How to Pay for Assisted Living
Pay with your long-term care insurance., Access your life insurance benefits., Take out a bridge loan., Ask family members to pool their assets.
Step-by-Step Guide
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Step 1: Pay with your long-term care insurance.
Long-term health care insurance will cover assisted living costs.
Talk to your insurance company about your policy options.
Some policies are specifically for home care, a portion of which can be used for assisted living, or for facility-only, which covers care in a licensed assisted living facility.You may need to talk to your insurance provider in person and advocate for your need for long-term health care.
Many insurance companies will require you to have at least two areas of Activities of Daily Living (ADL’s) that you need help with, including bathing, eating, dressing, walking, and going to the bathroom.
If your ailing loved one has not already applied for long-term health care insurance before falling ill or becoming dependant, there may not be time to do so now.
Talk to the insurance company about whether or not your loved one can qualify for this option.
Long-term care insurance benefits depend on the policy you sign up for with your insurance company.
They can range from $1,500 to up to $9,000 a month. -
Step 2: Access your life insurance benefits.
If you have a life insurance policy, you can use it to help you pay for assisted living costs.
Talk to your Life Insurance Agent about cashing out the policy.
The company will likely buy the policy back for 50 to 75 percent of its value, depending on the company and the type of policy.You can also ask your insurance company if they have a life insurance conversion program.
This program allows you to put the life insurance policy into long-term care payments.
Keep in mind some policies can only be cashed in if the policyholder is terminally ill.
If your insurance company will not cash out the plan for you, you can try to sell the policy to a third-party company.
The third-party company will give you a “life settlement” or a “senior settlement”, which is about 50 to 75 percent of the policy’s value.
You will then receive premium payments until you pass away, at which point the third-party company will receive the benefits. , A bridge loan is ideal if you do not have a lot of available cash or financial assets that are easy to liquidate.
Bridge loans are short-term loans of up to $50,000 made specifically to provide funding for a move into an assisted living facility.
There are two types of bridge loans:
The first type is an unsecured bridge loan, where you do not need to put collateral down for the loan.
This acts as a line of credit that you can use to pay for your first few months of expenses while you sell your home, apply for government benefits, or take other actions to free up funding for assisted living.
These loans come with interest rates of
8.25 to
12.5 percent, so use this option if you have a short payback time, within a year.
The second type is a lower-interest, lump-sum loan called the Capital Access Program.
You can secure this type by putting up real estate or another asset as collateral.
This type is good if you are trying to come up with the costly up-front entry free often required to get into an assisted living program.
You will need a good credit score, good credit history and a good debt-to-income ratio to qualify for this loan.
Up to six family members or an adult child can cosign the loan application. , Talk to your family members about helping you pay for assisted living.
This could be through pooling their assets or trading money for time spent taking care of you.
One or two of your family members could take responsibility for daily care, from driving to medical appointments to checking in once a day, and other family members could contribute money for your care.Consider working with a geriatric care manager or a senior move manager who can help you and your family organize the financial paperwork and present options for care.You can also work with a mediator to resolve any conflicts that come up between family members as you all try to sort out financial issues. -
Step 3: Take out a bridge loan.
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Step 4: Ask family members to pool their assets.
Detailed Guide
Long-term health care insurance will cover assisted living costs.
Talk to your insurance company about your policy options.
Some policies are specifically for home care, a portion of which can be used for assisted living, or for facility-only, which covers care in a licensed assisted living facility.You may need to talk to your insurance provider in person and advocate for your need for long-term health care.
Many insurance companies will require you to have at least two areas of Activities of Daily Living (ADL’s) that you need help with, including bathing, eating, dressing, walking, and going to the bathroom.
If your ailing loved one has not already applied for long-term health care insurance before falling ill or becoming dependant, there may not be time to do so now.
Talk to the insurance company about whether or not your loved one can qualify for this option.
Long-term care insurance benefits depend on the policy you sign up for with your insurance company.
They can range from $1,500 to up to $9,000 a month.
If you have a life insurance policy, you can use it to help you pay for assisted living costs.
Talk to your Life Insurance Agent about cashing out the policy.
The company will likely buy the policy back for 50 to 75 percent of its value, depending on the company and the type of policy.You can also ask your insurance company if they have a life insurance conversion program.
This program allows you to put the life insurance policy into long-term care payments.
Keep in mind some policies can only be cashed in if the policyholder is terminally ill.
If your insurance company will not cash out the plan for you, you can try to sell the policy to a third-party company.
The third-party company will give you a “life settlement” or a “senior settlement”, which is about 50 to 75 percent of the policy’s value.
You will then receive premium payments until you pass away, at which point the third-party company will receive the benefits. , A bridge loan is ideal if you do not have a lot of available cash or financial assets that are easy to liquidate.
Bridge loans are short-term loans of up to $50,000 made specifically to provide funding for a move into an assisted living facility.
There are two types of bridge loans:
The first type is an unsecured bridge loan, where you do not need to put collateral down for the loan.
This acts as a line of credit that you can use to pay for your first few months of expenses while you sell your home, apply for government benefits, or take other actions to free up funding for assisted living.
These loans come with interest rates of
8.25 to
12.5 percent, so use this option if you have a short payback time, within a year.
The second type is a lower-interest, lump-sum loan called the Capital Access Program.
You can secure this type by putting up real estate or another asset as collateral.
This type is good if you are trying to come up with the costly up-front entry free often required to get into an assisted living program.
You will need a good credit score, good credit history and a good debt-to-income ratio to qualify for this loan.
Up to six family members or an adult child can cosign the loan application. , Talk to your family members about helping you pay for assisted living.
This could be through pooling their assets or trading money for time spent taking care of you.
One or two of your family members could take responsibility for daily care, from driving to medical appointments to checking in once a day, and other family members could contribute money for your care.Consider working with a geriatric care manager or a senior move manager who can help you and your family organize the financial paperwork and present options for care.You can also work with a mediator to resolve any conflicts that come up between family members as you all try to sort out financial issues.
About the Author
Cheryl Walker
Writer and educator with a focus on practical DIY projects knowledge.
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