Are you considering supportive care for yourself or a family member? You may be wondering about the best way to fit it into a budget so you can pay for it.
Many people believe that when the time comes, Medicare will cover the cost of senior living. The reality is that Medicare pays for short-term, rehabilitative stays under certain conditions but does not cover long-term care. That leaves just two options: paying for care out-of-pocket or qualifying for government benefits that will defray costs.
We’ve put together this list of 12 frequently asked questions to help you navigate these choices.
1. Can I Use My Savings To Pay For Care?
Paying out-of-pocket refers to using the money you have on hand — whether saved in an account or coming to you as income — to fund a move to supportive senior care. Using your own savings often is the easiest way to pay for your move, as it may involve simply writing a check. Please note: savings can run out rather quickly due to the high cost of supportive care services.
If your money is tied up in investments such as CDs, you may pay a fee to gain access or wait for investments to mature before cashing out without a fee. Money that you’re holding in certain types of retirement accounts may be subject to early withdrawal penalties. Check with your accountant to understand the tax implications of cashing out various types of investments.
2. How Will My Monthly Income Help?
Most senior living and supportive care environments require some type of monthly fees, and many residents pay those fees from monthly income such as Social Security or pensions.
Other income you receive can also help. For instance, you may receive interest from banking accounts or dividends on stocks and bonds that you can put toward monthly fees.
Expect the fees you’ll pay on a monthly basis to vary by the area of the country, the type of community, and the services you require. In general, the more care you need, the more the care will cost on an ongoing basis.
3. Can Family Members Help Me Pay?
Yes, many people moving into senior living get financial assistance from relatives. Frequently, adult children will contribute to help their parents’ or other relatives’ move into a supportive living community.
In some cases, family members do not live close by, and it is not feasible to provide in-person assistance. Instead of asking the individual who needs supportive care to move far away from their familiar surroundings, family members may decide to pool resources to pay an entrance fee, monthly fees or both. If the individual moving to supportive care has some income, such as Social Security, relatives may simply supplement the cost rather than covering it entirely.
Family members may be promised reimbursement for the financial outlay once a house or other asset sells, or the financial contribution may be viewed as a gift.
4. What About Selling My Home?
Many individuals who move to a senior living community will sell their homes to do so. The proceeds of the home sale may go toward paying an entrance fee, or the money may be put into an account to fund monthly fees and the other regular expenses for the individual.
Prior to putting a home on the market, it’s important to work with an experienced real estate agent to assess what the home is likely worth, what work needs to be done and how much it will cost, and how long the home is likely to be on the market. An experienced agent also can advise you on the best time to put your home on the market in your area to maximize your profit.
5. What If I Need To Move Before My Home Sells?
If you have a health issue that requires you to move immediately — or if you feel that you need help and should not remain in your home — you may not be in a position to wait for your home to sell before making a change. Certain types of supportive living options are need-driven; if you require help with activities of daily living such as bathing and medication management, waiting may not be an option.
If waiting is not an option then one possibility is a bridge loan, a specific type of lending product that provides a cash infusion to an individual waiting for a home to sell. Bridge loans typically come in one of two varieties. The loan may be a short-term line of credit for a small amount for initial moving expenses (up to $50,000). Alternatively, longer-term loans of larger amounts may be available to help individuals who need to pay an entrance fee for a supportive living community.
6. Can I Rent Out My Home?
Yes, you can rent your home as a source of ongoing income to fund a move to supportive care. However, you should be aware that becoming a landlord comes with a number of responsibilities that will require you to either work with a management company — with its own fee — or have relatives or friends nearby who can manage the property for you.
Renting out your home, at least for a short period, may be a good option in some cases. For example, if the home has been in the family for generations and has great sentimental value, your children or other relatives may not want to part with it. In that case, they may be willing to manage renting out the home to avoid selling it.
If you do choose to rent out your home, be aware that you’ll need to cover maintenance and other expenses, including property taxes. It’s also prudent to have money saved in case you should need to go through unexpected legal issues with a tenant.
7. Will My Veterans’ Benefits Help Cover Costs?
Veterans and their spouses can get coverage for assisted living through the Department of Veterans Affairs. To qualify for the coverage, you must have served more than 90 days on active duty, including at least one day in wartime.
The program is known as the Non-Service Connected Improved Pension Benefit with Aid and Attendance — often referred to as simply “aid and attendance.” To apply, you’ll need to have a doctor certify that you qualify medically. Suffering an injury during your time in the military service does not have to be the cause of your medical condition.
The program pays a monthly stipend, with the highest amount going to married veterans; a lesser amount is given to single people and surviving spouses. There are income limits for the program, but medical expenses and supportive care are deducted from the income that is considered.
8. Can I Get Government Assistance?
Many people confuse Medicare and Medicaid. Medicare, the health insurance program for people over 65 who have worked and paid into the system, does not pay for long-term care. Medicaid, on the other hand, provides medical care for persons with limited financial resources.
Some states offer waiver programs that provide some degree of Medicaid funding for supportive care such as assisted living and nursing care. If your income is low and you do not have significant assets, you may qualify for some assistance under Medicaid.
The program operates as a partnership between the federal government and individual states, and it may be called something than Medicaid in some states. Eligibility varies in from state-to-state, with a small amount of cash plus a home and a car allowed in many cases. Not all supportive living communities accept Medicaid, and availability may be limited in those that do accept the program.
It’s important to be aware that the government does not allow qualifying for the program by giving away assets, such as a home or vehicle. If you apply for Medicaid, the government may review your financial information as far as five years back to ensure that applicants have not gifted significant assets.
Individuals with disabilities may qualify for assistance through Supplemental Security Income, or SSI, which is administered by individual states.
9. Can An Annuity Help Me Fund Supportive Care?
For individuals who have savings but fear their funds might run out at some point, annuities can provide a viable choice. If you choose to buy an annuity, you will pay an amount in the beginning to fund the annuity, then receive payments for a set period of time.
The primary benefit of an annuity is that you are assured of receiving payments on a regular basis even if the money you paid up front is depleted. For individuals who live to an advanced age, annuities can be advantageous because they often pay out more money than is invested up front.
10. Can I Benefit From Selling A Life Insurance Policy?
If you’ve had a life insurance policy for years, you may be able to use it now as a financial resource. To cash out the value in your policy, speak with your insurance agent about living, or “accelerated,” benefits.
In most cases, the insurer that issued a policy will purchase it back for 50 to 75 cents on the dollar. The exact amount is determined by a number of factors, including the health and age of the policyholder, along with the amount of monthly premiums and the face value of the policy. Some policies have restrictions on the situations in which you may cash out, while others provide more flexibility.
11. Is Long-Term Care Insurance Helpful?
A very small percentage of Americans carry long-term care insurance, and it can be expensive for older individuals to purchase. However, if you or your family member purchased a policy in middle age, the allowed benefits can provide significant assistance.
Individuals who move into an assisted living community receive a specific dollar amount per day — which varies by policy type. Additionally, some policies specify a benefit for care in a skilled nursing environment.
12. How Much Will Supportive Care Cost?
The cost of moving to a supportive care environment can vary based on multiple factors, including your area of the country, the type of community in which you’re interested, and the specific services and amenities you need. By reviewing communities in the area where you want to live, you should be able to find one that meets your needs and fits your available budget.
Affordable Independent Living in Berlin, Maryland
Gull Creek offers a variety of enrichment programs for multiple levels of senior care at our scenic campus on Maryland’s Eastern Shore. At Gull Creek, we understand that senior living pricing can be complicated and hard to understand, which is why our pricing has been purposefully structured to be straightforward and affordable. To learn more about our affordable care services that allow residents to enjoy an exceptional senior living lifestyle, please contact us.