When considering how to fund senior living, you might feel a bit overwhelmed, wondering if you’re going to need to dig up a pot of gold in the backyard to make it all work. While it’s true senior living can be expensive, that doesn’t mean it’s only for the wealthy.
Before you pick up that shovel and look for buried treasure, consider that there are several possible sources of funding that you might not have considered—or thought you couldn’t access.
More Than You Realized: Ways to Fund Senior Living
- Are you a Veteran, or spouse of a Veteran? Wartime Veterans and their surviving spouses, 65 years and older, may be entitled to a tax-free benefit called Aid and Attendance provided by the Department of Veteran Affairs. This benefit is designed to provide financial aid to help fund senior living by offsetting the cost of long-term care for those who need assistance with the daily activities of living such as bathing, dressing, eating, toileting, and transferring. To be eligible, you must meet specific criteria.
- Do you have Long-Term Care Insurance? This form of Insurance is designed to help pay for costs of long-term care not covered by health insurance, Medicare, or Medicaid. It’s one of the best ways to fund senior living, because a small investment over time pays off in the form of affordable care. However, not all long-term care insurance policies cover all services, nor do they all pay the same for similar services. If you’re still relatively young, consider investing in long-term care insurance now. If your loved one needs care now and does not currently own this type of policy, it is no longer an option.
- Have you considered the equity in your home? A home equity loan, sometimes called a “second mortgage,” offers access to a large sum of cash drawn from the equity in your home. If you’re looking at very costly care for a severely ill parent, home equity lines of credit from multiple sources—you, your parent, a sibling or two—could be your best option as you consider ways to fund senior living. One benefit of a home equity loan is that it usually carries a fixed interest rate, making your monthly payments highly predictable.
• Did you know you can sell a life insurance policy? The process is called life insurance settlement. You’ll most likely get less than the value of the policy but significantly more than surrendering or abandoning the policy, and the purchaser will take over premium payments. Policy value generally has to exceed $50,000, but you usually have your funds within 30 days. These funds are put into an irrevocable trust, which makes payments to the community. Your family can then set aside a certain amount for inheritance and choose how much to allocate for care. When proceeds of a life settlement are used to fund senior living by paying for the costs of long-term care, tax deductions may apply.
• Have you considered selling your home, or other property? Selling the family home is one of the most popular ways to fund long-term care. It can be a hard decision for some, and is only an option to fund senior living if there is no spouse left still living in the home. While it does reduce an inheritance, it can also relieve the family of issues concerning ongoing upkeep and taxes. For assistance with staging the house and pricing it to full advantage, contact a professional such as a senior real estate specialist or transitional specialist.
• Are you familiar with a reverse mortgage? A reverse mortgage is a type of home equity loan reserved for seniors 62 and older that can help fund senior living. A reverse mortgage may make sense for people who don’t plan to move, who can still keep up with the cost of home maintenance, property taxes and insurance and those who want to access the equity in their home to supplement income in retirement.
Unlike traditional loans, borrowers don’t have to repay the money until they move and sell the home. This makes it a good option if one parent still lives in the home, or if you’re considering in-home care. If your parent never sells the home, the estate will have to repay the loan. Otherwise, the borrower may be able to take possession of the home.
What Medicaid and Medicare will and won’t do for you.
Federal law requires Medicaid to cover home care services for seniors who are blind or who have another disability that limits functioning. Some states also cover care in personal care homes. Medicaid covers Medicaid-eligible nursing homes for seniors who meet other eligibility requirements. To gain access to Medicaid, you generally must show that your parent has little or no funds. That may require you to first exhaust other options, such as selling a home.
Medicare covers a stay of up to 100 days in a rehabilitation center. The community must be certified by
Medicare, and your parent must meet other eligibility options. Medicare does not cover the cost of assisted living facilities or any other long-term residential care, such as nursing homes or memory care. Medicare-covered health services provided to assisted living residents are covered, as they would be for any Medicare beneficiary in any living situation.
At Peregrine, our expert senior living team is here to answer your questions and help you along this path. For us, redefining senior care includes being there to support your family during this transition.
Pioneering Care: The Peregrine Way™®. Contact us today to learn more, and please download the free guide, The Complete Guide to Choosing Between Senior Living Options. We are here to help you!
