How to Pay for Assisted Living

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The national average rate for assisted living is $3,628 per month, according to Genworth's 2016 Cost of Care Survey. No matter what your socio-economic status, make sure you are taking advantage of all means available that can help pay for assisted living.

Most families pay for assisted living out of their own pockets using a combination of Social Security, pensions, Veterans benefits, home equity, and savings.

Below are ways to pay for assisted living, including some options that most people know about and others that are less well known.

Long-Term Care Insurance

Long-term care insurance is a policy that is purchased through a private insurance company. Similar to health insurance policies, the price varies greatly depending on factors such as the person's health, age, and amount of coverage. Coverage could be denied for people with pre-existing conditions such as Alzheimer's disease, multiple sclerosis, a stroke, or Parkinson's disease. However, insurers vary widely in their criteria. If one company denies an applicant, another company might accept that person.

Medicare

Medicare does not pay for the cost of living, room and board, or personal care in an assisted living facility. Medicare might pay for short-term stays in an ALF or rehabilitation center while someone recovers from an illness, injury, or surgery. Assistance from Medicare is very limited.

Medicaid

Medicaid is a joint federal government program for older people with low incomes and limited assets. However, administration of the program falls to the individual states, according to the Centers for Medicare and Medicaid Services (CMS), which says "each state sets its own guidelines regarding eligibility and services." The number of state Medicaid programs paying for assisted living is increasing, and many states also offer home and community-based services to help delay an elder's placement in a long-term care facility.

Aid and Attendance Veterans Benefit

The Veterans Administration's Aid and Attendance is part of an "improved pension" benefit that is largely unknown. Living in an Assisted Living facility qualifies. Aid and Attendance is an enhancement to a veteran's regular VA pension. As of 2017, an eligible veteran may receive up to $1,794 monthly, a surviving spouse is eligible for up to $1,153 monthly, and a veteran with a spouse is eligible for up to $2,127 monthly. For more information on what VA Benefits will cover, eligibility criteria and how to apply, download AgingCare.com's FREE Veterans Benefits eBook.

Investment-based options to pay for assisted living

The following ways to pay for assisted living are riskier, because they are financial transactions rather than government money. They should be considered only after other options have been exhausted.

Life Settlements

A life settlement, or life insurance settlement, converts life insurance into money that can be used to pay for long-term care. The company that issued the policy buys it back for 50 to 75 percent of its face value. The settlement company pays the premiums until the policyholder dies, at which point the company, not the policy's original beneficiaries, receives the money.

Reverse Mortgage

Elders who own their home outright or have only a small mortgage can trade in their equity for a loan. A home equity loan is known as a reverse mortgage. It allows people to trade in ownership without making immediate payments on the loan. Payments don't start until the home is no longer the primary living space.

Annuities

An annuity is a contract between a person and an insurance company that is designed to meet retirement and other long-range goals. You make a lump-sum payment or series of payments. In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date.

Bridge Loan

Bridge Loans are a risky option that should be used with caution. A bridge loan is a short-term, temporary loan. For example, some elders are trying to sell their house to move to assisted living. But suddenly their care needs become too urgent to wait until the house sells before moving to assisted living. For people affected by conditions out of their control, a bridge loan, typically for 6 to 12 months, may be a viable option. The homeowner is assuming that the existing house is going to sell within the length of time specified in the contract.

Paying for assisted living doesn't have to come from one source. There are options available, and seniors and their families should consider those that apply to their situation. And remember, before taking risks with investments and assets, or making a major financial decision, speak with a financial advisor.

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38 Comments

I am at wit's end. My mom has passed away and my dad (83) has beginning stage dementia and was no longer safe living on his own. We have found a wonderful assisted living facility where he is now living. My problem is how to pay for it. There is enough money at present to keep him at the facility for up to 6 months.

There is a reverse mortgage that my parents took out several years ago and borrowed money, but not to take care of the house. I now have to sell the house, but it is probably not even worth what is owed to the bank, so that is not going to be a help.

Dad is a vet, so I am meeting with the VA to get financial aid. It has taken me 3 months to get that appointment and now I am told that it could take 12 months for him to be qualified.

His medications now have to be put up in a blister pack for the assisted living and the VA will no longer pay for his meds. So I have to sign him up for Medicare Part D. Because he did not apply for part D years ago, he may have to pay a penalty which stinks, because he did not need part D then. Also, that will not start until January 2013 and it is now $650 a month out of pocket along with the $3500 for the home.

Medicaid is only interested in how much they are going to be reimbursed. He has paid into the system since he was 17 years old and now that he needs it, he has to pay them back with any money that is available including his life insurance policy which we will need to bury him when that time comes.

I have had days where I have done nothing but make phone calls and at the end of the day, have nothing accomplished and still no real answers.

Where is there a school for the children of the elderly to learn what to do before we need to do it?
My Mom has Parkinson's and it's just not safe for her at home anymore. She tried living with me and was very unhappy. We have been trying to find a safe place for her to live where she will have the care she needs. We found a nice assisted living facility, went through the financial mumbo jumbo and got turned down for the bridge loan. This loan was supposed to float her until the VA assistance kicked in. So now we're back to square one. It's so sad that there is no one to help us with this. I can't tell you how mnay times we've been told they can't help us. Mom is on SS and a small pension. THere is no way she can afford the nicer facilities on her own. So what do we do and where do we turn?
That is so awesome to hear stuff like that n just by meeting with similar situations. I am so glad u were able n still able to just talk to someone that understand what you r or were going through at the time. This site has made a huge difference for me during the past year. I hope others read these post so they too will know about such thing that may be available in their local hospital area. Thanks. ; )