Senior Care Financial Planning
Financial Planning Provides a Secure Foundation
When a need for long-term care arises, you don’t want money concerns to be part of your challenges. Trying to figure out how to cover costs during a crisis can be overwhelming. If you or a loved one should have to live in an assisted living home or a nursing home, how will you pay for it? By establishing a solid financial plan now, you can face the future on solid ground.
Understand the Costs
Long-term care is expensive. According to some statistics, you can expect to pay in the ballpark of $225 per day for a semi-private room in a nursing home, which translates to around $6,844 per month. A one-bedroom unit in an assisted living facility costs about $119 per day, and around $3,628 per month. An in-home aide charges an average of around $20.50 per hour. With those numbers in mind, it’s easy to see how important it is to establish a financial plan for long-term care expenses in the event you or a loved one requires help.
While Medicare is an invaluable resource for many seniors, it provides limited coverage when it comes to assisted living or nursing home care. Up to 100 days of care is covered, but not at 100 percent. What’s more, as explained by ElderLawAnswers, you must essentially deplete all of your assets in order to receive funding assistance from Medicaid. In fact, you can own no more than $2,000 in assets.
Know Your Options
Thankfully, there are several options available for paying for long-term care. Consider these ideas when deciding on your personal plan:
Supplemental Medicare Advantage plans. These insurance plans are designed to help seniors cover expenses associated with prescriptions, dental care and vision care. If you are currently eligible for Medicare or are nearing the age of Medicare eligibility, it’s important to get a clear understanding of how to navigate some of the vital enrollment dates, so read up on those in advance. By doing this, you can formulate your decisions ahead of time.
Long-term care insurance. Long-term care insurance is just what it sounds like- it’s designed specifically to cover costs associated with long-term care. However, some people don’t qualify for all plans, and it’s best to purchase a policy while you are young since premiums go up as you get older.
Short-term care insurance. Also described as “convalescent insurance,” Investopedia explains these policies cover long-term care for 180 to 360 days. Premiums tend to be lower than traditional long-term care policies since insurance companies carry a shorter commitment to the insured.
Sell a life insurance policy. If your cash payout is more than the surrender value, selling a life insurance policy is a viable option. By taking advantage of this option, you can access cash for expenses associated with long-term care.
Hybrid insurance policies. Another method for covering the costs of long-term care is hybrid long-term care insurance. These policies are a combination of life insurance and long-term care insurance. Should you require long-term care, you basically dip into the death benefit to use for long-term care needs.
Veterans benefits. One of the benefits offered by the Veterans Administration is paying long-term care expenses. This is available both to veterans and their surviving spouses.
Reverse mortgage. If you own your home outright, a reverse mortgage can help pay for your long-term care. You would trade your equity for a loan, and you would not begin repaying the loan until the house was no longer your primary residence.