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How can families afford the costs of senior living communities?

Once families have decided that a senior living community is a safe and comfortable option for aging loved ones, the big question looms: how to pay for it. The national median monthly rate for a one-bedroom unit in an assisted living facility is $3,500, according to a recent Cost of Care Survey. Other research shows monthly fees can range from $1,500 to more than $10,000.

The National Center for Assisted Living (NCAL) reports that the typical assisted living resident has an income of about $19,000 per year. Most residents therefore must tap additional resources to cover the costs of assisted living.

Group Calculating Costs

Consider talking to an elder law attorney to help your family figure out how to pay the costs of senior living accommodations. These specialized attorneys can answer important questions about qualifying for Medicaid to pay for care, protecting family assets while still affording needed care, and making sure a spouse has money left after his or her partner’s care expenses are covered. The lawyer fees could be well worth it if your family ends up saving thousands of dollars.

Here’s an overview of options to consider when you’re looking for ways to pay for senior living options.

Personal savings. If your older adult has substantial savings or access to family money, paying out of pocket can cover the costs, but for how long? Consult with a financial adviser to confirm that personal savings or family assets will last though the years.

Sell the house. Some older adults can sell their house and use the money to pay for senior-living expenses. If the senior’s need for assisted-living care is too urgent to wait for the house to sell, consider a bridge loan until the house sells. Be aware that these are short-term loans, and can be risky in some situations, so consult with a financial adviser.

Reverse mortgage. This special type of home loan for homeowners who are age 62 or older allows long-time homeowners to borrow cash against the value of their home without having to sell the home. These loans may not be the best option for some seniors. Consult with an independent financial adviser—a neutral party, not a salesperson who wants to sell you a loan.

Long-term care insurance. This insurance covers nursing home care, home health care, assisted living care, and other medical services. Consult with an insurance agent to find out what coverage you can afford. Premiums are based on factors such as age, health, benefit amount and duration, and when the insurance company will start paying benefits. Other factors can affect the cost of coverage, including the region you live in.

Veterans benefits. Assisted-living costs can be covered by veterans benefits. To apply, you’ll need military discharge papers, a valid medical condition with a doctor’s letter, and minimum financial asset conditions. Spouses of veterans may also qualify.

Medicare and Medicaid. For those who qualify (based on disability and income), Medicaid pays for long-term assisted living care. Medicare does not pay for long-term assisted living, but sometimes pays for short-term rehab stays, usually after hospitalization. Each program has specific rules about what services are covered, how long you can receive benefits, whether you qualify for benefits, and how much you have to pay in out-of-pocket costs.

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