How to Pay for Assisted Living: Three Options
Paying for senior living, for many seniors is a burden; not only for the senior but for the family as well. Going into an assisted living facility may not necessarily be a choice that seniors make, but rather something that is needed due to many factors.
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Below are three main options that you can look into when paying for senior living before you are required to use Medicaid. Medicaid will take effect after have exhausted all other financial outlets.
Three payment options are below:
Long Term Care Insurance (LTCI) – A long-term care insurance policy will help pay for the care needed when a senior can no longer care for themselves. This will cover anything not covered by medical insurance. Assisted living, respite care, hospice care, nursing home and other related care is covered under LTCI.
• Purchase policy in your prime before you have health problem; the premium will cost more for those who are older and who have health problems.
• “Most policies sold today are “tax-qualified” by federal standards. This means if you itemize deductions and have medical costs in excess of 7.5 percent of your adjusted gross income you can deduct the value of the premiums from your federal income taxes.” – from AARP
• Please click here for more information on LTCI.
Long Term Care Benefit Plan – Any type of Life Insurance Policy (Term, Universal, etc.) with a death benefit of $50,000 to $1,000,000 can, without any issues, be converted to Long Term Care Benefit. In simple terms, life Insurance money can alternately be used for senior living.
• Considered a direct tax-exempt payment when used to cover senior housing and long term care.
• Converting takes 30-45 days.
• The plan automatically saves 5% or $5000 for funeral fees.
Reverse Mortgage – Any homeowner over the age of 62 can turn saved equity from their house into cash. Seniors can use money from their current home to pay for their senior living.
• The money does not have to be allocated for specific uses – it can be used for any type of long-term care.
• The home must have been approved by FHA (this generally means it is a single-family home).
• Eliminates mortgage monthly payments.
• There are high closing costs and fees that are not normal to traditional mortgages to be considered.
Paying for long-term care is complicated but there are options as listed above. Another option to consider is to pay the money for housing upfront with a Granny Pod and then insurance or out-of-pocket money for caregiving –a family member may be able to assist as well. It is best to review all options with family and friends prior to making a decision on senior living.
Once a decision has been made and it comes time to plan your move, give Moves for Seniors a call at (800) 227-0515 or contact us for a free move consultation. Our senior moving services provide you with Specialty Move Coordinators who will help you coordinate and organize your move from start to finish.