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Financial Solutions to moving a person into an Assisted Living Facility

Many of you see the need for a loved one to be in an Assisted Living or Memory Care and understand the benefit of being in a community rather than at home but the questions is….”How do I pay for this”?.

Although most Assisted Living and Memory Care communities are private pay, using savings, social security benefit payments or retirement funds, there are still options out there to consider as well as tax advantages that may be available. Here are a few options to review:

Long Term Care Insurance – This is insurance that was previously purchased in the individual’s life through private insurance, that covers some or likely all cost, depending on the policy and how it is written.

The first step to understanding what might be covered, is to contact the insurance company and ask to make a claim or application.

  • Let them know that you are looking to go into an Assisted Living/Memory Care. Sometimes coverage will be to your advantage moving into an Assisted Living rather than getting care in the home.
  • There are sometimes number of year limits on how long policy is applicable. Sometimes there are total dollar limits so again, you just must review how your policy is written.

VA Aide and Attendance – If you served, even one day, during war time, you may qualify for benefits.

If you are a surviving spouse, there is spousal benefit as well.

This is a tax-free benefit designed to provide financial services to help cover the cost.

Currently, the benefit amounts are up to:

Single Veteran- $1,936.00 monthly /$23,232 Annually
Surviving Spouse- $1,244.00 Monthly/$14,928.00 Annually
Married Veteran- $2,295.00 Monthly/27,540.00 Annually
Two Vets Married-$3.071.00 Monthly/36,852.00 Annually

Reverse Mortgage Options

An older adult who owns their home outright or has only a small mortgage can convert some of the equity in their home into cash payments while still retaining ownership. While there are different types of reverse mortgages, federally insured Home Equity Conversion Mortgages (HECMs) are the most common. When it comes to paying for residential senior living (like assisted living), reverse mortgages are usually only an option if the institutionalized elder’s spouse, or another individual who is a co-borrower on the loan, still resides in the home and maintains it per the terms of the loan. Otherwise, the loan becomes due when the last borrower no longer lives in the house for 12 consecutive months, sells the home or dies.

Funding Long-Term Care Services with a Life Insurance Settlement

A life settlement, or life insurance settlement, converts an existing life insurance policy into money that can be used to pay for long-term care services. A third party purchases the policy for a cash payment that is typically more than the surrender value of the policy but less than the death benefit amount. This third party assumes the responsibility of paying the premiums and becomes the beneficiary of the policy. When the insured dies, the third party receives the death benefit.

There may be tax advantages to living in an Assisted Living Community for room and board and care cost that allow you to utilize deductions. You would want to talk to your tax attorney or accountant to determine the ability and amount or percentage that may be deducted.