Financing Senior Living Without the Sticker Shock: A Guide for Patients
Step 1: Take current finances into account.
While paying for senior living can be daunting, financing long-term care is doable. According to the American Health Care Association, the nationwide median cost of senior living is $4,000 per month or $48,000 per year, which most individuals cover through some form of private pay. These sources may include savings, pensions, annuities, long-term care insurance benefits or Social Security. Close family members may also be able to help support care for seniors. Another source can be the sale of a home. Jamie Hopkins, former co-director of the New York Life Center for Retirement Income and professor at The American College of Financial Services, said in The Wall Street Journal, “For most Americans, their house is their largest asset.”
Step 2: Weigh the options.
If a patient owns their home with a partner or spouse but is the only one who needs long-term care, they may want to consider a Home Equity Conversion Mortgage (HECM), which is a type of reverse mortgage and is insured by the U.S. federal government. Reverse mortgages allow families to tap into a tax-free cash flow that can be used for expenses like assisted living, while also maintaining home ownership. This enables the spouse or partner to continue living at home while the other receives care elsewhere. Couples may even want to find a care community that offers both assisted living and independent living to allow them to live in the same place despite their varying health needs. Or, for more flexibility, senior adults may consider converting a life insurance policy to a pre-funded account.
Step 3: Reach out to the assisted living community.
The next step for patients is to reach out to the assisted living community to ask questions about the costs of their stay. Experts at Brookdale Senior Living suggest that those looking for senior living options and their care partners ask about any upfront fees before moving in. These may include security deposits, one-time admission fees, or move-in charges. Some communities allow initial fees to be applied toward your stay. They also recommend inquiring whether monthly fees increase, and how often. It’s helpful to ask, “What’s the highest monthly fee that I could ever have?” Find out if fees are ever refundable, and under what circumstances.
Step 4: Find the appropriate level of care.
The cost of senior living will depend on the level of care the patient will need. If an individual has long-term care insurance, they should verify the level of care specified in their policy. Do their benefits go beyond help with daily activities to overnight care or memory care? With these in mind, the patient may want to consider a care community with a flexible pricing structure, such as a “level of care” model, instead of an all-inclusive package. Patients should also inquire how much costs could vary, should their needs change over time. Before a potential resident arrives at Brookdale, we conduct a personal service assessment to determine if their unique needs will be met within our community. Long-term care options include assisted living communities, memory care, or skilled nursing. We then personalize care to exactly what residents need, and when they need it, so that they’re not overpaying for services.
Step 5: Establish a timeline.
Some families save long-term care discussions for the occasional reunion with relatives. For others, moving into a long-term care community is an urgent need. And often, financial considerations dictate the timeline of that transition. Some families may opt to care for their loved one in their own homes, but they can underestimate the financial and emotional burden of providing those services — particularly if round-the-clock care is needed. So, if a senior needs to move to an assisted living community quickly due to a medical emergency — but they aren’t financially ready — they may want to consider a bridge loan. This short-term loan can temporarily cover living costs while they wait for benefits to kick in or to sort out a financial strategy.
Step 6: Don’t forget federal benefits.
Federal benefits are notoriously confusing, which is why it’s important that patients know what kind of care their coverage allows. While traditional Medicare doesn’t typically cover senior living communities, it can cover inpatient hospital stays, hospice, and skilled nursing. There are also other types of coverage to consider, such as Medicare Part D for prescription drugs. For a good overview, check out Brookdale’s Medicare FAQs.
For patients with fewer financial resources, Medicaid often covers skilled nursing, and, depending on the state, it may also cover assisted living and nursing home care. In some states, dual-eligible patients — those who are over the age of 65 and who qualify for Medicaid — are eligible for both Medicare and Medicaid benefits through the Program of All-Inclusive Care for the Elderly (PACE). While PACE focuses on home care, it also covers nursing home care, assisted living, memory care residences, rehabilitation centers and PACE centers. If a patient is a veteran, the federal Veterans Aid and Attendance benefit will cover some of the costs of assisted living or skilled nursing.
Figuring out how to pay for long-term care can be a hurdle, but Brookdale is here to help. We can guide patients through the many choices that will meet both their ongoing health and financial needs. If you or your patient have more questions, please contact us today.
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