Six Options for Financing the Cost of Senior Living

Most people don’t think about senior living until they have to. Whether it is prompted by a loved one suddenly in need of care or a senior deciding that it is a time to downsize, choosing the right senior living may be the biggest choice you were never prepared to make.

On top of that, paying for senior living is not cut and dry. There is a steep learning curve to overcome.

So, with that in mind, let’s review some options that you or a loved one may have when deciding how to finance the cost of senior living.

1. Long Term Care Insurance

If a loved one is in need of care from an assisted living or nursing home, long term care insurance can be a great way to help cover the cost. Long Term Care Insurance helps cover care that normal insurance providers don’t tend to cover like: bathing, dressing, or assistance with getting in and out of bed. It also helps cover chronic conditions like disabilities or diseases like Alzheimer’s. If your loved one has long term care insurance, make sure to inquire about the policy and the care that will be covered under it.

2. Life Insurance Policy

Leveraging a life insurance policy is another way that you or a loved one can help pay for the cost of senior living.

There are three options when leveraging a life insurance policy:

a. Borrow from the Policy b. Withdraw your cost basis (what you in premiums) c. Cash in the policy

If you choose two use the first two options, you will not owe taxes on the withdrawn money. However, if you choose to cash out the policy, you will owe taxes.

3. Home Loan

If you or your loved one do not intend on selling your house right away, a home loan may be a good option to help cover the cost of senior living. Many banks will offer seniors bridge loans or home equity loans.

It may be good to sit down with a financial advisor when considering a home loan to try to find a loan option with lower upfront cost.

4. Medicare

Medicare will not help cover the cost of independent living or assisted living. Medicare will only help cover some of the costs associated with a stay at a skilled nursing facility.

5. Medicaid

For seniors with lower socioeconomic statuses and little equity, Medicaid may be an option to help pay for a senior living community. However, the ability to use this benefit will vary by state and depend on whether the community accepts Medicaid payments. It is also worth noting that communities that accept Medicaid are often full so you may be put on a waitlist. 6. Veteran’s Affairs (VA) Benefits

Veterans’ and their spouses may be eligible for assistance under the Aid & Assistance benefit. The program offers veterans’ and/or spouses with up to $2,120 per month to help pay for the cost of care.

Check out https://www.va.gov/pension/aid-attendance-housebound/ to review the eligibility requirements.

You can also ask your senior living of choice about VA benefits. They can often help assist with finding out if you are eligible and they may offer their own discounts to veterans.