Paying For Senior Living Care

The thought of finding senior living care that is both effective and affordable can be scary — if not downright overwhelming.

Whether the care is for yourself or a loved one, the same questions persist:

• When should I start thinking about shopping around?
• What factors can influence the price of care? Does where I live matter?
• Do certain care options influence how much I will pay?
• Can personal investments or safety net programs, like Medicaid, be used to foot the bill?

Please don’t pull out your hair! There’s no need. The process doesn’t have to be this intimidating, nor ultimately will it be. As you’ll read, a number of options await you and your pocketbook to ensure you receive the care you need and deserve at the price you can comfortably afford.

Levels of Care

This one is perhaps the most obvious.

Estimated costs for an independent living community range on the low end for as little as $1,500 per month, depending upon the state. This lower number reflects the fact that residents living in these senior living facilities largely live an autonomous lifestyle with little to no assistance from staff for activities of daily living (ADLs), which consist of bathing, grooming, dressing, continence, medication, laundry, and more.

At the other end, there’s memory care, a heavily-involved form of assisted living in which residents can require attendance around the clock.

On average, the cost of assisted living, according to a 2018 study conducted by Genworth, an industry-leading long-term insurance company, can run as much as $4,000 per month. When you consider the required extra monitoring necessitated by residents with memory impairment, this could account for an additional $1,000 per month.

Average monthly fees may range even higher for 24-hour in-home care or a private room within a skilled nursing facility.

Location of Care

Unfortunately, senior living communities are not immune to the volatile effects of geography on real estate values. As such, you could very well find that an assisted living community in Washington State requires a monthly fee nearly three times that of a community in Missouri, even if the two are under ownership and management of the same company. There are many tools on the Web you can use to assess the average cost that every state may charge now and going forward for different levels of senior care.

When doing your research on the average cost a given state may charge for senior care, please bear in mind that these aggregates are calculated using numbers from all areas of that state — from the most-dense urban epicenters to the smallest rural town.

Additionally, remember that, in some cases, neighboring states could show vastly different senior care cost averages, presenting you opportunities for saving considerable amounts of money over time if relocation is an option.

Living Arrangements

Senior living communities all over the country offer residents a number of floor plans to meet individual preferences and needs.

A resident at an independent living community that prefers more autonomy may be willing to pay more per month to enjoy a full private kitchen, larger or extra bedroom, in-unit washer and dryer, contemporary touches such as granite countertops, or simply just more overall square footage.

Finer appointments may be not of much concern to another resident. Someone who lives at an assisted living community may place more importance on the companionship of a roommate, potentially drastically reducing the monthly expense.

Staff-to-Resident Ratio

This ratio is calculated as the number residents who require care at any given time to the number of staff members present to administer care services.

When a senior living community employs a higher concentration of registered nurses, physical therapists, dieticians, culinary staff, and administrative and support employees, the difference in the quality of care can be significant.

The tradeoff, however, is higher monthly fees.

When finding the right senior care, it’s always important to inquire about a community’s staff-to-resident ratio to weigh this figure against its fees. Also keep in mind to ask the community whether or not secretarial or general support employees are included in the overall ratio.

Typically, these employees do not have daily interaction with residents and thus should be excluded.

Move-In Date

Depending upon the circumstances, it won’t always be possible to pick the exact date upon which you or a loved one becomes a resident of a senior care community If those circumstances, though, do allow for some move-in flexibility, late-summer and early-autumn months — August, September, and October — often rank as the most popular times of the year to officially call a community home.

These months offer a number of advantages, including cooler weather across much of the country, off-peak moving prices, a safe buffer zone from any winter-related challenges, and enough time to get settled into a new environment prior to the holidays. And we would be remiss if we didn’t mention that a lot of senior living facilities, depending upon their bottom lines, tend to offer move-in specials at the end of a month or quarter, no matter the time of year.

Pooling Family Resources

This “all-hands-on-deck” approach can be a relatively simple option for a group of siblings who may be concerned about a mother or father who is living alone but do not necessarily have the luxury of the time it takes to provide the care the parent needs.

Because of the obvious sensitive nature of the subject matter, tensions and emotions can run high — and understandably so. This makes it imperative that you lean upon the assistance of trained professionals, such as family mediators, licensed nurses, or geriatric care managers, whose expertise can provide everyone involved with a sense of calm during an otherwise turbulent time.

The assistance of a third-party can go a long way in keeping everyone on the same page or stepping in when disagreements arise.

Life Insurance

The living benefit rider of a life insurance policy with a death benefit of at least $100,000 can be exercised to provide the policyholder with a cash advance of up to half the worth of the death benefit.

After this rider option is exercised, the benefits of which can be used to pay for any number of types of long-term care, the policy will still provide coverage for the policyholder’s family, and the beneficiaries remain unchanged.

The living benefit option of a life insurance policy can be used to pay for the following types of long-term care:

• Assisted living
• Memory care
• Rehabilitation care
• Nursing home care
• Hospice care
• Home care

Reverse Mortgage

The most popular type of reverse mortgage is a home equity conversion mortgage (HECM). A special type of home loan reserved only for those 62 years of age or older, an HECM works identically to a traditional mortgage in that it gives homeowners the freedom to borrow money using the equity in their homes without relinquishing title.

Unlike traditional mortgages, though, a reverse mortgage does not require the homeowner to make mortgage payments. As a result, true to its name, the balance on a reverse mortgage loan goes up (not down) over time as interest and fees accrue.

Because the loan on a reverse mortgage is repaid when the homeowner is no longer physically occupying the home, this method of using funds to pay for senior care tends to work best when a loved one needs assistance while the other is capable of living alone in the home.

Also, reverse mortgage scams become more prevalent every day, so beware. Do your homework and do not consider this option if the home in question is being considered for future family generations.

Veteran’s Benefits

Through its Aid and Attendance program, the Department of Veterans Affairs (VA) provides eligible veterans and their families with monthly payments on top of the normal pension amount.

The purpose of the program is to supplement the basic pension of veterans and their surviving spouses with additional financial assistance to be used to pay for senior care.

To apply for assistance under the Aid and Attendance program, veterans must meet at least one of four criteria, which include the need of another individual to complete performa daily activities (bathing, feeding, etc.) and residency in a nursing home due to the loss of mental or physical capacity related to a disability.

Annuities

Available to people up to the age of 85 who meet specific health criteria, a long-term care annuity is a type of deferred annuity that is structured specifically to help those who need to pay for expenses associated with long-term care.

Like traditional deferred annuities, long-term care annuities provide future payments to the account holder in exchange for an initial lump sum investment.

The contract stipulates how much will be paid to the account holder once he or she needs to start pulling from the annuity fund for long-term care, and to access the money, the recipient must prove that he or she needs assistance with two of the six main activities of daily living (ADLs).

The key to long-term annuities, however, is the accompanying long-term care rider. If specific criteria are met, such as a chronic or terminal illness (Alzheimer’s disease), the payout from this rider could potentially double or triple the amount of the initial annuity investment.

Medicaid

This joint federal and state program assists low-income individuals with medical costs.

Eligibility requirements vary from state to state — as do the names states assign to their individual Medicaid programs — and not all senior living facilities accept Medicaid as a form of payment.

If you or a loved one prefers home care to that provided inside a community setting, Medicaid waivers often pay for in-home support services.

To see if you are eligible for your state’s Medicaid program, you can take a free test with the American Council on Aging or call the Medicaid office directly.