We all know that affording a high-quality assisted living community comes with significant costs for families and individuals. But sometimes they don’t know.
Depending on location, assisted living in the United States can cost more than $2,000 to and up to $7,000 per month, an average, and clients may have a false sense of security about what their health insurance policies will cover. Once potential residents realize that Medicare doesn’t help pay for their assisted living, they may turn to the community staff for financial guidance.
Whether you work in marketing or admissions at an assisted living community, it’s crucial to understand the challenges families face when it comes to paying for care and services. Here are some questions that may come up when families seek advice about how to afford assisted living.
1. Can I use my veterans benefits to pay for a room?
Veterans and their spouses may be eligible to receive benefits they can apply toward assisted living. One program for veterans, the Veterans’ Aid and Attendance Benefit, will contribute more than $1,700 a month (and more than $2,000 for couples) for long-term care.
Also, if the veteran or veterans’ survivor has documented physical or mental restrictions, then he or she may be eligible for an enhanced VA pension. The individual must meet certain qualifications, such as:
● Be aged more than 65 years
● Have not received a dishonorable discharge
● Meets net worth requirements
Veterans and their spouses should visit vets.gov/pension for application details and a full list of requirements.
2. Can I use my life insurance to pay for a room?
For many older adults, a great way to obtain funds for affording assisted living is to use a life insurance policy.
If the resident has paid enough premiums on a whole or universal life policy, then she or he may be able to take advantage of the policy’s built-up cash value. What the resident or family will owe in taxes depends on the cost basis:
- If he or she only borrows what has been paid in premiums, then taxes may not be owed on the money.
- If the resident cashes in the entire policy, then ordinary income tax applies.
3. Should I sell my home to afford assisted living?
Selling a home may be the best solution for seniors who have significant equity and can’t otherwise afford assisted living. The proceeds from a home sale may cover the cost of moving into and paying monthly expenses in an assisted living residence. Since life expectancies, like life itself, are unpredictable, clients who are exploring this option may want to consider purchasing a lifetime annuity. These annuities guarantee a monthly income for one or both spouses for the rest of their lives.
If the potential resident is a homeowner who wants to keep the home in the family, then he or she may want to take out a home equity loan or home equity line of credit. Homeowners should shop for the lowest-cost loans and lines of credit available in their areas. Be aware that home equity lines of credit based on floating interest rates pose more risk than fixed-home equity loans.
Setting up a reverse mortgage is another option for homeowners who are aged 62 or more years, but it’s one that can come with significant costs. Closing costs, fees and one-time government mortgage insurance premiums can add up. Encourage residents to do their own research and point them toward the Department of Housing and Urban Development, where they can find information on specific reverse mortgage programs for seniors.
When you understand families’ needs and concerns, you’re better able to help them manage the entire assisted living journey. Long-term care is a weighty, important decision for families. They will appreciate any information that helps them feel confident in their final selection.