The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Generally, assisted living comes out to an estimated 60-70% of a similar sized room in a nursing home, according to the census bureau. That means a bill between $50 and $120 per day. Seems like a lot right? This article will detail a few different ways you or your loved one can pay for the care they need.
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 $4200 per month for the year of 2016, the last year calculated. We can only assume it has gone up since then as residents in assisted living should expect to see a 3-5% annual increase in the base rent per year. Even in-home care, once an alternative, has exceeded the costs of assisted living for many people’s needs.
There 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 general 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.
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.
Unlike Medicare, Medicaid does indeed cover assisted living costs, but the coverage, financial aid, and eligibility of a person differ from state to state. In some states there is no Medicaid coverage for assisted living and regardless of state, not all facilities accepts Medicaid benefits. Click here for a map of your state’s qualifications.
The Veteran Administration’s Aid and Attendance (A&A) pension is an additional benefit outside of a veteran’s regular pension that can pay for long term care costs up to $1,881 per month as of 2019. This dollar amount is for single veterans with no dependents. 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 $1,211 per month.
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 care insurance policy. If this isn’t possible, another option is to try cashing out a life insurance policy for its present value, called a life settlement, to use the money to pay for assisted living care.
These are just a few ways to pay for assisted living and depending upon financial situations the best option varies case by case. It’s a good idea to start planning earlier rather than later and in the best-case scenario the money saved will not have to be used.
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