How to Pay for Assisted Living

Posted by: The Bristal

Just as with real estate, assisted living prices vary by location. You can do a simple search online and find charts that have the average price per state. For our purposes, an estimate by Metlife Insurance Co. places the national average at around 3,550 per month for the year of 2012.

Paying for Assisted LivingThere are a few ways people usually pay for assisted living: private funds, long-term care insurance, veterans benefits, or Medicaid. Private funds can be drawn from personal investment portfolios or saving accounts, i.e. 401K, pensions, or Individual Retirement Accounts (IRAs). Also, when moving into assisted living communities, people do not generally expect to return home so many sell their homes, using the equity that has built up over their lifetimes as a source of payment. For those who own homes, but don’t want to sell them, it is possible to trade in equity for a loan. This is called a reverse mortgage and with this option, it may be necessary for someone to remain living in the home.

Long-Term Care Insurance:
A policy that is purchased via a private company. These policies usually have restrictions. Most policies will not cover the costs unless the person is unable to perform two or more ADLs—dressing, bathing, eating, using the bathroom, etc. Some insurance companies make evaluations using their own doctors to see if you qualify. It is best to get an integrated home care policy with 100% protection for care received either in a licensed assisted living facility or skilled nursing facility, or in an unlicensed setting such as your home. A “facility only” policy refers to care received in a licensed assisted living or skilled nursing facility. Sometimes, it is possible to convert a life insurance policy into a long-term insurance policy. If this isn’t possible, you might be able to sell a life insurance policy for its present value, called a life settlement, and use the money to pay for assisted living care.

Veteran Benefits:
The Veteran Administration’s Aid and Attendance (A&A) pension is an additional part of a veteran’s regular pension that can pay for assisted living costs up to $1,732 per month as of 2013. To be eligible for an A&A pension you must already be qualified for a regular veteran’s pension—a wartime veteran with at least ninety days of active duty who did not qualify for the Armed forces pension. Also, a veteran’s surviving spouse may be eligible for up to $1,113 per month. Click here for more information.

Medicaid:
Unlike Medicare, Medicaid does cover assisted living costs, but the coverage, financial aid, and eligibility of a person differ state to state. In some states there is no Medicaid coverage for assisted living and regardless of state, not all facilities accepts Medicaid beneficiaries.

Medicare:
Unfortunately, Medicare does not usually cover the cost of assisted living unless the care is considered medically necessary. Assisted living, although seemingly necessary, is not considered medical. It is aimed at providing patients with room/board and assistance with activities of daily living (ADLs) rather than the skilled care services Medicare provides for.

Depending upon financial situations, the best option varies case by case. It’s a good idea to start planning earlier rather than later.

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