Income and Savings
Using personal income or savings to pay for senior living is the simplest route. If a senior is not able to fully cover expenses, family members may contribute part of their income or savings to help pay for care.
Long Term Care Insurance
If your loved one has long-term care insurance, it may cover assisted living, depending upon the specifics of the policy. Unfortunately, according to the Long-Term Care Association, less than 3% of Americans have long-term care insurance. The most cost-effective time to secure coverage is during middle-age or younger, as it can be prohibitively expensive as an older adult. If your loved one is covered, depending on the policy provision, it can go a long way to support care costs.
Many seniors transition from a house or other residence that they own. The sale of their property holdings can help pay for their care. For those who need assisted living immediately, but aren’t able to sell their home right away, some communities offer deferments that are paid back once the property sells.
Selling a Life Insurance Policy
This practice, known as a “life settlement” involves selling your policy to another person or a company for a cash settlement. They pay the premiums from then on, but collect the benefit when you pass away. This can be a complicated process so make sure you understand the impact on your family.
Pooling Family Support
A senior who cannot afford assisted living often relies on some financial support from grown children or other family members.
A reverse mortgage allows you to borrow money based on the equity in your home. The loan is paid back when you sell the home. A reverse mortgage stipulates that you must reside in your home for the length of the loan. A reverse mortgage can be useful if a couple needs care and has full ownership of the house. For example, if a husband is healthy, but the wife has advanced Alzheimer’s disease, the couple could use a reverse mortgage to pay for the wife’s care at an assisted living community with memory care, while the husband remains at home.
In some states, Medicaid covers care at skilled nursing facilities and assisted living communities. But Medicaid, which is not to be confused with Medicare, is only available to seniors who have little or no assets, so it’s generally an option of last resort.