When you are looking into finding an assisted living home for a loved one, the cost is most likely a deciding factor on when you can go and what you can afford.
Depending on the level of care that your loved one needs, assisted living facilities can be much more cost-effective than long-term in-home care or even a nursing home.
Assisted Living Costsassisted-living-costs
The monthly rates assisted living facilities charge will be different from location to location, what amenities are offered, what level of care is required, but the range is from $3,000 to $6,000 on average, according to Genworth’s Cost of Care Survey.
The cost of assisted living can seem very expensive, but when you compare it to the average cost of a nursing home is $5,000 to $10,000 per month or in-home care is $4,000 per month for 40 hours of care per week, assisted living is more affordable and much better value for your money if your loved one doesn’t need full-time medical supervision.
Other Factors Affecting Assisted Living Costs
There are many different factors for assisted living costs. Location is important, as some states are more expensive than others. Also, the type of care that your loved one needs, will affect the cost.
Adding memory care to the assisted living will increase the cost, as memory care is expensive. Loving Assisted Living, we will help you find the home that is best suited to you and your loved one.
Just like when you buy a house, square footage, number of rooms, bathrooms, location inside the community (floor, proximity to amenities, and/or elevator), view, and availability are measured in the price point.
Be sure to ask about all of your choices, since most assisted living facilities have many different floor plans to help control the monthly cost of assisted living better.
If your loved one is interested in having a roommate, sharing space — and the resulting costs — may also be a choice.
Some residential centers provide two-bedroom apartment-style living that can cut costs from 10% to 20% or more a month.
The opportunity to have more room and a social partner, along with the lower cost, can make shared living a better option for some residents.
The staff-to-resident ratio
The staff-to-resident ratio of an assisted living facility plays a major role in the amount of attention each resident gets.
And while a well-personed facility is ideal to ensure greater attention to the needs of your loved one, that concentrated attention is likely to increase the monthly cost of assisted living.
It is common to choose an assisted living facility in or near a current zip code. There is little need to change doctors, alter shopping habits, and other activities that revolve around local establishments or groups if seniors want an assisted living facility in an area where they have lived for years.
But the amount of monthly treatment can cost depends on where your loved one stays, moving towns— or even states — can have a big impact.
Assisted living facilities in urban areas typically cost more than their rural counterparts due to the increased valuation of real estate and business costs, as in California it can be more expensive than most other states.
Relocating even an hour away from a major metropolitan area will result in a cost drop of up to 25 percent. Swapping states can also save large sums net.
Moving from Illinois, for example, where the average monthly cost of assisted living is $3,898 for its sister, Iowa, can save $380 a month. A little further north, Minnesota’s monthly cost shaves $698 off the Illinois average cost.
When you move in
Even though they are in the treatment sector, assisted living facilities are still businesses. This means that they are dealing with the same financial pressure as supermarkets, restaurants, and other firms.
Residences can negotiate price breaks by the end of the month, quarter, or year to meet budgetary demands.
If your family is not constrained by a time limit, waiting to transfer a loved one to an assisted care group may mean either a slightly lower monthly payment or financial benefits such as waiving the “community charge” (which can be equal to rent of several months) or transferring in credits.
When you decide what’s best for your loved one and the numbers count, it’s important to know all of the payment options that are available to you.
It’s easy to get upset when your loved one’s comfort and safety depend on your decision. It is best to have an action plan that incorporates any tool you can before looking at any of the possible residential care facilities. Here are some of the best ways you can, without breaking the bank, “spare no expense.”
Ways to Pay for Assisted Living
While the cost of assisted living varies significantly and may seem daunting at times, there are several ways to circumvent the bulk of this financial burden.
- Veteran’s Benefits Veteran’s benefits cover residential care in various circumstances:
- If your loved one or his partner has service-related injuries or disabilities, benefits may be extended to the cost of living assisted.
- Support and attendance benefits are available to any veteran (or spouse) with disabilities whose compensation is less than the amount given.
To receive the benefits your loved one is entitled to, you will need to go through the Veteran’s Administration, which can be a time-consuming, complicated process.
Therefore, consider working with a geriatric consultant who understands the ins and outs of the program and can help simplify the process of applying for benefits.
Senior living facilities also offer financial concierge services which will direct you through the benefits application process.
- Life insurance While most purchase life insurance with their beneficiaries in mind, if appropriate, policies can be extended to “living benefits.” Depending on the monthly premiums, age, and fitness of the policyholder, the company is likely to buy back 50-75 percent of its face value from the policy. Unless the policyholder is terminally ill, some plans will not provide “accelerated” or “working” incentives, while others will be much more flexible. If the insurance policy of your loved one does not permit living expenses, you still have options to consider. You may sell their policy to a third party, for example, in exchange for a “life settlement” or “senior settlement,” which usually consists of 50-75% of the policy’s value. After purchasing the policy, the monthly premiums become the responsibility of the third-party company, and that company receives the full value of the policy after the original policyholder dies.Another choice, known as the “life insurance” plan, or “life insurance conversion program,” allows seniors to directly turn their policy benefits into long-term care payments. Conversion to life insurance typically pays less than a life settlement–usually between 15 and 50 percent of the policy value–but is possible for lower-value plans that might not qualify for a life settlement.
- Pooling Family Resources If you’re worried about living alone with your mom or dad, other family members might also be worried. Often bringing everyone together to think about it helps a solution to be found, such as pooling assets and swapping resources for a time. For example, if a majority of daily care is done by one or two siblings or family members, such as traveling to medical appointments, others with less flexible work schedules may contribute money instead. If there is a family home that nobody wants to sell yet, when the house is sold, siblings with available funds may pay for assisted living with a guarantee of repayment. Tedious and daunting can be the study and paperwork involved with identifying and choosing assisted living facilities and being eligible for financial support. Families sometimes get stuck because no one feels qualified to take the job. Working with a geriatric care manager or senior moving manager who knows the resources in your field can be a huge relief. A care manager will collaborate with the whole family to propose solutions, overcome roadblocks, and help you find your loved one’s perfect location. Money issues can also cause tension within the family. If you have trouble communicating on this difficult topic, read more about how to deal with family disputes. You might also enlist the help of a mediator.
- Long-term care policies Consider yourself lucky if you or your loved one received care insurance. With assisted living care, long-term care insurance policies apply–all you need to know is how to claim the benefits. Some long-term care plans have a particularly defined incentive for home care nursing, depending on a mental or physical disability that can be used to pay for living assistance. The policy may also set out a fixed home care allowance, which may then be paid directly to the assisted living facility or to the recipient, who may then use it to pay for assisted living.If your loved one hasn’t already bought long-term care policies, it’s probably too late now to do so. Nonetheless, there is still time to sign up for a long-term care policy yourself to avoid putting your own family in the future in the same position.
- AnnuitiesIf you have a nesting egg but are concerned about maintaining your money, an annuity might be a good option. When you buy an annuity you pay upfront a lump sum and receive regular checks back over a fixed period of time–usually the rest of your life. The annuity will help extend your savings and guarantee that you are receiving some reliable income at all times. Their big benefit is that you keep getting money regularly, even if your payment premium runs out. If you’re living for a really long time you’re going to get back more than you put in. The underwriter takes the risk that if you die early, you can live longer than the money lasts–and it makes an extra profit. Underwriters aren’t going into the annuity business expecting to lose money, but annuities can still be a better deal for you than merely depleting your bank account every year.Another advantage is that when you apply for government assistance, annuities aren’t completely counted as Medicaid properties. The annuity income is treated as “cash,” but it is not the full amount initially used to purchase the annuity. Annuities are complex financial instruments with various variations. To receive future payments, some allow initial purchase while others have immediate payments; some are based on a fixed interest rate, others operate off a variable rate. You’re going to want to do some research and speak to a trusted financial advisor about which annuity options could match your situation.Be very cautious when investing in stocks. Unscrupulous marketing campaigns are advocating for bogus annuity offers by community centers, adult education workshops, telemarketing, and slanted ads targeting vulnerable seniors. And fraud on an annuity is more common than most people know. Always use your common sense filter: It could be a scam if it looks too good to be true. If you purchase an annuity and deal with a highly recommended representative, you’ll want to choose a reputable company. So ensure that your representative helps you work through some of the trickier aspects such as inflation.
- A Reverse Mortgage If your loved one owns a home outright or is close to paying it off, the option you’re searching for might be a reverse mortgage.
A reverse mortgage helps you to cash out your home equity’s interest either in full or in a series of monthly installments. The bank agrees on a value based on the value of the house, interest rates, the age of the borrower, and other factors and the loan balance rises gradually over time. (If a bank holds a household mortgage, it must be refunded before you can start receiving payments.) Even if the loan balance exceeds the value of the home, the borrower will stay in the home until death. The loan balance must be repaid upon death which usually requires the home to be sold. Initially, reverse mortgages were developed to help widows stay in their homes after the breadwinner passed away. We work best nowadays when one parent wants assisted living but the other should live in the home. One borrower must be over the age of 62 to qualify for a reverse mortgage and one person must continue to live in the home.Be sure to spend time researching the benefits and disadvantages of reverse mortgages as they are not for everyone. For example, a beloved property that you want to keep in the family is probably not a great option.Finally, a reverse mortgage is a big commitment, so partnering with a reputable firm is critical. Make sure you understand the terms and read the fine print, as there are lots of rules on policy and mortgage protection for homeowners and keeping properties well maintained. There may also be high fees or clauses involved which make it easy to lose the house. The Consumer Financial Protection Bureau recently reported that fraud and foreclosures on reverse mortgages are on the rise.
- Renting Your Home The family home can be an important resource if only one parent currently lives, or if both parents need assistance in their daily lives. Selling is, of course, a choice, but Mom and Dad’s house is beloved by many families, and family members are not ready to make this decision.
Consider renting out the house in this situation, and using rental income to pay for assisted living. The thought of being a landlord may seem daunting, but you can employ a company for you to manage the property and still produce enough income to ease the burden of assisted living costs.
Use Medicaid for Assisted Living
If your loved one has little in savings or other financial assets and their income is small, they can qualify for Medicaid, which can help pay for assisted living. A fast, free, and non-binding Eligibility Test for Medicaid is available.
In many states, Medicaid systems go by another name, so if you are not already familiar with it, it is a good idea to look up the name of your state’s program online (example: Arizona Long-Term Care System). Medicaid eligibility varies by state, but generally, to qualify, the applicant has to have less than $2,000 in assets outside their home and car.
Medicaid is only approved by some assisted living facilities, and Medicaid beds are usually limited. Check with your local Area Agency on Aging to find long-term residential care options near you. You can also arrange for a free consultation from a government health insurance consultant to help you navigate the maze of signing up for public benefits.
Important Note: While Medicaid can help with assisted living expenses, neither Medicare Part A, Medicare Part B, nor Medicare Part C covers residence in an assisted-living facility.
For any Medicare program to provide coverage of any kind, the treatment must meet the basic requirements:
- Care must be “medically necessary,” that is to say ordered or recommended by a licensed physician or other approved medical provider. (Hoping to improve eligibility chances? Read our Medicare coverage guide.)
- Care must be provided or administered by a medical provider participating in the Medicare system.
Your next step is to find assisted living facilities accepting Medicaid.
Few states offer a list of providers or a searchable database if you’re doing your own work, but these can be hard to find online. To help you out, in the table below, we have compiled a list of these resources to help you find central, assisted living facilities accepting Medicaid.
If you’d rather speak to an expert, you can contact your aging local agency and ask any questions about Medicaid and assisted living. Case managers will evaluate the needs of your loved one, consult with you on financial planning, and help you draw up a care plan that fits the medical needs of your senior.
Common Problems with Using Medicaid for Assisted Living You may run into some bumps along the road after you have done your preliminary research and found some assisted residential facilities that accept Medicaid. Understanding what they are is important for you so that you can prepare your solutions in advance.
Sadly, many people encounter problems that qualify for the HCBS waiver of their state.
Few common hurdles:
- HCBS exemptions can require a higher level of medical need than your senior would qualify for.
- HCBS exemptions often have restricted slots, and even if you qualify from a medical or financial perspective, you can find yourself on the waiting list.
- Potential solutions:
- See if your state offers programs for assisted living or independent living that are not Medicaid. (For example, Florida provides residential care financial assistance through its Preferred State Supplementation for Assisted Living program.) • Consider two or three of the other funding options mentioned above.
- Consult with the manager of geriatric care who knows the resources in your field.
Medicaid is a complicated system but it provides important long-term care services.
Now that you have all of the basic information, you should be able to build a solid plan to get your loved one the best care possible. Be sure to make use of the many available resources!