Funding Senior Care: Consider These Sources

Finding sources of funds for senior care can cause many sleepless nights for seniors but there are more options than one might think. Even seniors who don’t have deep financial resources can often find funding for senior care where they least expect it if they take the advice of financial experts.

Funding senior care: sources to consider

Personal assets

Often the first option for funding senior care is personal wealth accrued over decades. Money in savings (including CDs), as well as retirement accounts like pensions, IRAs and 401(k)s, stocks, bonds, and other investments, and funds from the sale of a home are all great options for funding senior care.

Digging deeper, there are also real estate investments like second homes and commercial buildings, jewelry, art, stamp, and coin collections, vehicles and boats, and antiques that can be liquidated to provide the money needed for funding senior care. For a more in-depth look at assessing personal assets, the money.usnews.com article “What Is a Personal Asset?” is a great resource.

Long-term care insurance

Long-term care insurance is an obvious choice for funding senior care. But there are a few things to understand up front about long-term care insurance. For example, while it often covers care not covered by health insurance or Medicare, there are usually requirements that must be met before payments can begin. According to the nerdwallet.com article, “Long-Term Care Insurance Explained,” these prerequisites include the inability to manage at least two activities of daily living (bathing, incontinence care, dressing, eating, toileting, and getting in and out of bed or a chair), or there is a cognitive impairment such as dementia. The wait time for payments to start can be as long as 90 days following approval of the claim.

Life insurance

Most people think of life insurance in terms of survivor benefits because it was purchased to protect a growing family. Once children have left the nest, however, life insurance can provide substantial funding for senior care.

First, it’s important to note that term life does not have cash value, only whole life (and some universal life) policies do. Since life insurance policies are usually purchased decades before retirement, they will have accrued considerable value which can be accessed in several ways.

According to the forbes.com article, “How To Cash Out A Life Insurance Policy,” the options include:

• Cash value surrender provides the policy’s value minus surrender fees.
• Borrowing against the value allows the borrower to either repay the loan with interest or have that amount with interest deducted from the death benefit. There may also be transactional charges.
• Cash withdrawals up to the accrued value are tax-free but will reduce the policy cash value as well as the death benefit. Taxes may be levied if the withdrawal exceeds the amount of premiums paid.
• Life settlement is the sale of a policy to a third party who pays a lump sum that is more than the cash value but less than the death benefit. The buyer becomes the beneficiary and age restrictions may apply.

Another possibility is for those who purchased a hybrid life/long-term care policy which can be used for long-term care and still pay a death benefit.  they can be used for long-term care and will pay a death benefit as well. Find out more in the smartasset.com article, “What Is Hybrid Long-Term Care Insurance?”

Government benefits

Depending upon age, income, and disability, there are several sources of government benefits for funding senior care. For most seniors, social security is an obvious option because it can be used for any need but there is also Supplemental Social Security, a state-run program available to seniors with little to no income and resources, who have a disability or blindness, or are age 65 or older.

Although Medicare does not cover long-term care in most situations, Medicaid does if eligibility requirements are met. As described in the Medicaid.gov article, “Eligibility Policy,” eligibility for Medicaid is primarily income-based so it may be available for funding senior care even if a senior isn’t yet on Medicare.

One more option for funding senior care is open to veterans of the U.S. Armed Forces who meet the eligibility criteria. The first step in seeking eligibility is to apply for and receive a VA pension. Next, a senior must meet the requirements of one of the two VA programs:

• Aid and Attendance program
• Homebound Benefits program

Among the qualifying factors are an honorable discharge, income limits, net worth limits, wartime service dates, age, and disability. Find out more in the va.gov article, “Nursing homes, assisted living, and home health care.”

Learn more about all that One Lincoln Park has to offer seniors: contact us to schedule a tour and see for yourself.