By Casey Ribick
One of the most common questions that a lot of people may have in the process of looking for assisted living or long-term care is how to manage the costs. While there are a variety of different payment plans and options on the table, expenses are going to vary from facility to facility. These are largely contingent on the following factors:
- Amenities
- Size
- Location
- Local regulations
- Competition
To give you an idea, the average cost of assisted living in 2018 was $3,750 a month and $45,000 a year. States with the highest national average (between $5,000 and 6,000 a month) include:
- New Jersey
- Massachusetts
- Maryland
- Maine
- Connecticut
By comparison, the lower price band is around the $3,500 range, including states like:
- Arkansas
- Alabama
- North Dakota
- Louisiana
- Mississippi
At any level, though, this represents a lot of money to spend. While you want the best care for your loved ones, that money needs to come from somewhere. Here are some of the most common ways people finance senior care.
Government Support
A lot of people go into assisted living or long-term care assuming that they’ll be able to fully cover their needs through government assistance. But—in reality—this isn’t the case, even for Medicare and Medicaid. In certain areas, though, Medicaid does offer a waiver program to cover nursing home facilities. However, every state’s requirements for eligibility and coverage limitations are different. For example, Medicaid is funded by the state and federal government, which means limitations and different state policies. Complicating the situation is that even if you’re able to get Medicaid coverage by your state rules, not every assisted living facility/nursing home will accept it as payment.
For veterans, the Department of Veteran Affairs offers programs to support coverage, nursing homes included. In some programs, this may also include spouses of veterans. While the VA can subsidize the costs of some services, this doesn’t include living expenses and rent. One such example is the Veteran Aid and Attendance program for cutting down long-term costs. Talk to your case manager or a social worker at the VA to see if you qualify.
Personal Funds/Loans
Government coverage is a major part of how many people pay for long-term care, but because coverage can vary so much, it’s not guaranteed to be a fit. Many people are reliant on using personal funds like social security, pension, savings, or a combination of them to handle their living expenses. Another option is looking into long-term care insurance or alternatives like reverse mortgage loans, home equity loans, and bridge loans.
Reverse mortgages are loans that are available to seniors 62 years and up, allowing them to convert their home equity into monthly cash payments. These payments can go into the cost of senior living, and the loan isn’t required to be repaid until 6 months after the homeowner passes away. Generally, selling off the home will be done to pay this off.
You can also look into a home equity loan—it is similar to a second mortgage. If the home is worth more than you pay for the first mortgage, you may qualify for this type of loan, where you borrow against the home equity value. After that, you make payments over a determined set of time. Finally, you have a bridge loan, which is good for those seniors selling their current home, but not finding buyers. These bridge loans cover senior home expenses until you sell your home, then you use the proceeds to pay off the loan.
The good news here is that when you determine your loved one needs long-term care, different facilities are going to have the resources able to help properly guide you. Many facilities have assistants/staff specifically designated to help manage any questions or concerns that you have when it comes to overall planning. Along with figuring out a financial plan, you can also schedule tours and learn more about the benefits of residency.
Article by Casey Ribick. Casey is a writer for Senior Care Center and manages an assisted living facility in Southern California. He writes about health, senior care, and financial planning.
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