Starting the conversation: Paying for Senior Living and Insurance options for loved ones
Added: (Thu Mar 31 2022)
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When it comes to paying for senior living, there are numerous options, the most common of which are traditional (i.e. paying from savings or current income), long-term care insurance, and Medicaid and Medicare (to a certain degree). Other viable options include social security, reverse mortgages, life insurances, VA benefits, bridge loans, and annuity incomes – all of which have their own pros, cons, and conditions.
In Ohio, particularly in Lantern communities, most of these options are available. However, finances will always be a significant obstacle to overcome for most seniors, with more than a handful delaying their move because of the possibly tremendous expenses they’ll be facing, which according to Lantern of Saybrook’s Joanna Timonere can cost up to $4,000 per month.
Indeed, rising costs remain one of the biggest reasons why many seniors and their loved ones are having second thoughts about relying on assisted living communities. With insurance premiums skyrocketing, it only becomes more challenging. It didn’t help that the COVID-19 pandemic only made things worse.
The market’s less-than-desirable condition is enough for most seniors to tighten their belts and, as much as possible, look for the best deal they can get hold of. “Considering all factors, these reactions are expected,” says Jean Makesh. “I consider it a blessing in disguise, actually, as it will only open up opportunities for communities like Lantern to educate people about the options available to them.
“Most of the time, they’ll be pleasantly surprised that a particular option to pay is actually available to them. Or that they can actually save way more money if they just took the time to discover every route they can take.”
Plenty of seniors still opt for the traditional way to pay for assisted living services. “In this case, these are the seniors who have amassed substantial life savings over the years and can confidently pay uninterrupted, despite fluctuating market conditions. Others have the privilege of still having income coming in from numerous sources, even well after they’ve already retired.”
Of course, that’s only one side of the coin. On the other hand, there are insurance options like life insurance and long-term care insurance that can take care of the full or partial payment of assisted living services. Here’s a brief explanation of how each one works for most senior living communities as per Joanna’s insights:
For long-term care insurance, it’s usually bought from a private insurance company with the specific intent of covering eldercare expenses. It’s best to purchase them ahead of time – way before the time you decide to enter senior living. The younger and healthier the insured, the better, in order to keep premiums low. At best, you shouldn’t wait until you’re 50 to get this kind of insurance.
Moreover, it’s important to anticipate the possibility of being excluded from coverage if the senior already has a history of stroke, multiple sclerosis, Alzheimer’s, or Parkinson’s.
For certain life insurance, benefits can only be enjoyed while the policyholder is still alive. Another way that can yield money is if the policy has a life settlement option where it can be sold in full or its entire value converted in exchange for care.
You may also consider the Accelerated Death Benefit route where the policy may receive a portion of their benefit. A Death Benefit Loan, on the other hand, allows the holder to receive a loan against the cash value of the policy.
For the vast majority of seniors, insurance options are a godsend. However, not all of them are perfect. With insurance premiums becoming more costly over time, they’re not exactly a ready option for plenty of people. Makesh advises opting for the best deal you can get – no more, no less.
“Much like any kind of insurance you get into, you want to keep the rate as low as possible while still getting good coverage. Get a crystal-clear understanding of the policy to ensure risk mitigation and any possible exclusions. That’s only half of the equation, though. You also want to look at the longevity of the agency you’re considering”.
There are other options to consider, beyond the said conventional approaches. These include
Medicare may pay for short-term care in a nursing facility (up to 100 days).
Medicaid may pay for long-term care services as long as you’re deemed eligible. Nonetheless, conditions vary based on needs and the state you’re in. Expect only a small percentage of costs to be covered by it.
Aid and Attendance Benefit for Veterans directly provides financial support to eligible army veterans and their spouses. Usually, this comes in the form of a pension intended for daily living costs. Married veterans tend to receive more per month (i.e. $3032 per month as opposed to the $1911 per month received by single veterans).