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Financial Well-Being

August 27, 2019

The 5 Best-Kept Secrets to Financing Senior Living

By Brookdale Senior Living

About Brookdale Senior Living

Brookdale Senior Living offers multiple care levels for seniors in more than 600 communities nationwide. Brookdale helps you find the right care plan for yourself or your loved one. With amenities such as transportation services, salons and private dining rooms and activities such as gardening, fitness classes and trivia nights Brookdale caters to a wide range of interests and needs.

Download our ebook, “5 Best-Kept Secrets to Financing Senior Care.”

It’s hard to put a price on all the benefits senior living has to offer. Between fun activities and social programming, cleaning and laundry services, restaurant-style dining and 24/7 care, there are so many reasons to make the move to a senior living community. But a common problem for many seniors and their families is figuring out how to pay for it.

However, there are some steps you can take to make your ideal retirement lifestyle a reality. If you’re looking for ways to pay for senior living, check out these five financing tips.

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.

^{The information contained in this article is provided for informational and educational purposes only, and it should not be construed as legal or financial advice. For further information, we recommend seeking out a legal or financial professional.}