Transitioning to a long-term care facility can be both positive and challenging for you and your family. Assisted living facilities offer the security of personalized loving care, companionship, and amenities that will make you feel at home. But funding your long-term care can be a challenge without proper planning. Gain peace of mind for yourself and your loved ones by putting a plan in place now for the costs of the long-term care you will need in the future.
How to Pay for Long-Term Care
There are a number of funding strategies available to help you plan for long-term care.
Private/Self-funding
Funding for long-term care out of pocket is the most straight-forward solution. However, even a few years of professional residential care can rack up several hundred thousand dollars in care costs. Those with substantial assets and investments may take the route of self-funding, but for most families, this strategy is not a viable option.
Home Equity/Reverse Mortgage
Both of these plans draw on the value of your home. While a home equity loan requires monthly payments to the lender, which may be hard for seniors with fixed incomes to make for several years, a reverse mortgage does not require repayment until the owner’s death or sale of the home. However, payments are not tax-deductible, as they are on home equity loans up to $100,000. Home equity loans also ensure that your home remains an asset to you and your heirs.
Medicare/Medicaid
While Medicare can partially cover shorter-term care, such as rehabilitation after surgery, or in-home care for homebound seniors, it does not pay for the costs of daily, long-term assistance in a residential facility. As a result, patients needing care for chronic conditions such Alzheimer’s will not be able to draw from Medicare. Some patients may qualify for Medicaid coverage, but several eligibility rules apply, varying by state.
Long-term Care Insurance
The long-term insurance option involves paying annual premiums to cover future costs of care. Plans reimburse policyholders with a fixed daily amount, such as $100 per day, for a usually limited amount of time. Depending on the policy, coverage may cover assisted-living care, at-home care, or a combination of both. Of course, premiums increase depending on an applicant’s age and health, the amount of daily payout, and the length of care.
The downside to long-term care insurance is paying premiums for a benefit you may never need to use. The average 55-year-old will start out paying close to $2,000 per year for up to $162,000 in coverage.
Finding Your Way
Planning for long-term care doesn’t have to be a daunting financial prospect. With the right strategy personalized for your income and needs, you can reduce the stress associated with managing costs and prepare for a peaceful transition. Contact us to learn more about what costs are associated with assisted living facilities and how to plan for long-term care.Â
