Financial Planning for Assisted Living

Posted: July 25, 2022

If you’re like most families, you probably have questions about financial planning for elderly parents. Today’s aging population, expected to double by 2060, has given rise to several options to help older adults get the care they need.

Many family members choose to move their loved ones into assisted living communities where they can thrive in a nurturing environment and be around like-minded peers. If you’re considering this option but unsure how to finance it, keep reading to find answers to common questions about paying for long-term care.

How Do I Pay for Assisted Living?

Many older adults require long-term care or medical monitoring but feel as if they don’t have the means to achieve this. Fortunately, family members have several options when wondering how to pay for assisted living with no money:

• Bridge loans: If your family has decided to sell your loved one’s home to pay for their assisted living, a bridge loan can help. This type of loan is a short-term loan that can help pay for care services until their home sells. Senior living relocation specialists can provide realty services to older adults wishing to sell their property when it’s time to move.
• Rent the home: If your family member isn’t ready to sell their home, you might consider renting it to help cover the costs of assisted living. This option also means they won’t need to sell their home before relocating.
• Veterans’ programs: Veterans eligible for a Veterans’ Affairs (VA) pension might be eligible to receive benefits that can help pay for assisted living. The Aid and Attendance Program can provide monthly payments to those who qualify.
  

  How Much Does Assisted Living Cost?

Monthly assisted living fees average $4,500 across the country. However, states like California or New York might be higher, while others like Texas or Georgia might be lower. Aside from geographical location, the following factors can influence the cost of assisted living:

• The size of the apartment or residence
• The services required
• Available amenities

The number and frequency of your loved one’s services will impact the overall cost of assisted living, as will the size of the apartment or residence. The more amenities a community provides, the higher the monthly rent will likely be.

What Is Included in Assisted Living Costs?

Assisted living communities might offer all-inclusive or fee-for-fee pricing. If your loved one would benefit from several services, all-inclusive pricing might be a better deal. This pricing structure typically covers rent, meals and any services the resident might need, from housekeeping to transportation.

However, if your family member is relatively independent or you can provide assistance with most of their tasks, they might prefer fee-for-fee pricing that lets them choose only the services they’ll need. These services might include:

• Homemaking.
• “Hands-off” tasks like cooking and cleaning.
• Assistance with daily living tasks like bathing, eating, managing their medications or getting dressed.

Monthly fees might also cover exciting life enrichment opportunities and 24/7 maintenance services.

Will Medicaid or Medicare Cover Assisted Living?

The federal government and the states jointly fund Medicare. While the federal government sets guidelines on how each state must spend its Medicaid dollars, states can also set their policies on how they help residents in assisted living communities. Therefore, Medicare may cover assisted living, depending on your location.

If your state’s Medicare program doesn’t cover assisted living, there may be a Medicaid waiver program that does. In Colorado, for instance, the Elderly, Blind and Disabled Waiver (EBD) allows participants to receive care in assisted living communities.

Medicare typically will not cover long-term care. However, it may cover short-term services for those already living in an assisted living community. Medicare might also cover a stay in a certified skilled nursing facility for up to 100 days following a severe injury or surgery. However, after 100 days, your loved one will need to pay for their stay through other means of financial assistance.

Does Any Insurance Cover Assisted Living?

While many health insurance plans will not cover the costs of long-term care, those that include long-term care (LTC) insurance are specifically designed for this type of care. LTC insurance might only cover part of your assisted living costs, but it can generally make services much more affordable. You can use these benefits in a home setting, assisted living community or long-term care center.

The only drawbacks of LTC insurance are that most policies will limit how long and how much they’ll pay. Most will also require your loved one to meet medical requirements before covering assisted living costs.

Another option is to take advantage of a hybrid life insurance policy with life insurance and LTC insurance together. This option lets you sell a portion of your life insurance policy. You’ll typically get your money quickly and be able to use funds for anything, including assisted living. The payout is generally higher than the cash surrender value and you’ll no longer need to make premium payments. Using a life settlement to pay for long-term care can also present tax deductions, so it’s a financial option worth considering.

Am I Eligible for Financing?

If you’re considering taking out a bridge loan or other financing to pay for assisted living, you’ll first want to consider eligibility requirements:

• Credit scores: Typically, a bridge loan requires multiple family members to act as co-applicants. As a result, while credit scores are a factor, high scores from some applicants can counteract a low score from another. Other factors influencing eligibility will include income, liquid assets and home equity.
• Alternative funding source: Since the bridge loan is a short-term solution, the lender will need to know about alternative funding sources that will become available. Alternative funding options may be a lump sum from selling a home or a retroactive payback from VA benefits.

Since the family typically takes out a bridge loan, age is not a factor in eligibility. The applicant’s health condition is also not relevant, nor is their marital status.

Find Affordable Assisted Living at Dayspring Villa

There are several options for families to take advantage of when it comes to paying for long-term care. When you opt for assisted living, these costs may be more affordable than imagined.

Dayspring Villa is an all-inclusive assisted living community that provides all accommodations for one monthly fee. This fee covers meals, assistance with activities of daily living, transportation to outings, housekeeping and Life Enrichment opportunities. At Dayspring Villa, residents can appreciate affordable care in a peaceful, warm and welcoming environment.

If you have any questions or wish to schedule a tour, we invite you to contact us today.