With the average lifespan increasing and costs of living rising, more and more aging adults that need care are finding their savings accounts depleted. The cost of care then falls back onto the family, who have financial burdens of their own, and often get overwhelmed by expensive care options. According to the Genworth 2014 Cost of Care Survey, the average annual cost of a one bedroom apartment in an assisted living community is $42,000 per year, and a private room in a nursing home averages more than $87,600 per year.
Independent home care is generally less expensive, so many seniors and their families opt for this option because of the potential for savings. However, quality in-home care providers with screened and trained professionals still cost an average of $4,560 per month, and thus paying for elder care requires understanding options through research and careful planning.
Long-Term Care Insurance
Long-term care insurance (LTCI) helps pay for costs that private medical insurance does not cover, and minimizes the financial impact of long-term health care needs. In general, long-term care insurance covers the cost of home care, assisted living, adult daycare, respite care, hospice care, nursing home and Alzheimer's care facilities. However, most companies will not insure people with preexisting conditions, so it is best to buy LTCI before health issues arise.
Learn more about long-term care insurance
Life Insurance Policy Conversions: Long Term Care Benefit Plan
Rather than allowing a life insurance policy to lapse, the owner can convert their policy into a Long Term Care Benefit Plan. It is a unique financial option for seniors because it pays for immediate care needs, all health conditions are accepted, and there are no premium payments. There are also no wait periods, care limitations, costs or obligations to apply, and no requirement to be terminally ill. Policy owners have the right to convert an in-force life insurance policy to enroll in this benefit plan, and are able to immediately direct tax-exempt payments to cover specific costs like senior housing and long term care.
Learn more about paying for senior care with life insurance
Government Funded Long Term Care
Contrary to popular belief, Medicare is not universal health care for people over 65, and it does not cover long-term care costs for seniors. However, Medicare, Medicaid and the US Department of Veteran Affairs do offer assistance programs that can help pay for eldercare in certain circumstances.
Learn more about government funded long term care
Reverse Mortgages
A reverse mortgage - also known as a Home Equity Conversion Mortgage (HECM) - is a kind of loan for homeowners over the age of 62 that turns home equity into cash. When a reverse mortgage is secured, the money from the home equity can be used while still living in and retaining ownership of their home. There are no restrictions on how the money from a reverse mortgage can be used. The relatively high closing costs can be a disadvantage, but it could be useful if there is concern about not being able to make the payments on a normal loan, or the money is needed for any purpose.
