How to pay for Senior Care
With increased life expectancy the issue of long-term care has become increasingly important. Unfortunately, like other medical care costs, long-term care costs have increased substantially over the last several decades and can range from $42,000 per year for assisted living care up to a whopping $87,600 per year for a private room in a nursing home.
To make sure you and your family have enough money to pay for long-term care you should start planning years before the care is needed. Let's review some payment options.
1. Long-term care insurance
Long-term care insurance can be the perfect solution to help minimize the financial impact of long-term health care needs. It's important, however, to consider this option well before the insurance is needed. In fact, this insurance generally cannot be purchased if health issues exist.
Long-term care insurance can be used to pay for a wide-range of care options, including assisted living facilities, nursing homes, adult daycare facilities, and memory care centers.
Medicaid recipients are eligible for care within a nursing home or may be able to receive other home health care services if they qualify for nursing home care, but states may not be required to provide services to seniors who do not qualify for nursing home care.
Additionally, qualifying for Medicaid can be very difficult and may require your loved one to deplete certain assets. If you are considering Medicaid to pay for long-term care review your state's Medicaid eligibility rules for more information about asset and income eligibility, spousal protections, and Medicaid estate recovery.
3. Reverse Mortgages
If your loved one has not purchased long-term care insurance and they do not qualify for Medicaid but they have equity in their home, they may be able to pay for long-term care through a reverse mortgage or Home Equity Conversion Mortgage (HECM).
Using a reverse mortgage, seniors over the age of 62 can withdraw money from their home and use the money to pay for long-term care. The benefit of a reverse mortgage is the money can be used for anything and the owner retains ownership of the property. There can, however, be some downsides to a reverse mortgage, and they should be discussed with an estate planner.
4. Savings and investments
Another option for funding long-term care is to pay the costs out of pocket. Obviously, this is only an option for those who have a steady income, consistent cash flow, or assets that they can sell to finance their expenses. Some seniors are also able to do this if they have an employment pension, Social Security pension, rental income, or investments that generates interest.
Although senior care is expensive, many families are able to pay for their loved one's care with a little planning. It's important, however, not to wait until the moment you need care to consider all of your options.