Many adult children are unaware of their parents’ ﬁnancial situation. So, when a parent suddenly needs to make the move into an assisted living community, ﬁguring out how to ﬁnance the transition can be challenging. Even if your parent is in a very comfortable ﬁnancial situation, you might need to explore some interim ﬁnancing options until their funds become available.
This blog post will help you to understand some of the ﬁnancial resources available to oﬀset the costs or bridge a gap when paying for senior living. Then you can begin exploring options that may be appropriate to your situation. We strongly suggest that families consult with their ﬁnancial advisor, accountant or attorney when exploring any of the options below.
Accessing a Line of Credit – HELOC
It is not uncommon for a senior to need to move out of their home before it sells. A Home Equity Line of Credit or HELOC is an option to eliminate this obstacle. It can be used to pay monthly charges in a senior living community while waiting for the house to sell.
The Accelerated Death Beneﬁt (ADB) is a provision in some life insurance policies that allows a person to receive a portion of their life insurance money early — to use towards long-term care beneﬁts. There are diﬀerent types of ADBs each of which serves a diﬀerent purpose. Consult the insurance carrier to see if there is a provision and whether it covers long term care.
Another alternative would be to sell your life insurance policy to a third party for cash. The payment would typically be more than the surrender value of the policy but less than the death beneﬁt amount. This third party continues paying the premiums and becomes the beneﬁciary of the policy. When the insured dies, the third party receives the death beneﬁt.
A veteran and/or their spouse may be able to qualify for ﬁnancial assistance from the government to help cover the costs of home health care, assisted living or nursing home expenses. The veteran must have served a minimum of 90 days of active duty, with at least one day during an active time of war. To be eligible for this beneﬁt which is called Aid and Attendance, the individual must be ﬁnancially and medically qualiﬁed.
The best ﬁrst step is to contact the Department of Veteran Aﬀairs: Milwaukee County, 414-266-1234 and Waukesha County, 262-548-7732.
Long-Term Care Insurance
Some long-term care insurance policies will help pay for the cost of assisted living services. If your parent has a long-term care insurance policy, contact the insurance carrier to discuss the coverage provided under that policy. Senior care consultants can provide the paperwork needed to get beneﬁts started.
Those with very limited resources may think that senior living is out of reach for them. However, some senior housing facilities oﬀer aﬀordable options for low-income seniors. These programs generally provide reduced rents, or rent based on ability to pay.
Low-income housing options provide very little in the way of services, and do not include assisted living. In order to qualify, individuals must have very low income, generally 50-60% of the area median income. Contact your local housing authority oﬃce to learn more.
This is a government funded program to help pay for the cost of assisted living services. Seniors who are already eligible for the program, may be able to use these funds to pay for assisted living. You must qualify ﬁnancially and medically.