When the time comes for your loved one to move to a senior living community, financing the move could be a complex process. This is even more daunting since the costs will vary depending on the type of care, location, and services needed. Before you get overwhelmed, know that there are options to choose from which will help you and your family pay for senior living costs.
This kind of insurance policy can reimburse seniors with a daily amount to assist with ADLs (activities of daily living). It’s best to purchase policies ahead of time before you receive actual benefits. An assessment will be performed to see if your loved one requires long-term care. When approved, a care manager will provide a Plan of Care that contains your coverage.
Military veterans from the United States may be eligible to use their benefits to help pay for long-term care. Veterans could be entitled to respite care, adult day health care, or skilled home health care through standard medical benefits. Veterans might also be eligible to use their veteran’s pension and disability payment to pay for long-term care. To determine whether your loved one is eligible, just visit VeteranAid.org and take a two-minute questionnaire.
There are two ways to use our real estate assets to pay for senior living:
● The first option is to use home equity, your home’s market value minus any liens on your property. For instance, if your home is worth $200,000 and you made a 20% down payment on it, you’ll have an equity of $40,000 (which is 20% of your home’s total cost). Your home equity will increase and decrease along with your home’s value, so make sure it is well taken care of.
● The second option is to use a reverse mortgage—this is similar to an equity loan, where borrowers can convert some or all of their home equity into cash. However, this is only available to seniors over 62 years of age and won’t require monthly payments. This loan doesn’t need to get paid until you sell your home. In this loan, the lender’s responsibility is to pay the borrower every month, hence its name, “reverse mortgage.”
Life insurance can give you various options towards paying for long-term care. If you’ve chosen a policy that has cash value, you may withdraw cash to pay for senior living. Your policy can also be sold in a “life settlement option” to pay for care. This option can provide up to three times the value compared to cash withdrawals. If the policy’s owner is terminally ill, it can be sold through a viatical settlement. Using this alternative will allow proceeds from the sale to become tax-free.
Overall, there are options from which to choose!
For more information on planning for future care, download our Family Guide to Funding Senior Care & Housing or contact Friendship today to schedule a virtual or in-person tour.