Figuring Out Finances For Senior Living
How can we afford to pay for this?
That’s often one of the biggest concerns when families begin considering senior living. Senior living doesn’t come cheap, but the reality is, neither does aging-in-place at home. And while there’s much more that goes into this decision than price alone, it’s a big part of the equation.
Comparing the Cost of Home Versus Senior Living
Make sure you’re comparing the total cost of living at home, not simply your mortgage and rent costs as this has a large impact on affordability. At home, you also pay for food, utilities, home maintenance, property taxes, insurance, entertainment and health care. Factor those costs into your current monthly expenses for a more apples-to-apples comparison with potential senior living costs.
But What’s the Value?
Even if your comparison shows a senior living community may cost more, make sure to keep the positive impact on quality of life in the equation. What is the value of a satisfying social life? What is the worth of rediscovering the cultural and recreational activities you’ve always loved? And remember, there’s no price tag on peace of mind.
Four out of five adults underestimate the costs of home health care with the average American underestimating the cost by almost 50 percent, according to the Genworth Long Term Care/ Caregiving Online Survey.
Building Your Budget
Once you understand the cost and value of senior living, let’s discuss how you can prepare financially. While every family’s circumstances are different, there are three general steps you should follow in budgeting for senior living.
- Gather and organize financial documents for yourself or your loved one.
- Discuss putting a financial plan in place while you’re discussing what you want in a senior living community. Talk about your wishes, needs goals as well as how to handle financial duties such as paying bills, managing benefit claims, making investment decisions, and preparing tax returns.
- Consider consulting a financial advisor and/or estate planning attorney who specializes in elder care and/or long-term care planning.
Options to Offset the Cost
While there are a variety of senior living options, luckily there are also a variety of options to help you pay for it.
VETERANS AID & ATTENDANCE BENEFIT
Wartime veterans or a surviving spouse with limited income may be eligible to receive a non-service- connected pension (above the basic pension) to assist in paying for assisted living, home health care, adult day care or skilled nursing.
LONG-TERM CARE (LTC) INSURANCE
LTC insurance helps to pay for the cost of home care, adult day care, assisted living, memory care, skilled nursing and hospice by covering services typically not covered by health insurance, Medicare or Medicaid.
LIFE INSURANCE CONVERSION
Anyone with an in-force life insurance policy can transform it into a pre-funded financial account that disburses a monthly benefit to help pay for long-term care needs such as home care, assisted living, skilled nursing and hospice. Unlike life insurance, this account is a Medicaid-qualified asset.
Many people incorrectly assume that Medicare, Medicaid and/or their health insurance will cover senior living. Here are the facts.
Medicare only pays for long-term care if you require skilled services or rehabilitative care:
- In a nursing home for a maximum of 100 days.
- At home if you are also receiving skilled home health or other skilled in-home services.
Medicaid does pay for the largest share of long-term care services, but to qualify, your income must be below a certain level and you must meet minimum state eligibility requirements based on the amount of assistance you need with ADL.
Health insurance through employers or private health insurance typically cover only the same kinds of limited services as Medicare. If they do cover long-term care, it is typically only for skilled, short-term, medically necessary care.
It can be overwhelming, but there are resources that can help. View our full guide on how to choose the right senior living community which includes worksheets and exercises to help you clear the clutter and move toward a care-free lifestyle!