Funding Sources for Senior Care and Housing
Oliver Wendell Holmes said, “Old age is always fifteen years older than I am.” Feeling youthful is definitely a key of healthy aging. But as the years pass, it’s wise to have a plan for funding senior care just in case you, or a loved one, eventually need to make a lifestyle change.
Here at Avalon Park in Cottleville, we want to be of help as you plan for the future. We’ve put together some information on possible sources for funding senior care.
Why knowing about sources for funding senior care is so important
First, it can be helpful to understand why having a plan for senior care and housing is so important, regardless of your current health status.
- About 70% of seniors over the age of 65 will need some type of long-term care.
- The average adult age 65 and over receives long-term care services of some kind for approximately three years.
- According to the CDC, most common conditions affecting older adults who require long-term care are high blood pressure, Alzheimer’s disease or another form of dementia, depression, arthritis, diabetes, heart disease, osteoporosis and stroke.
Remember that long-term care can be provided in several ways. For example, at Avalon Park independent living, residents have the reassurance that should their needs change, they will have access to an on-site supportive health services provider who can coordinate and deliver supplemental care services right in the comfort of their Avalon Park apartments.
4 sources for funding senior care
An adult who is 62 or older and 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.
A reverse mortgage may make sense as a source of funding senior care for people who don’t plan to move, who can still keep up with the cost of home maintenance, property taxes and insurance and those who want to access the equity in their home to supplement income in retirement. Unlike traditional loans, borrowers don’t have to repay the money until they move and sell the home. This makes it a good option if one parent still lives in the home, or if you’re considering in-home care. If your parent never sells the home, the estate will have to repay the loan. Otherwise, the borrower may be able to take possession of the home.
Long-term care insurance
The best time to buy long-term care insurance is between the ages of 40 and 50, when a person is still in fairly good health. However, a policy may still be affordable and available for you or your parents even if they’re in their 70s, depending on their health history. You can purchase inflation coverage, a guaranteed coverage growth rate, so that your insurance keeps up with rising costs.
Policies vary widely in what they cover, so reading all the fine print is important. Coverage is often denied for people with pre-existing conditions, such as Alzheimer’s disease, multiple sclerosis, stroke, or Parkinson’s disease. There also may be a waiting period before benefits kick in. In many cases, the shorter the waiting period, the higher the premiums.
Wartime Veterans and their surviving spouses, 65 years and older, may be entitled to a tax-free benefit called Aid and Attendance provided by the Department of Veteran Affairs. This benefit is designed to provide financial aid to help fund senior living by offsetting the cost of long-term care for those who need assistance with the daily activities of living such as bathing, dressing, eating, toileting, and transferring. To be eligible, you must meet specific criteria.
You may apply for Aid and Attendance or Housebound benefits by writing to the Pension
Management Center (PMC) that serves your state. You may also visit your local regional benefit office to file your request; visit https://www.va.gov/find-locations.
Life insurance conversion
The process is called life insurance settlement. You’ll most likely get less than the value of the policy but significantly more than surrendering or abandoning the policy, and the purchaser will take over premium payments. Policy value generally has to exceed $50,000, but you usually have your funds within 30 days.
Most life settlements involve the use of a life settlement broker who shops the policy around to multiple buyers and charges a fee. It is possible for a policyholder to manage their own sale, but brokers often get higher prices for a policy than an individual seller can.
These funds are put into an irrevocable trust, which makes payments to the community. Your family can then set aside a certain amount for inheritance and choose how much to allocate for care. When proceeds of a life settlement are used to fund senior living by paying for the costs of long-term care, tax deductions may apply.
Funding senior care: know your alternatives
The good news is there are several possible sources you can consider when developing a plan for funding senior care. You also might want to consult with your financial advisor or an elder care consultant. The senior living professionals at Avalon Park in Cottleville are also ready to assist you in making the choices that work best for you and your family.
Move to Avalon Park with confidence knowing you’ll never have to move again. Contact us today to set up your personalized tour.