How Can You Pay for Senior Living?
If an aging loved one is considering moving to a senior living community, you might both be concerned about how to pay for it. It’s an issue that comes up early in the conversation for most families. Fortunately, there are a number of payment options, depending on the type of care your senior loved one needs.
Services Provided in an Assisted Living Community
As you’re helping your loved one budget for their move and their new lifestyle, keep in mind that many of their necessities will be covered by their monthly fees including:
From adult education classes to yoga, movies, and even fine dining, there’s typically very little reason to leave the senior community. Plus, nearly all living expenses and amenities are included in one monthly payment.
Let’s look at some of the best ways to finance a move to a senior living community.
How to Finance Senior Living
Nearly 90% of all seniors pay for their senior living community with private funds. But there are other avenues to explore.
Many times proceeds from the sale of their home are used to finance a senior’s new life in a senior living community. If your senior loved one has savings or can cash in a 401K, these might be the best option to avoid borrowing money.
According to Long Term Living, a growing number of today’s senior living communities make it easier to pay out of pocket by offering an ACH debit option. The resident brings a cancelled check to the billing department, and they set up ACH processing. Payments are automatically deducted from a checking account on the same day each month.
Alternatively, your loved one may choose to pay the bill each month using a credit card to earn rewards points for gift cards, travel, or even cash back and for the convenience of electronic payments.
A Bridge Loan or Senior Line-of-Credit
If your loved one is waiting on the sale of their home or for federal benefits to help pay for senior living costs, you might consider a senior line-of-credit or a “bridge” loan.
These short-term, “interest-only” loans help fund senior living costs until the necessary money comes in. Then the borrower pays off the loan with a balloon payment, while the lender continues to make payments to the senior community.
Deferred Annuity with Long-term Care Rider
As long-term care insurance premiums continue to rise, many older Americans are considering a deferred annuity with a long-term care rider to pay for assisted living.
Rather than making monthly insurance payments, the investor places a lump sum of money, usually starting at $50,000, into a deferred annuity. He or she can withdraw the money, tax-free and without any IRS penalties, to pay for senior care.
The coverage may be for two to three times the amount of the initial investment and can be funded with cash, another annuity, or a whole or universal life insurance policy.
For instance, Life Care Funding helps you convert your existing life insurance policy into cash to pay.
Life Settlement Accounts
Life Settlement companies are another option to consider if your aging loved one has a life insurance policy. With a life settlement agreement, a senior sells their life insurance to a third party and receives a lump sum payment. While the payment isn’t as much as the face value on the policy, it is typically more profitable than the policy’s cash surrender value.
Many people aren’t aware that a United States veteran, as well as the surviving spouse of a veteran, may qualify to receive monthly benefits to pay for assisted living. The Department of Veteran Affairs’ administers a program known as the Aid & Attendance Benefit.
Any veteran who is classified as “fully disabled” or is age 65 or older qualifies. As of 2016, a veteran can receive up to $1,788 per month, and a surviving spouse can receive up to $1,149 per month. Couples can receive up to $2,120 per month to pay for their care, room and board in a nursing home or assisted living community.
Elder Benefits Consulting can help walk you through the application process.
Talk with a Senior Living Counselor
The professionals at Five Star Senior Living communities are happy to help you discuss your options to pay for senior care and help you put together a monthly budget. Call the Five Star Senior Living community nearest you to schedule a personal appointment.
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