How to Pay For Assisted Living

May 21, 2023 / Assisted Living

When seeking long-term care and community options for your aging parents or loved-ones, assisted living is often one of the first choices. An assisted living facility will provide residents with care for activities of daily life, such as personal care or medication management, while also providing them with private living space, generally in the form of a studio-apartment style home with a kitchenette and living space. Assisted living facilities have opportunities for socialization and outings with other residents, as well as amenities and services focusing on supporting the physical health, social connection, and intellectual stimulation of residents. All the benefits of assisted living do come at a cost, and the price is staggering for many people. The Senior Care AZ team is breaking down how to pay for assisted living and the financial options that may be available for you. Read on to learn how to pay for assisted living and if you’re looking for Arizona senior placement services, contact us.

Who Pays for Assisted Living?

Most families will use some sort of private fund to pay for assisted living, including savings or retirement accounts. Though many aging adults have been saving for retirement for many years, families often have to contribute a certain amount of their own money to cover the costs of assisted living. In some cases, insurance, home equity, and other benefits and options can help cover the cost of assisted living.

Private Pay: Financing Options for Assisted Living

Some adults may have health insurance or life insurance plans that may cover part or all of the costs of assisted living, or they may have assets that could be sold to help cover the costs.

Health Insurance

Medical insurance is used to cover the costs of hospital stays, medical procedures, and other medical care, and in some instances, part of the medical aspects of your care at an assisted living facility may be covered by your insurance, although this will vary depending on the type of insurance you have and what your plan covers.

Medicare

Medicare will often cover some aspects of the health care residents will receive while living in an assisted living community. Medication management, such as administering shots of insulin to a diabetic resident, could be covered under Medicare. Other types of personal care, such as bathing or dressing, will not be covered by Medicare as these are not medical related expenses.

Private Health Insurance

Similar to Medicare, private health care providers will often cover some aspects of medical care provided by assisted living, but they will not cover costs related to personal care. To learn about the specific costs covered by your private health insurance provider, contact the company and ask to discuss the specifics of your plan when it comes to elder-care options.

Long-Term Care Insurance

Many aging individuals will plan far in advance and begin paying into a long-term care insurance plan, which must be done before the age of 60. While there are requirements an individual must meet to begin receiving the benefits of this plan, such as being unable to perform two daily tasks of everyday life, long-term care plans will often cover the costs of assisted living. While long-term care insurance covers more costs when it comes to elder-care than most private health insurance plans, it also comes with significant costs over the years of contributing to the plan.

Life Insurance

Many people are unaware that an individual’s life insurance plan may be used to cover the costs of elder care, such as assisted living. You can sell a life insurance policy to a third-party for market value and use the proceeds from this sale to contribute to paying the costs of an assisted living facility. Selling to a third-party may allow the insured to retain some of the benefits of the plan, or the plan can be surrendered to the insurance company for cash value, rendering any benefits useless in the future.

Home Equity

If you or your loved-ones own a home, they may be able to use the equity to cover their assisted living costs.

Bridge Loans

A short-term loan, or bridge loan, is a way for homeowners to get cash quickly in an urgent situation and leverage their homeownership to do so. This loan can be used to pay for assisted living while you’re waiting to liquidate assets or wait for a home to sell, provided someone is able to make payments on the loan in the meantime.

Reverse Mortgage

A reverse mortgage is an option for individuals who want to access some of their home equity while still allowing residents, such as a spouse or adult children, to stay in their home. This allows homeowners to tap into home equity in the form of a lump sum or to supplement their income. This type of mortgage is a common target for scams, so working with a reputable bank is necessary to ensure safety when taking a reverse mortgage on the home.

Sell or Rent Your Home

Selling your home can be an excellent way to receive the money your home is worth, especially if you are the primary resident and you will be moving into an assisted living facility. If the house is vacant and you would like to keep the equity in your home while still earning money, you can consider renting or leasing the home.

Public Pay: Using Medicaid for Assisted Living

Each state is in charge of managing Medicaid, which offers health coverage to more than 80 million Americans, including elderly people. Many state Medicaid plans will cover the costs of nursing services and personal care assistance, and some assisted living facilities will accept Medicaid plans to pay for a portion of assisted living costs. Coverage for Medicaid depends on the state, and some assisted living facilities may not accept Medicaid, so it is important to conduct research on your benefits and what is accepted prior to choosing a facility.