Most people think about aging quietly in their own homes until they die. For many people, this may be the case. However, for much of the aging population chronic diseases, accidents or dementia make that scenario challenging.
Survey after survey finds that the majority of people want to age at home. For that to happen caregiving becomes a necessary part of people’s lives. Family and private caregiving are the two mainstays of aging at home. At some point, one or both of these may become unsustainable, due to cost and/or caregiver burnout.
This is where assisted living comes in. Assisted living can help relieve family caregivers and takes the place of paid caregivers. But, there is a cost, and planning for that cost should be a priority for every family.
What is Assisted Living and How Much Does it Cost?
Assisted living communities are for people who need help with some of their activities of daily living. People choose assisted living for a variety of reasons:
- The cost of in-home care has become too expensive and difficult to manage.
- Assisted living communities offer socialization, activities, and transportation.
- Aides assist with bathing, dressing, and one person transfers.
- Medications are managed and dispensed by nurses or med techs.
- Nursing services are available part-time.
- Physician’s often come on-site to see residents.
Many people are shocked to find out that Medicare does not pay for assisted living.
The cost of assisted living varies widely across the country. Most assisted living communities establish a base rate and then add on costs depending on the level of care is needed. If a lot of care is required, the cost can get quite high. According to Genworth, the median monthly cost for assisted living in 2019 was $4,051. You can almost always expect fees to go up yearly.
The term assisted living typically encompasses memory care as well. Many assisted living communities designate a different floor or floors for memory care. For people who have dementia, memory care may be the only choice. Since the staff to resident ratio is generally higher in memory care, costs may be higher as well.
1. Consider a Smaller Community or an Alternative to Assisted Living
A smaller, more intimate community may be less expensive. Personal care homes, also known as residential care homes or board and care homes, are residences that provide meals, supervision, and assistance with activities of daily living.
Board and care homes are generally less expensive than full service assisted living communities. That being the case, there may not be the full suite of amenities offered by larger communities. There are also other alternatives to assisted living that may be more affordable. With some of these other alternatives, you may be able to augment with private pay caregivers and still come out ahead.
2. Choose a Smaller Room
During the initial tour of a community you like, you may be tempted to ask for a larger room to accommodate all of the stuff you have accumulated over the years. Larger rooms cost more. Consider a smaller room and take some time to downsize. The cost savings can be significant over time.
Also, a community outside an urban setting is likely to be more affordable. There may be some tradeoffs with this choice: inaccessibility of medical facilities or a longer distance for your family to travel to see you.
3. Sell Your Home
Most people who move to assisted living may try to sell their homes in order to finance the monthly cost of assisted living. Whether this is a viable source of financial support depends upon the real estate market where you live, and the equity you have in your home.
It is wise to calculate the profit you will make from the sale and then project out how long that money will last. If it won’t continue to pay your assisted living fees, you will want to consider some other options.
4. Rent Your Home
If you are not confident in the real estate market where you live, consider renting your home to help pay for assisted living. If management is not your cup of tea, you can hire a management company for a fee to take care of the details.
Some people choose this option to retain ownership of their home for legacy purposes or to wait until the market has improved before selling. By renting, you get monthly income while still retaining ownership.
5. Negotiate the Cost
This option is worth a try, and may end up with you receiving a discount. Assisted living communities have proliferated across the country over the last 10 years and many communities are motivated to attract residents.
It can’t hurt to ask. An assisted living community might be willing to reduce your monthly fee to keep you as a resident.
6. Pensions, Annuities, and Investments
No one likes to think about dipping into their retirement savings, but it may be necessary to do so. There might be ways you can mitigate the damage to your estate.
Meet with a financial planner to see that your best option is.
7. Medicaid Waiver Programs
According to Medicaid.gov, the purpose of the Medicaid Waiver program is to keep people out of nursing homes which saves money and provides support services in assisted living.
Each state may differ in the way they administer this program. For example, a person who is in assisted living runs out of money. They qualify for Medicaid and rather than moving to a nursing home (where care is much more expensive), the state provides financial support for them to remain in assisted living. Along with financial support, you may also qualify for case management, aide service, and nursing visits.
Note: not all assisted living communities are Medicaid waiver contracted communities. Make sure the place you choose accepts Medicaid waiver residents. Otherwise, you may move only to discover that using the Medicaid Waiver program is not an option at that location.
8. VA Aid and Attendance
The VA Aid and Attendance program may help if you are a qualified veteran or spouse of a veteran. If you qualify for this program, the benefit will help offset the cost of assisted living.
9. Assistance Through State and Local Programs
You may also qualify for state and local programs that can help defray the cost of care that you receive in assisted living. Eldercare Locator is a good place to start your search.
If you qualify for assistance with activities of daily living such as bathing and dressing, this will help reduce the add on costs of such care in assisted living.
11. Long-Term Care Insurance
Long-term care insurance was designed to assist seniors in paying for home care and assisted living. If you purchased a plan and need help paying for assisted living, apply for benefits.
There may be a 90-day waiting period and you will want to get started on that elimination period as soon as possible so you can access your daily benefit. The longer you wait to purchase a plan, the higher the premium is likely to be.
12. Cash in or Borrow Against Your Life Insurance Policy
Before considering this, speak with a financial advisor about the risks and benefits of this choice. It may be a good option, or it may not be.
If it is a good choice, the cash may come in handy to help reduce your monthly financial outlay.
13. Ask Family for Help
Asking family to help pay for assisted living costs can be a tough choice. It may seem like you are asking for a handout and the process can be humiliating. But think of it this way. Your family might not even know you need financial assistance and they may be more than happy to help.
Family financial assistance might take the form of a loan against the eventual settlement of the estate, or it might be given with no strings attached. Having an honest and transparent discussion about the need for help might yield some additional ideas from family members on how to pay for assisted living.
Paying for Assisted Living
Understanding how to pay for assisted living should be at the foundation of estate planning. By starting early and reviewing or researching some of the options you may have available, you can feel confident about your ability to pay for the care you need.
- “Home and Community-Based Services 1915.” Medicaid.gov, Medicaid, www.medicaid.gov/medicaid/home-community-based-services/home-community-based-services-authorities/home-community-based-services-1915c/index.html
- “VA Aid and Attendance Benefits and Housebound Allowance.” The US Department of Veterans Affairs. www.va.gov/pension/aid-attendance-housebound/
- “Monthly Median Costs: National 2019.” Genworth Financial. www.genworth.com/aging-and-you/finances/cost-of-care.html