Your Roadmap For Paying For Senior Care

As the largest birth generation in America, an astounding number of baby boomers will need senior care sooner rather than later. If we take the 76 million baby boomers born between the years 1946 and 1964, we end up with almost 11,000 people a day who will retire over the next 19 years. Paying For Senior Care is a priority and this month’s article will give you the insight you need to plan ahead.

While the boomers are marching into this phase of their lives, it’s important to plan ahead. It is possible to find options to help for Paying For Senior Care, either for yourself or your parents. As distant as it may seem, your senior care is down the road.

Many seniors choose to have caregivers in their homes. Starting with as little as 4 hours a week, this can potentially reach 24 hours a day, 7 days a week. With national average rates in the $17-$22 per hour range, 40 hours of care a week can cost around $3,400 per month.

The national median monthly rate for a one-bedroom unit in an assisted living facility is $3,600. This is according to the 2014 Cost of Care Survey released by Genworth Financial Inc. of Richmond, Virginia.  Georgia and Missouri represents the lowest median assisted living costs nationwide and states in the northeast have the highest median annual costs for assisted living with the District of Columbia being the most expensive.

Private pay

Private pay is the term for a senior who pays for their long term care using their own personal assets. This can be a single source or a combination of financial products including the following.

  • Retirement and social security income
  • Income generating assets
  • Savings accounts
  • CDs, IRAs, stocks, or bonds
  • Real estate, and other liquid or hard assets.

This option makes Paying For Senior Care a quick and tangible form of payment. This is because existing personal assets are Paying For Senior Care.

VA Benefits

If you are a veteran or a surviving spouse of a veteran, you may be eligible to a VA benefit called “Aid and Attendance,” a federal assistance program that many veterans are unaware of that helps pay for senior care in either a personal care home or home setting.  The benefit offers monthly payments to veterans or their surviving spouses who might have trouble living on their own.

The current VA monthly payout for 2015 is $2,120 for a married Veteran; $1,788 for a single Veteran; $1,149 for a surviving spouse.  The veteran must have served at least one day of active duty in war time.  The surviving spouse of the veteran is also eligible.  The person must need assistance with 3 ADL’s (Activities of Daily Living) from a third party.  Lastly, the veteran or surviving spouse cannot have more than $80,000 in liquid assets, excluding a personal residence and an automobile. An elder care attorney can provide advice on how to establish trust accounts that can help offset liquid assets in excess of $80,000.

Long term care insurance

Unlike traditional health insurance, long-term care insurance is designed to cover long-term services and supports, including personal and custodial care in settings such as your home or a facility.  These insurance policies reimburse policyholders a daily amount for services to assist them with activities of daily living such as bathing, dressing and eating.  The biggest question is affordability.  Policies cost less if purchased when you are younger and good health. As a result, many of the current contracts require licensed caregivers to provide these services in order to qualify for benefits.  The American Association for Long-Term Care Insurance is a good place to start your research.

Life Insurance

When we think of life insurance benefits, we typically think of collecting these funds at the time of the person’s death. But a life insurance policy can provide financial support now, and there are several different ways that policies can be used to pay for care while the person is still alive.  Ask your Life Insurance Agent about cashing out the policy, accelerated, or living benefits.  It can be called any of those terms.  What usually happens is the company will advance 50 to 75 percent of its benefit. The rules will be different depending on the company and type of policy. You cannot assume all policies have all the “bells and whistles” because some policies require riders to be added to the policy at issue to include these benefits.

Another option is to sell the policy to a third-party company in return for a “life settlement” or “senior settlement,” which is usually 50 to 75 percent of the policy’s face value. After buying the policy, and giving you the percentage, the third party company continues to pay the premiums until the policyholder dies.  At which time the company receives the benefits.  Keep in mind most insurance companies will only consider this strategy if the policy is 2 or more years old.

Annuity Contracts

These offer a wide range of benefits for long-term care needs.  The insurance company converts your single premium payment into a guaranteed monthly income stream for a specified period of time or for the rest of your life. How much you receive in income each month depends on the amount of your initial premium, your age, and gender.  Annuity strategies are complex in nature and can result in tax liabilities.

Planning And Paying For Senior Care

In conclusion, no matter what route you choose, be proactive with your retirement planning. You can do this by consulting a licensed insurance agent, financial adviser and an elder care attorney. These professionals can make recommendations on how to plan for financing your future senior care today. Plan confidently my friends.