiums until the policyholder dies. At which time the company receives the benefits.
There are also options called "life assurance" benefit or life insurance conversion program. This allows seniors to switch the benefit of a life insurance policy into long-term care payments. Life insurance conversion typically pays between 15 and 50 percent of the value of the policy. Although this is less than a life settlement, it is an option for lesser-value policies that might not qualify for life settlement.
Veterans Benefits
The VA (Veteran’s Administration) can be very generous when taking care of those who served. If you or your loved one is a veteran, you may be eligible for benefits that can be used to pay for certain types of care. If you have a service-related injury or disabilities, it will be easy.
But there is another set of benefits, known as “Non-Service Connected Improved Pension Benefit with Aide and Attendance” (Aid and Attendance for short) that pays toward the cost of assisted living. This 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 and/or at least one day during wartime. The medical condition doesn’t need to be service related, but you must meet medical qualification. There is varying information on how much this pays, but the average is a maximum benefit of $1,949 a month for married veterans, $1644 for single veterans and $1056 for a surviving spouse.
People are often told that they have too many assets to qualify for the program. These folks are not told that they could make some re-allocations or adjustments to their assets without being penalized and then they could qualify! Seek professional guidance when adjusting or allocating assets. You do not want to make a mistake that can disqualify you.
You will need to apply through the Veteran’s Administration. Along with military discharge papers, you will need a valid medical condition that makes you appropriate for assisted living. You will need a letter provided by your doctor. Complete the formal application form “Veteran’s Application for Compensation and/or Pension”. VA FORM 21-526, Parts A, B, C, and D prior to your visit to the VA.
Selling or Renting out The Senior's Home
This can be a valuable resource. Many times Mom and Dad’s house is treasured and families aren’t ready to take this huge step. If that’s the case, consider renting the home which will give you a monthly income that could cover the cost of assisted living. When making decisions to sell. Seek out an agent that specializes in working with seniors. They will have a wealth of information to help.
Reverse Mortgage
If they own your own home and a spouse still needs a place to live, a reverse mortgage might be just the solution you're looking for. This allows you to borrow money on the equity in the home. When the last person is gone from the home, the money needs to be repaid which usually means selling the home. This is probably not the best choice for a home that you want to keep in the family.
Bridge Loan
If you have trouble liquidating assets quickly, these short term loans are becoming more popular. They are usually available up to $50,000 and designed to fund the move to assisted living. Usually used while waiting for the sale of property or to be approved for a pension.
Private Pay
Personal income or savings is the simplest route, but the cost of a month’s rent can quickly use up your savings. You can also cash in personal investment portfolios, like 401k plans or IRAs. Often paying out of pocket is beyond what many can afford for very long. However, when all your resources have been exhausted, you can apply for Medicaid.
Annuity
If you have a sizable savings but are worried about outliving your resources, you may consider an annuity. When you purchase an annuity, you pay a lump sum to the underwriters and then you will receive regular payments over a specified time period (usually the rest of your life).
This is one way you can stretch out your money and make sure that you will always have some money coming in even if you live longer than you expected. The biggest benefit of an annuity is that even if your purchase premium runs out, you can get more money back than you put in. The underwriters hope to make a profit off you if you die early. They take the risk that you could live longer. It can be more beneficial for you than just spending your money on the cost of the stay.
Another advantage of an annuity is that it isn’t fully considered an asset by Medicaid when you apply for government assistance. The income (or your monthly payment) from the annuity is counted as a resource, but the larger sum you originally paid for the annuity is not. This can be a complex, so it is wise to have an accountant or financial adviser help you.
Whatever source you choose to help pay for care, always seek out a professional to assist you. There are MANY people and organizations out there to give guidance. Always check references and remember to breath! It seems overwhelming but there are abundant resources to help.
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