Often, the most challenging part of moving your parent to senior living isn’t getting their agreement but rather figuring out whether your family can pay for it. But rest assured; a limited budget doesn’t automatically mean senior living is beyond your reach! You may not realize that many options exist to help fund senior living. Here are some of the most common, as well as some quick ways to save.
Options to Help Fund Senior Living Expenses
Depending on your specific circumstances, these options may be able to help your budget for your loved one to go further for senior living:
- Veterans Aid & Attendance Benefit – A wartime veteran or their surviving spouse may be eligible to receive this non-service-connected benefit to help fund senior living. The benefit starts with the basic pension and, depending on medical need, gives your loved one a rating that could add more money to their monthly pension. But your loved one must meet the military service criteria and medical and financial requirements to qualify for Veterans Aid & Attendance.
- Long-Term Care (LTC) Insurance – LTC insurance can help your loved one fund senior living by covering care services typically not covered by health insurance, Medicare, or Medicaid. Many LTC policies begin to pay benefits after an assessment has determined that your loved one needs help with two or more Activities of Daily Living or has cognitive impairments (known as a benefit trigger). However, there will be an elimination period, typically 30, 60, or 90 days after the benefit trigger occurs before payments will be received. During this time, your family may need to cover the cost of services your loved one receives out of pocket.
- Life Insurance Conversion – If your loved one has an in-force life insurance policy, you may be able to transform it into a pre-funded financial account that disburses a monthly benefit to help fund senior living. Unlike life insurance, this account is a Medicaid-qualified asset. The conversion process transfers ownership of a life insurance policy from the original holder to an entity that acts as a benefits administrator. Because the original owner no longer holds the policy, it won’t count against your loved one in the Medicaid spend-down process. There are no application fees to apply for a life insurance conversion, and the typical enrollment time is 30-45 days. Once converted, the benefits payments should start immediately to help with senior living in Somerset County.
- Reverse Mortgage – A reverse mortgage is a type of home equity loan specifically for homeowners aged 62 or older. It may make sense to access the equity in your loved one’s home to supplement income to help fund senior living. If your loved one meets the age requirement, owns their home, or has a small mortgage, and the house meets FHA property standards and flood requirements, they may be eligible. If so, the lender makes payments to the borrower based on a percentage of your loved one’s accumulated home equity. However, the loan will need to be repaid when the borrower dies, sells the home, or permanently moves out.
For more information, download our Senior Living Options Guide!
Saving for Senior Living
Another way to help fund senior living is to create space in your budget. These tips can help:
- Decrease Spending – Often, your loved one can significantly cut their daily expenditures. Start by looking at automatically renewing subscriptions, entertainment and/or dining expenses, and phone and cable expenses first.
- Make Catch-Up Contributions – At age 50; you can begin making extra contributions to your IRA (up to $1,000) and 401(k) accounts (up to $7,500), according to the IRS. So it’s never too late for your loved one to start!
- Wait on Social Security – While you can collect benefits starting at age 62, most financial advisors recommend waiting until age 70 to increase your loved one’s monthly benefit exponentially.
- Check with the Senior Living Community – It never hurts to check as the community your loved one is considering for senior living in Somerset County may offer move-in specials or have pricing options that can help you fund senior living as well.
Remember to check your loved one’s current assets as well, including what savings, stocks, bonds, or annuities they may have to help fund senior living. You might also consider selling or renting their home.