When people hear about assisted living as an option they usually feel a bit of relief. Allowing seniors to maintain freedom while also getting assistance with some of their daily needs is a comforting idea. The first questions that then come to mind are often, “What services are provided?” and “How much does it cost?”. Then, “How can I pay for it?”.
Among the many benefits of assisted living, one is that it’s generally quite a bit more affordable than skilled nursing care or around the clock in-home care. Still, the cost may be a concern, so new residents often want to know what supplemental payment assistance is available.
The cost of Assisted Living
Prices among Assisted Living communities vary quite a bit from state to state and depend greatly on the individual accommodation selected. But to give you an idea, the average cost of assisted living in the United States is $3550 (from a 2012 Met Life Survey).
Common ways to pay for Assisted Living
While many people can afford to pay for assisted living out of their savings and retirement income, not everyone can. Fortunately, there are several methods that may work for people who need or would like to benefit from at least some financial assistance.
As a rule, the majority of assisted living residents pay for some if not all of their costs from personal funds. With some advance planning, this usually isn’t a problem for many people, and there are a number of ways of making things easier on the pocket book. We will discuss some of them below.
Selling a home
If the person choosing assisted living lives alone in a home that they own, the most common approach is to put the home up for sale in order to cover the new living costs. Since real estate values have started going up again in most of the country, this is a better option than it was only a few years ago.
A Reverse Mortgage
If one or more residents will continue to live in their current home while a spouse or loved one moves into an Assisted Living Community, a reverse mortgage could be an ideal option. As long as the mortgage has a relatively low balance and the holders are at least 62 years old, a reverse mortgage is a way to receive steady monthly income while still retaining ownership of the home. In a Reverse Mortgage, the bank slowly buys the home back from its owners by making payments to them instead of the other way around.
Veterans of the United States Armed Forces qualify for a wide variety of benefits throughout their lives, including some that begin during their later years. In some cases the Veterans Administration will pay for a portion of the cost of assisted living. Veterans and/or their surviving spouses may can qualify for monthly payments toward assistance with daily living. The application process for the Veteran’s Administration Aid and Attendance can be confusing and time consuming, but there are professionals who can help simplify and streamline the process free of charge.
Unfortunately, assisted living costs aren’t covered by Medicare Health Insurance However, depending on the state you live in and your financial situation, the Medicaid Program might cover some or all of the costs. It usually provides benefits only for those in difficult financial situations and usually only for shorter stays meant for recovery, rather than permanent placement in Assisted Living Communities. However, it may be worth investigating to see if your state offers a program that might be of benefit to you.
Long-term care insurance
These increasingly popular insurance policies are ideal for covering assisted living costs for those who plan ahead. If you take out long-term care insurance in your 30s or 40s the premiums start out and usually stay quite low. On the other hand, those who are close to needing the benefits usually aren’t eligible, so it’s important to start early.
IRS 502 Tax Deduction
As with all things tax related, whether or not this may apply is specific to each individual situation. For details regarding this tax deduction, please see IRS Publication 502, “Medical and Dental Expenses” and refer to the “Nursing Home” section (year 2012 version available online at www.irs.gov or consult your tax professional, accountant or attorney.
Family Pooled Resources or Collective Sibling Agreement
Many families are concerned about a parent or parents as they age and continue to live at home. Safety, health care, and simple aspects of daily living may become major concerns. When circumstances at home are no longer viable for an elder to live on their own, often family members will pool their resources to pay for assisted living. This arrangement not only provides the care for the elder, but relieves the family from concern.
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