If you or a loved one are currently considering or facing the possibility of long-term care in an assisted living or nursing home facility, you may have realized a stunning fact – Medicare won’t cover it. Medicare certainly comes in handy for short-term care and hospital stays, but long-term care is something you’ll have to foot the bill for. The following are a few ways to help you cover long-term care expenses and get the care you need.
Know the Difference
Before you start researching ways to pay, it is important that you understand the differences in the two types of facilities you are considering. So whom is each facility best suited for?
- Assisted living – This facility is typically for seniors who are still very independent but may require assistance with activities of daily living (bathing, grooming, dressing) or daily tasks such as meal prep and housework.
- Nursing homes – This facility is typically for seniors who require constant, 24-hour care. Many have significant mobility issues or are bed-bound, in addition to medical issues like dementia.
Another significant difference is the price. The national average for assisted living is $43,536 annually and $82,128 – $92,376 annually for a nursing home, depending on whether the room is semi-private or private. This cost will vary by state as well.
Use Your Life Insurance
Life insurance is something we all have, but you could be getting more out of it than you think. You are likely familiar with the death benefit as it pertains to your life insurance policy, but you can actually access these funds now by adding a life insurance rider. As Investopedia explains, “All life insurance riders pay a tax-free benefit which is an acceleration of the life insurance death benefit.” To qualify, your doctor must ascertain that you are unable to carry out at least two of the six activities of daily living, or have significant cognitive decline. Life insurance is an important and helpful tool for many seniors, but it is a myth that you have to have it. In fact, if you no longer have dependent children living with you or you have enough in savings to cover the cost of care for you and your spouse, you might consider selling it in a transaction known as a life settlement. While life settlements aren’t for everyone, this article courtesy of NewRetirement can help you determine if it could be beneficial to you.
Use Your Home’s Equity
You’ve likely heard of a reverse mortgage, but at the time, you brushed it off. Now that you are researching ways to fund long-term care, a reverse mortgage is worth considering. According to The Senior List, “Reverse mortgages are a type of home equity loan which allows borrowers to receive cash against the value of their home while maintaining ownership.” There are certain criteria you must meet, such as being 62 or older and having someone remain living in the home. For this reason, this type of loan is best for healthy single seniors who can put the payments away in a separate bank account or couples in which only one senior needs care. A HELOC (home equity line of credit) is another way to use your home’s equity. For more info on this option as well as home equity in general, check out this helpful article from Bankrate.
Use Your Resources
When it comes to footing the bill for long-term care, you’ll need to tap into more than one resource. Chances are you’ll be paying a portion of it out of pocket, so it is best to take a look at your funding resources and go from there. You could use your Social Security benefits, veterans benefits, IRAs, stocks/bonds, or annuities. Involve your family in the planning process, and consider whether they could potentially serve as a caregiver until professional care might be needed.
Once you start doing your research, you’ll learn that assisted living and nursing home facilities aren’t cheap. If you aren’t prepared, your finances can take a hit. Start getting your long-term care financial plan in order now to avoid a headache down the road.
June Duncan is the co-creator of Rise Up for Caregivers, which offers support for family members and friends who have taken on the responsibility of caring for their loved ones. She is the author of the upcoming book, The Complete Guide to Caregiving: A Daily Companion for New Senior Caregivers.