Paying for Senior Care is a very important issue that every family should consider. Having to assist a loved and cherished senior member of your family through the process of finding a senior care solution, can be challenging enough, without the complexity of finances.
Various factors will influence the financial cost, and of course, may determine your decisions. Fees for senior care vary tremendously depending upon what option you select. You may also be influenced by aged care facilities available finances, either private retirement funding, property capital, or medical insurance.
The cost of funding senior care will be determined by the level of physical and medical care, also by the size and location of the facility, be it a nursing home, care home, assisted living or retirement community. This means you could be talking about anything from $500 to $10,000.
There are some subsidized senior housing projects available, sometimes referred to as congregate housing, HUD housing or Section 8 housing. Here you pay half the rent whilst the government funds the rest. Unfortunately, many of these programs have long waiting lists, and you do have to have limited income and assets to qualify.
If you opt for or Home Care there are also some programs that help to reduce your home expenses so that your home can continue to be affordable solution. If you decide to sell your home to pay for care costs, be wary of the fact that if you bank the proceeds from the sale, and therefore have assets, you may still not qualify for any government support. If you sell your property, and then opt to purchase a senior housing unit for a similar price, then you may still qualify for some funding assistance. There are some care homes that will accept a senior’s SSI income and pay a small incidental monthly allowance to residents.
Some funding sources like private health insurance provide strictly for medical care. They do not pay for important custodial care such as help with bathing, dressing, grocery shopping or getting around the house. Other funding sources such as long term care insurance or Medicaid do pay for custodial care costs but no medical care, and often have many limitations and restrictions to what is covered. The costs of living for seniors needing housing with services can be covered by a combination of the following:
Personal or family money — assets like stocks and savings, plus income from a job or investments. Pensions and Social Security retirement benefits — this is often the primary income source for many seniors that can cover rent or mortgage payments. Supplemental Security Income (SSI) — monthly public assistance checks for seniors and the disabled who have very limited income and assets.
Reverse mortgage — can be an income source to pay for services to keep a senior in their own home, or to pay for nursing home care of a very ill spouse, or even pay for long-term care insurance. Long-term-care insurance — sometimes will only pay for nursing home care, but some policies cover an array of services in a private home or in an assisted living type of facility.
Medicaid Funding for Senior Care
Medicaid is the federal medical insurance program that provides medical coverage and some assisted living for low-income seniors. Seniors who end up spending their savings or assets on medical care will eventually qualify for Medicaid. Eligibility varies from state to state, with lowest limits at assets at $1500 and income at $600 per month. If over the income level, it is possible to qualify by paying a monthly deductible.
Medicaid will provide for some custodial care, be it in your own home, an assisted living facility or a nursing home. However, be mindful that Medicaid is not accepted as a means of payment by some medical institutions, and many nursing homes will have a limited number of places for Medicaid residents.
Medicare Funding for Senior Care
Medicare will cover acute hospital care and some allied health professionals in the treatment of the disabled and elderly. Most private health insurance companies follow similar guidelines to Medicare. Coverage is strictly for medical care, and does not cover housing costs. Assistance for day-to-day custodial and personal care such as bathing, eating and dressing is not covered. Medicare will sometimes pay for care in a nursing home or skilled nursing facility, following a hospitalization, but only for a limited convalescent period. Long-term nursing home care is not covered.Medigap insurance may cover some costs that Medicare does not, but excludes cover for custodial care.
Supplemental Security Income (SSI)
SSI can help to pay for senior housing costs, but the amount is very rarely enough to cover such costs in most states. Some care homes have arrangements where SSI goes directly to the home, and a small incidental allowance is paid to the resident.
Long-term Care Insurance
This can be an option, and many policies are now quite flexible and designed for much more than just long-term nursing home care, however, they can be expensive.
Home-Equity Conversion or Reverse Mortgage
This too often ends up being the way elderly people who are homeowners end up paying for care. It is a way of borrowing money released from the equity held in the home. Unfortunately, this is a sad way that many seniors end up losing value in what they had built up as an inheritance for their children. It needs very careful consideration, as it can result in your heirs and children carrying the debt.