Most families use private funds to pay for assisted living, such as personal savings, pension payments, retirement accounts, or a combination of any of these. Before choosing a community for your loved one, it is important to consider how you'll pay for assisted living and what funds are available through insurance, savings accounts, and family contributions. In this article, we will provide an overview of 6 ways to pay for assisted living and explain how to get help planning important care expenses. Are there two types of nursing homes that are “bought and paid monthly out of pocket”? I prefer not the first, but the second.
Sharing space and subsequent costs may also be an option if your loved one is interested in having a roommate. Some assisted living centers offer two-bedroom apartment type housing, which can reduce costs by 10 to 20 percent or more per month. Along with the lower cost, the possibility of having more space and a social companion may make shared living a better option for some residents. If your loved one's insurance policy doesn't allow for living benefits, there are still options you can consider. For example, they can sell their policy to an outside company in exchange for a “lifetime agreement” or “agreement for the elderly”, which normally consists of 50 to 75% of the value of the policy.
After purchasing the policy, the monthly premiums become the responsibility of the third company, and that company receives the full value of the policy after the death of the original policyholder. Another option, known as a “life insurance benefit” or “life insurance conversion program”, allows seniors to convert their policy benefits directly into long-term care payments. A life insurance conversion usually pays less than a life settlement (generally 15 to 50 percent of the value of the policy), but it is available for lower-value policies that may not qualify for life settlement. If you or your loved one have purchased health insurance, consider yourselves lucky. Long-term care insurance policies apply to assisted living care; all you need to know is how to collect your benefits.
Some long-term care policies have a specific benefit designated for nursing home care, based on a mental or physical diagnosis, that can be used to pay for assisted living. An annuity can help you take advantage of your savings and ensure that you always have a reliable income. Its great advantage is that you continue to receive money regularly, even if your purchase premium runs out. If you live a long time, you'll get more than you invest. The insurer assumes the risk that you will live longer than the life of the money and will make additional profits if you die prematurely. Insurers don't go into the annuity business expecting to lose money, but annuities may be a better deal for you than simply draining your bank account every year.
Another benefit is that Medicaid doesn't fully count annuities as assets when you apply for government assistance. Annuity income is counted as a “resource”, but the total amount originally used to purchase the annuity is not. Annuities are complex financial tools with many variations. Some require an initial purchase to receive future payments, while others offer immediate payments; some are based on a fixed interest rate, others work with variable rates. You'll need to do some homework and talk to a trusted financial advisor about what annuity options might be appropriate for your situation. If your loved one is a full owner of a home or is close to paying for it, a reverse mortgage could be the solution you're looking for.
A reverse mortgage allows you to withdraw the accumulated value of your home value, either in full or in a series of monthly payments. The bank decides the value of the home based on the value of the home, interest rates, the applicant's age, and other factors, and the loan balance increases gradually over time. If a bank has a mortgage on the house, it must pay it off before you can start receiving payments. Upon death, the balance of the loan must be repaid, which usually requires selling the house.
Reverse mortgages were originally developed to help widows stay in their homes after the death of the breadwinner. Nowadays, they work best when one parent needs assisted living but the other can stay in the home. To apply for a reverse mortgage, one landlord must be 62 years of age or older and the other person must continue to live in the home. Finally, a reverse mortgage is a big commitment so it's important to work with a reputable company.
Make sure you understand all terms and read all fine print as there are many rules about homeowners insurance and mortgage insurance and about how to keep your property in good condition. There may also be high fees or clauses that make it easier to lose your home. The Consumer Financial Protection Office recently reported that reverse mortgage scams and foreclosures are on the rise. Knowing different pricing models and how to budget for assisted living can make it easier to choose right community.
Making decision to move into an assisted living community can be positive and necessary change and hopefully your loved one will be looking forward to starting new chapter in their life. Many assisted living facilities use point system to determine level of care required by resident. If older people find an assisted living facility in area where they have lived for years there is no need to change doctors change their shopping habits and other routines that revolve around local establishments or organizations.
