Covering the Cost of Assisted Living

It may actually be less expensive for your loved one to live in an assisted living residence than to receive extensive help in home. The costs of assisted living can vary dramatically, depending on the level of care required, the location of the facility, and the amenities offered. Typically, rates range from $1000 to $3000 a month. In some cases, they can go as high as $5000 per month.

Base rates typically cover all basic services and many basic care needs; however, assisted living residences have clearly defined pricing tiers specific to the level of care required. In 2009, it cost an average of an additional $347 per month for each care service provided, according to a MetLife survey.

Drawing from all available sources to pay for assisted living can be complex, so it is important to meet with an accountant or financial advisor before finalizing any arrangements. The portion of fees that go toward health care specifically may be tax deductible, while standard living expenses are not.

This guide serves to explain all the financing options that may be available to you as you consider as assisted living arrangement for your loved one:

Personal Resources

Most seniors finance their life in assisted living residences using personal resources. Often, the sale of the family home provides the money necessary to live in assisted living residences. Pensions are another source of funds for long-term care.

In 2011, the Center for Retirement Research at Boston College conducted a study on the source of funding for care in senior living facilities and found that of the 2617 assisted living residents who participated in the study, nearly 2000 reported being self-reliant, with only a few relying on their families for financial support.

Life Insurance Policies

Long-term life insurance policies can be another source of funding for life in an assisted living facility. Some policies allow women who are older than 70 and men who are older than 74 to get cash from a term life insurance policy. This may be a good avenue to take, since having such a policy can make seniors ineligible for Medicaid.

Medicare or Medicaid

Medicare does not generally cover the cost of living in an assisted living residence.  Seniors who qualify for Medicaid may be able to receive help for the part of their costs related to nursing care. Currently, 41 states have a Medicaid waiver or state plan for residents who qualify, which can usually be found through Home and Community Based Services (HCBS).

In 2010, 19% of the residents in assisted living facilities across the country received Medicaid funding according to the National Center for Assisted Living.

It may be possible to for those who receive Supplemental Security Income (SSI) to obtain additional subsidies.

Long-Term Care Insurance Policies

Long term care insurance policies vary in terms of whether or not they will cover the costs of assisted living. Some only cover care in skilled nursing residences, while others are more inclusive.

When assisted living costs are covered, the lifetime cap of the plan is generally $200,000, and payments towards care services provided will typically max out at $100-150 per day.

Veterans Benefits

Veterans and their spouses may be able to receive some financial help from the Department of Veterans Affairs if they have limited income. Qualified veterans can apply to the program for Aid & Assistance. Such benefits are not connected to disabilities received during service.

Reverse Mortgages

Some seniors use reverse mortgages to pay for their care in assisted living residences.  This can generate a steady cash flow, while helping to ensure that heirs will still be able to inherit the family home.

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