In the past ten years or so, the lives of elderly people have undergone tremendous changes. Today, there are more choices than ever before. There are also more options for financing the lives of senior citizens.
If you are like most families, you and your elderly relatives have a lot of questions about paying for living expenses in old age. We think it would be helpful to answer some of the questions we hear most often.
Does Medicare Pay for Senior Living?
Adults 65 and older can use Medicare to pay for up to 100 days of skilled care and rehabilitation after hospitalization, but not for assisted living or independent living in a senior living community.
How Does the Majority Pay for Senior Living?
Around 90% of people pay their living expenses through private payment options. In other words, you will not receive support to cover government subsidies or costs.
For example, older adults can use the sale of their home, reverse mortgages, pensions, 401K severance pay plans, or other savings to pay for elderly care. They may rent a house and use the money to pay for elderly care.
Can I Use My Life Insurance to Pay for Senior Living?
Yes. You can take out life insurance to cover the living expenses of the elderly. You will not receive a par value, but usually, you will receive more than your policy surrender value.
Alternatively, you can consider converting your life insurance policy into a deferred annuity with your caregiver. Money is tax-free and withdrawn monthly without IRS fines and paid directly to the senior living community.
Speak with a professional financial adviser or senior lawyer for more information.
What Is a Reverse Mortgage?
A reverse mortgage is a cash loan for the elderly to mortgage the home equity. The loan bank makes a lump sum payment, monthly installment payment, or payment as a credit line. The loan will not be repaid until the last borrower (usually both husband and wife will sign) has passed away or moved for a full year. Most commonly, the loan will not be repaid in increments. Instead, the house is sold and the lender gets the full loan plus interest repayment.
Adults above the age of 62, may qualify for a reverse mortgage. If your or your loved ones are homeowners and are unable or hesitant to sell, you may consider using a reverse mortgage to tap into your home’s equity to pay for senior care while allowing you to hold on to your property.
I Am on Medicaid. Will It Cover the Costs of Senior Living?
Medicaid is an option for individuals who qualify for low income in their state. In some cases, Medicaid will pay for long-term care services, including home care. Check the eligibility requirements in your state.
I Am a United States Veteran. Can I Receive Help Paying for Senior Living?
Many people do not know that U.S. war veterans may be eligible for Assistance and Attendance (A&A) benefits for veterans and their living spouses.
A&A is a tax-free monthly pension provided to veterans and their spouses who need help in daily life. Eligibility varies by state, but the benefits can be significant. Contact your local Veteran Affairs office or an elderly legal practitioner to determine if you or your loved one is qualified.
Alternatively, you can find useful information and apply for A&A benefits directly on the official VA website.
