7 Ways to Pay for Senior Care

Mar 16, Alissa Sauer

Today’s older adults aren’t wrapping up their life’s journey; they’re seeking a new one. And Leisure Care is here to inspire them to embrace joy and purpose in their lives. For nearly 50 years, we’ve been reimagining and reinventing senior living, making sure older adults have the most fulfilling, rewarding, and productive opportunities possible.

One of the first questions potential residents and families ask is how much those opportunities will cost. While the cost of care can seem high at first, the truth is that there are several options to help you and your family fit senior housing into your budget. With most things included in your monthly rent (housekeeping, maintenance, transportation, meals, and entertainment) and the options below to pay for care, you’ll find senior housing is more manageable than you may have originally thought.

How to Pay for Senior Care

Several options can help fund your move to senior housing.

1. A Traditional Approach

For many older adults, personal savings and retirement income are the starting point for paying for senior living and care. Social Security benefits, pensions, savings, investments, and retirement accounts such as 401(k)s and IRAs may all be used to help cover monthly expenses.

Some families also choose to contribute to a loved one’s senior living costs. The right approach will look different for every family and may involve a combination of income, savings, investments, and family support.

When considering how these resources fit into a long-term plan, it can be helpful to talk with a financial or tax professional about withdrawal strategies, potential tax implications, and how to make your resources last.

2. Long-Term Care Insurance

Long-term care insurance is designed to help cover certain costs associated with long-term care. Depending on the policy, benefits may help pay for services such as assistance with bathing, dressing, eating, and other activities of daily living, whether care is provided at home or in an eligible senior living or care setting.

Coverage varies considerably from one policy to another. Policies generally establish specific requirements, known as benefit triggers, that must be met before benefits are available. Many policies also have an elimination period, or a set period during which an individual must qualify for care before benefits begin.

If you already have long-term care insurance, review your policy or contact your insurance provider to understand what services and settings are covered, how benefits are calculated, and what requirements must be met to begin receiving benefits.

For those considering purchasing coverage, long-term care insurance is generally something to explore before care is needed. Age, health, coverage choices, and other factors can affect eligibility and premiums.

3. VA Benefits

Eligible veterans may have access to VA benefits that can help with certain healthcare and long-term care needs. Depending on eligibility and individual circumstances, VA programs may provide services such as home-based care, adult day health care, respite care, skilled nursing care, or nursing home care.

Veterans who receive disability compensation or a VA pension may also choose to use that income toward senior living and other personal expenses.

Another resource worth exploring is VA Aid & Attendance benefits. Aid & Attendance provides an additional monthly payment to eligible veterans and survivors who receive a VA pension and meet certain requirements, such as needing assistance with daily activities like bathing, dressing, or eating.

Eligibility for VA benefits depends on several factors, so veterans and their families should contact the VA or an accredited Veterans Service Organization to determine which benefits may be available to them.

4. Medicaid

Medicaid is a joint federal and state program that provides healthcare coverage to eligible people with limited income and resources. It is also an important source of funding for long-term services and supports in the United States.

Depending on the state, an eligible individual may receive Medicaid coverage for services provided at home or in certain care settings. Covered services can include skilled nursing, therapy, personal care, and assistance with activities of daily living.

Medicaid coverage for senior living requires an important distinction. Medicaid covers qualifying nursing facility services for eligible individuals. Some states also offer Medicaid programs or waivers that can help pay for certain care and supportive services provided in an assisted living setting. However, Medicaid generally does not pay for room and board in assisted living.

Eligibility, available programs, covered services, and financial requirements vary significantly by state. Families considering Medicaid should contact their state Medicaid agency or a qualified benefits professional to understand the programs available where they live.

5. Medicare

Medicare provides healthcare coverage for eligible adults age 65 and older, as well as certain younger people with disabilities or specific medical conditions. It can help cover hospital care, physician services, prescription drugs, and other healthcare needs, but it generally does not pay for ongoing custodial long-term care.

That means Medicare typically does not cover assisted living or ongoing help with activities of daily living when that is the only care a person needs.

Medicare Part A may cover a limited stay in a skilled nursing facility when an individual meets Medicare’s eligibility requirements and requires qualifying skilled care. Under Original Medicare, coverage can extend for up to 100 days in a benefit period, but the full 100 days are not guaranteed. Coverage depends on continued eligibility, and coinsurance requirements apply after the first 20 covered days.

Original Medicare also generally requires a qualifying inpatient hospital stay before skilled nursing facility coverage begins. Medicare Advantage plans may have different requirements, so individuals should review their specific plan.

Medicare also covers qualifying hospice care for people who are terminally ill and meet Medicare’s eligibility requirements.

Because Medicare’s long-term care coverage is limited, families planning for ongoing care may need to consider other resources, including personal savings, long-term care insurance, Medicaid, or other benefits for which they may qualify.

6. Real Estate Assets

For homeowners, a home can represent a significant financial asset and may become part of the plan for paying for senior living.

Selling a home is one option, particularly for older adults moving permanently into a senior living community. After paying off any remaining mortgage and costs associated with the sale, proceeds from the home’s equity may be used toward future housing and care expenses.

Homeowners may also be able to access some of their equity through financial products such as home equity loans or lines of credit. These options generally require repayment and may not be appropriate for every financial situation.

A reverse mortgage is another option available to some homeowners age 62 and older. It allows qualifying homeowners to access a portion of their home equity without making traditional monthly mortgage payments. The amount available depends on several factors, and the loan generally becomes due when the borrower sells the home, permanently moves out, or dies. Borrowers must continue meeting loan requirements, including paying property taxes and homeowners insurance and maintaining the home.

Because these options can affect a person’s finances and estate, homeowners should carefully review the costs, requirements, and long-term implications with a qualified financial professional before making a decision.

7. Life Insurance

Depending on the type of policy, life insurance may offer another potential source of funds for senior living or long-term care.

Permanent life insurance policies may accumulate cash value that policyholders can potentially access through withdrawals or loans. Some policies may also include riders that allow a portion of the death benefit to be accessed early under certain circumstances, such as a qualifying chronic or terminal illness.

Another possibility is a life settlement, in which an eligible policyholder sells a life insurance policy to a third party for a lump-sum payment. For qualifying individuals with a terminal illness, a viatical settlement may also be an option.

Each approach has different eligibility requirements and can affect the policy’s death benefit, taxes, estate planning, and other financial considerations. Before accessing or selling a life insurance policy, talk with the insurance provider and a qualified financial or tax professional to understand the potential benefits and consequences.

Leisure Care: Your Senior Living Resource

Navigating the complexities of senior care financing can feel overwhelming, but our sales advisors are here to help you explore available options. From traditional approaches like personal savings and family support to specialized financial instruments such as long-term care insurance and VA benefits, you have many pathways to fund senior housing and care needs. Additionally, government programs like Medicaid and Medicare, along with innovative solutions like using real estate assets and leveraging life insurance, offer additional avenues for financial assistance.

Leisure Care communities provide care, community, and connection for your whole family. Don’t let financial concerns stand in the way of enjoying the fulfilling and rewarding senior living experience you’re seeking. Contact us now to take the first step towards a brighter future.

Benefits, eligibility requirements, coverage, and tax implications vary by individual, policy, program, and state. Consult the appropriate benefits agency, insurance provider, or financial professional for guidance specific to your situation.