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The 5 Best-Kept Secrets to Financing Senior Living

1. BRIDGE THE GAP 

If you need help with costs to transition to senior living, some financial service firms offer bridge loans to help cover costs, while seniors wait for the sale of a home or for other benefits to kick in. 

With the number of people aged 65 and older rising, new services are now available, tailored to seniors. Organizations such as Elderlife Financial Services and others can help make the transition to senior living easy and affordable, with help to plan, locate and fund their senior housing needs. 

 

2. REPURPOSE YOUR POLICY 

If you or your loved one has an existing life insurance policy, you may be able to convert an in-force policy to a pre-funded account to help pay for senior care. This financial option is especially helpful for seniors because all health conditions are accepted, there are no waiting periods, no care limits, no costs to apply, no requirement to be terminally ill and no premium payments or fees. 

 

3. COVER YOUR CONTINUED CARE 

If you are concerned about covering changing healthcare needs, consider the benefits of a Life Care community, which offer long-term accommodations and health-related services with an entry fee. If you are age 65 or older and meet financial and medical criteria, you may be eligible. 

Most Life Care communities offer a range of accommodations and care, including independent living, assisted living, Alzheimer’s and dementia care and rehabilitation and skilled nursing. Entry fees for Life Care communities typically range from $150,000 to $300,000. When they’re ready to downsize, many seniors fund the buy-in fee by selling their current homes. 

You may also have the option of a refundable contract that returns a portion — up to 90 percent — of your entry fee to your designated beneficiary. The IRS considers Life Care to be a prepaid medical expense, so tax deductions may be available for portions of the upfront entry fee and monthly service fee. Consult with your tax advisor for more details. 

 

4. MAKE THE MOST OF MEDICARE 

You may be eligible for Medicare, a federal health insurance program for people who are age 65 or older, with coverage for inpatient hospital stays, care in a skilled nursing center, hospice care, and some home health care. 

What Is Medicare? 
Medicare’s different parts help cover specific services: 

  • Medicare Part A (hospital insurance) covers inpatient hospital stays, care in a skilled nursing center, hospice care and some home health care. 

  • Medicare Part B (medical insurance) covers certain doctors’ services, outpatient care, medical supplies and preventive services. 

  • Medicare Part C (Medicare Advantage Plans) is a type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Most Medicare Advantage Plans offer prescription drug coverage too. 

  • Medicare Part D (prescription drug coverage) adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans, and Medicare Medical Savings Account Plans.

For more information, visit medicare.gov.

 

5. FLIP THE FLOW

If you are aged 62 and older and have equity in an existing home, consider a reverse mortgage, also known as a home equity conversion mortgage. You can stay in your own home while tapping into a tax-free cash flow that can be used for expenses like in-home care or long-term care insurance. 

The Benefits of a Reverse Mortgage

  • You own your home, not the bank.  

  • There are no restrictions on how the money can be used. 

  • Reverse mortgages are backed and regulated by the US Department of Housing and Urban Development (HUD).

  • Heirs of seniors are not responsible for repayment of this loan, even if the home’s value goes down.

  • Income from a reverse mortgage is tax-free and doesn’t affect Social Security or Medicare benefits.

The Drawbacks of a Reverse Mortgage

  • Proceeds from a reverse mortgage may affect Medicaid benefits. 

  • Closing costs can be high with fees that are higher than a conventional mortgage. 

  • Homeowners are still responsible for property taxes, insurance, and upkeep. 

  • Homeowners will not be able to pass the family home down to heirs. 

If you plan to move in the near future or you have to move because you need more care, a reverse mortgage may not be the right choice for you. Securing a reverse mortgage is a big decision, so it’s important to talk to a financial advisor or an elder law attorney who can help you and your family weigh the pros and cons. Also, HUD-sponsored counseling services are available to offer impartial advice and help you find a reputable lender. 

 

Need personalized advice on paying for senior living?

If you’re ready to start a new chapter in life, we’re here to help. Get in touch with a Brookdale representative today.

To download or print a copy of this information for yourself or a loved one, download our ebook, “5 Best-Kept Secrets to Financing Senior Care.”

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