If you’re thinking about financing senior care, there are many options available to you that are not always recognized. Here are fourteen options you should know about to help you in paying for assisted living*.
- Bridge Loan
- Faith-Based Foundations
- Health Insurance Rider
- Health Savings Account
- Home Equity
- Life Insurance Policy Sale
- Long Term Care Insurance
- Program of All-Inclusive Care for the Elderly (PACE)
- Reverse Mortgage
- Senior Living Line of Credit
- State Health Insurance Assistance Program (SHIP)
- Veterans Benefits
*This content is for informational purposes only. This information should not be considered to be legal, tax, or tax advice.
An annuity contract with an insurance company can help pay for assisted living. By working with the insurance company, you will receive money over a period of time in exchange for a single payment or a series of payments. Money is available either immediately or deferred.
Bridge Loan for Seniors
A bridge loan for senior care is intended to be a temporary solution, similar to the bridge loans some homeowners use when purchasing a new home while selling a previous home. The loan can cover a gap in funding until other sources are obtained. At that time, the full loan will be repaid.
Bridge loans of this type can sometimes be split among a family, allowing them to share payments until the loan is repaid.
Senior bridge loans are unsecured, so there is no collateral needed. Additional features of bridge loans can include:
- Approval can be quick
- Interest is only a little bit higher than average
- Monthly payments are low
- Often there’s no penalty for paying off early
Some religious affiliations and congregations have foundations for members that need help paying for long-term care. Check with your local house of worship or national church body for information and more help.
Health Insurance Rider
If you don’t qualify for long-term health insurance, there is an option offered by some companies. Accelerated benefits can be activated in a rider to a health insurance policy. If you meet that criteria, some amount of benefits can be made available to help with expenses. The rest of the insurance will be paid out to beneficiaries after the policyholder passes away.
Health Savings Account
A Health Savings Account, or HSA, can pay for care. You can put money in pre-tax and it rolls over from year to year. If used for qualified health care expenses, including long-term care, withdrawals are tax-free.
Cashing in your home’s equity by selling it isn’t always the best option, but it can help in a pinch. For homeowners with townhomes or condominiums who need help with assisted living immediately but can’t sell their house, some communities can defer rents until the house sells.
Life Insurance Policy Sale
Another less-attractive but available option would be to sell your life insurance. It’s called a life settlement, and involves selling your policy to another person or company for an amount that you can use for your care. When it’s time to collect, the money will go to the company or person who took over the policy.
Long Term Care Insurance
Long term care insurance can be a good choice to cover costs if you’ve done your homework. Good insurance can help you and your loved ones, too.
- No need to borrow from family and friends
- Relieves them of caregiving
- Allows you to choose where to receive care
- Expands the range of services you receive
Unfortunately, some retirees are finding out that the insurance they bought in the late 1980s and early 1990s is insufficient. They are discovering that their claims may be only partly covered, or even denied.
Before you try to use it, make sure your long term care insurance will pay for your needs. A financial advisor can determine what your needs are and how much you can afford in terms of benefits.
In some states, Medicaid will pay for assisted living, but it is available only to seniors who have little or no assets. Medicaid eligibility varies by state, so check with your state to find out the requirements.
For more information on how Medicaid can help you pay for assisted living, visit our helpful resource here.
Program of All-Inclusive Care for the Elderly (PACE)
The Program of All-Inclusive Care for the Elderly, or PACE, is a Medicare program that provides care and services to people who might otherwise end up in a nursing home. It can be used for medical, social service and long-term care costs for qualified people. It’s not available in all states. Find out more at the PACE website, Medicare’s PACE page, or call 1-877-267-2323.
Many seniors are now using reverse mortgages to unlock home equity without having to sell outright. For long-term care, one family member must still be planning to stay in the house. No repayment is required until the borrower sells the home, moves out or dies. Borrowers must be 62 or older, and if there is still a mortgage on the home, the funds must be used to pay that off first.
Senior Living Line of Credit
Senior Living Lines of Credit are another method to pay for senior housing and care. As with a bridge loan, this can be used to move a senior into care while waiting for federal benefits or other funding methods to start. The line of credit allows borrowing for monthly needs, subject to credit approval.
A trust can be used to protect your money while using it to pay for health care. You can transfer assets to another person, called the trustee, who will manage the assets. In particular, charitable remainder trusts and Medicaid disability trusts can help pay for long-term care.
Charitable remainder trusts let you use your own assets to pay for long-term care services while also contributing to charity, which will reduce your taxes. Medicaid disability trusts are limited to people younger than 65 who qualify for public benefits and who have disabilities. This trust is exempt from rules regarding Medicaid eligibility.
The Department of Veterans Affairs has programs that can help to pay for care for older veterans who served during wartime. Assistance is also available to spouses of wartime veterans. Additionally, the Aid and Attendance program can add monthly care payments to a VA pension for qualified veterans and survivors. Find out more on our VA information page and the VA’s website.