Is it time for your loved one to consider an assisted living community? If so, then you’re understandably concerned about the costs associated with this decision. While assisted living costs can be high, there are a range of options to help mom or dad pay for the care they need. Do some upfront research and educate yourself on the different ways to handle assisted living costs.
1. Learn assisted living costs in your area.
Reliable financial surveys say that assisted living costs on average $3,500 per month, though there are wide regional variations. Your homework? Explore the costs of high-quality assisted living communities in the area where dad will be living.
2. Learn what mom can afford.
This step requires tact and sensitivity, but it’s crucial. Determine what financial resources mom has available so you can help her determine how to pay for assisted living. If necessary, there are financial planners who specialize in helping seniors navigate this process.
3. Understand the rules for Medicaid and Medicare.
Many seniors and their adult kids are surprised to learn that Medicare does not cover assisted living costs. Most seniors pay out of pocket for assisted living for the entire length of time they live there, or they pay out of pocket until they qualify for Medicaid, which requires mom or dad to have limited assets. Eligibility varies by state, but typically your loved one must have less than $2,000 in assets, excluding home and car, to qualify. Be sure to check Medicaid rules in your state, and reach out for help with this complex area.
4. Consider what to do with the family home.
The family home can be a valuable asset to help pay assisted living costs and there are options other than selling it outright that you may wish to consider. For example, a reverse mortgage allows dad and mom to cash out the value of home equity; however, this option requires that one homeowner is over 62 years old and one person must stay in the family home.
Another option when no one wants to sell the family home? Rent it and use the rental income to help pay assisted living costs. The main drawback is that someone in the family must agree to be a landlord, or if that doesn’t seem feasible, hire (and pay for) a property management firm.
A third option that some seniors opt for, especially when a move to assisted living becomes urgent, is to take out a bridge loan until the family home sells. These are short -term loans that provide the needed funds for a quick move into assisted living. As with other financial options, be careful about who you work with, so you avoid unscrupulous lenders who prey on seniors and families in stressful situations.
5. Consider veteran’s benefits.
If dad or mom is a veteran, be sure to explore what sort of financial assistance is available through the VA. This process can take awhile, so do this in advance of a move to assisted living.
6. Look into insurance policies – cash out life insurance, long-term care insurance, annuities, etc.
In step 2, you will have discovered if mom has a long-term care policy or if she holds life insurance policies that could possibly be cashed in early. Or maybe she has an annuity which could be cashed out to pay assisted living costs. These are all complex financial instruments, so a good senior financial advisor can be your valuable partner.
How can we help you make the best financial decisions for your loved one?