For most people, paying for any type of senior living accommodations and services is your personal responsibility. Whether or not you will be eligible for any type of financial assistance depends on the type of facility you live in, the amount and type of assistance you require, and your own ability to pay. It also depends on what state you live in. For example, although Medicaid is a federal program, each state determines what (and who) is covered or not, and to what extent.
Don’t make any assumptions about what might be available or whether you might qualify! Check out every possibility so you have a complete picture of your options. One resource that makes your search much easier is BenefitsCheckUp, a free service provided by the National Council on Aging. All you have to do is enter your ZIP code, and you will be able to see federal, state, and even local programs that may apply to you. These cover everything from medications and health care to housing, saving money on your taxes, veteran’s benefits, income assistance and more.
Perhaps the most dangerous misconception many Americans have about senior living is that Medicare will cover some or all of their expenses. This is wrong. Medicare is health insurance. As such, it does not pay for assisted living housing or personal care services. It does provide the same medical coverage whether you live in an assisted living facility or you are fully independent.
Medicare also covers part of the cost of rehabilitative or skilled nursing services, but only up to 100 days. This can come as an upsetting surprise to seniors and their families who don’t realize the 100-day limit exists. At that point, you must either leave, pay the full cost out of pocket if you want to stay, or apply for Medicaid coverage (if you qualify).
Like Medicare, Medicaid is a federal program. However, every state sets its own rules for eligibility and coverage. While some states provide funding beyond Medicaid to help low-income residents afford, the state of Georgia does not have any programs that cover independent or assisted living.
Medicaid does pay for skilled nursing, in every state including Georgia, if you meet the financial eligibility requirements. Essentially, this means Medicaid may become your “safety net” if you have depleted your other resources.
The VA’s Aid and Attendance Benefit is a pension designed to help veterans pay for assisted living expenses. For example, the 2019 benefit for married veterans is a maximum of $2,230 per month ($1,881 for single vets). However, eligibility criteria are complex and if you qualify, it can take several months to be approved and start receiving money. Like Medicaid, this VA benefit sets maximums for income and assets or net worth in order to qualify. The income limit is similar for both programs but asset calculation differs significantly. So, you may qualify for one but not the other.
If you are eligible for both Medicaid and Veterans Aid and Attendance, you will want to carefully compare the coverage differences, because you cannot take advantage of both programs simultaneously. That said, if you are married, it is OK for one of you to receive Medicaid and the other to receive the Aid and Attendance Benefit.
While the veteran’s benefit can be applied to assisted living, it does not cover skilled nursing care to the extent that Medicaid does. So Medicaid is generally considered the better option for residents of skilled nursing facilities.
Other Benefits and Funding Options
Once you stop working, your income will depend on Social Security benefits, retirement savings, pension benefits, and/or interest and dividends from investments. It may not be enough. And, depending on your health and your medical insurance coverage, increasing medical needs could take a big bite out of your post-retirement income.
This is why it’s so important to look into every possible source of financial support that can help you afford housing and long-term care. Not all will apply to you, but you’ll never know if you don’t do your homework. This is no time to leave money on the table, as they say.
Wait to Collect Social Security
You can start drawing Social Security benefits at age 62, but the longer you wait the larger your check will be. If at all possible, wait until you are 70. You can get an idea how much you’ll receive (in today’s dollars) by using the benefits calculator.
Just because you have already retired doesn’t mean you cannot continue to save, if you have the means. And if you’re still working, the younger you are when you start saving for your senior years, the more money you can accumulate. Traditional and Roth IRAs and your company’s 401(k) program (especially if they match contributions) are all easy ways to save. Talk to your financial advisor about the taxation difference between standard and Roth IRAs and how your age may impact which type is best for you.
Pay Off Debt
Debt nullifies the value of your savings because the money isn’t available for other things. Paying off debt or keeping it as low as possible enables you to save money for the future.
Inventory Your Assets
If you own investment property in addition to your own home, you can continue to receive that income as you age. But you might also want to sell to raise cash to pay for retirement housing and/or care. Ultimately, you will likely have to make the difficult decision to sell your personal home, but with a senior living plan in place, you can look forward positively to the change.
Long-Term Care Insurance
Most experts say this is a must-have, though few Americans have yet taken advantage of the opportunity. These policies can cover costs for assisted living, skilled nursing, and medical costs not usually paid by health insurance. As with all insurance, it is critical to know exactly what your policy covers and how the financial side works. Will your premiums rise over time? Will your coverage change?
You can purchase long-term care insurance at any age, but age and health both affect the premium -- if your health is poor, you may be denied. The best time to buy is when you’re in your 60s. More good news? Spouses can often save money by purchasing long-term insurance together.
It’s important to note that, if you have disability insurance, it probably will not pay for long-term care.
There are several types of life insurance, so it is especially important to discuss these options with your agent. Other than basic term policies, life insurance often gives you the choice of cashing in early or borrowing against the value of the policy. There are also hybrid policies that serve as both life and long-term care insurance. Policies that offer maximum flexibility can be especially helpful for funding senior care options.
Home Equity Line of Credit (HELOC)
You can borrow against the equity in your home (something you may have done in the past to help pay for other major expenses).
Assisted Living Bridge Loans
If you are waiting for final approval of veteran’s Aid and Attendance benefits, or waiting for your home to sell, an assisted living loan can give you the cash you need right away to get settled in your new situation. Then, when your benefits kick in (VA benefits are retroactive to when you applied) or your home sells, you can use that money to repay the loan. Typically, these loans are for periods of two years or less.
Contributions from Family
If your adult children are financially able to contribute, they may wish to help pay for your assisted living or other long-term care needs.
This may be an option if you own your home and only one spouse will be moving into assisted living.
Senior Communities You’re Considering
Some retirement communities have special programs in place to reduce costs for residents with limited means. So always ask about that! At Magnolia Manor, our Supportive Housing program subsidizes independent living within our Americus and Macon communities.
The most important thing to remember is that government programs, especially HUD, Medicaid and Veterans Aid and Attendance, are complicated. It can be difficult to understand if you qualify, and how to apply. In addition, everyone’s circumstances are different. Therefore, one of the smartest moves you can make is to get help and advice from qualified professionals such as your attorney, accountant, and/or a certified financial planner. Do make sure your financial advisor is a fiduciary. Fiduciaries are required by law to work only in your best interests, regardless of whether they benefit from your decisions.
With these people on your team, you’ll be able to make well-informed decisions tailored to your hoped-for lifestyle as well as your care needs.