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When long-term care becomes a necessity for an older loved one, among the first concerns for many seniors and their families is how to cover the costs. While the idea of transitioning to a senior living community provides many benefits, the associated costs can be a significant concern for some families. According to Glenworth’s Cost of Care Survey, a senior living community will cost a monthly average of $4,500 for assisted living or $9,034 for nursing home care.
In this blog post, we’ll explore insurance options for paying for senior living that can help alleviate some or all of the financial burden of senior living, providing peace of mind for seniors and their loved ones.
Insurance options for paying for senior living expenses
Long-term care insurance
Long-term care insurance is a specialized insurance policy designed to cover the cost of ongoing senior care and housing that traditional health insurance doesn’t.
A long-term care insurance policy can help cover the cost of assisted living, nursing home care, and in-home care. Most long-term insurance policies go into effect once the policyholder needs assistance with activities of daily living (ADLs) such as bathing, dressing, grooming, and eating.
One of the key advantages of long-term care insurance is that it provides dedicated funds specifically for senior care expenses. This can help protect assets and prevent seniors from depleting their hard-earned retirement savings to cover senior living costs.
However, it’s important to note that long-term care insurance can be expensive, and eligibility is based on several factors. It also becomes more expensive as the person to be insured gets older, so taking out a policy earlier in life has its benefits. Meet with your insurance professional to ensure you understand this type of policy.
Download our free Guide to Funding Senior Care & Housing.
Life insurance
Although typically considered a death benefit, a life insurance policy can be sold, and proceeds can be used to fund senior living while retaining some death benefits.
In addition, seniors can surrender their life insurance policy for cash value. However, in this case, you won’t receive any death benefits.
It’s essential to carefully review the terms and conditions of your policy, as they can vary between insurance providers.
Medicare
Although Medicare does not cover the cost of senior living, Medicare may cover the health-related expenses of care while living in a senior living community.
Medicare may cover medication management and short-term stays in skilled nursing. Check with each senior living community to see if they accept Medicare.
Medicaid
Medicaid is a joint federal and state-regulated program that provides health coverage for low-income individuals, including seniors with limited financial resources.
While Medicaid doesn’t cover the cost of room and board in senior living, it can cover certain personal care services, such as on-site therapy and medication management.
To qualify, seniors must meet income and asset eligibility requirements, which vary by state. Review your state requirements and check with each senior living community to verify they accept Medicaid.
Wrap-up
Exploring options for paying for long-term care can help you or your loved one access the care and housing found in senior living communities. Long-term care insurance, life insurance, Medicare, and Medicaid are insurance options available to seniors and their families.
Each option has its own eligibility, criteria, benefits, and considerations, making it crucial to carefully assess your circumstances and seek professional advice from an insurance professional or financial advisor when navigating these critical financial decisions.
By planning and considering insurance options, seniors can secure their life savings and have the peace of mind to fully enjoy the next chapter of their lives.
If you have questions about paying for senior living, an Allegro advisor can help! Explore the funding options for paying for senior living, download our free Guide to Funding Senior Care & Housing.
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