The Challenge of Paying for Assisted Living

Posted on

Jan 20, 2016

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In our culture we often fail to plan for the last great act of life. At the beginning of the circle of life we give all our thoughts and best efforts to planning for a new child and their upbringing, but due to the inherently sad nature of the end of the circle of life, we often fail to plan or really give the following question any thought: how will I pay for assistance if I were to need it as I age?
The Unique Reality of Assisted Living Communities
Assisted Living communities are one of the only areas of health care that Medicare will not pay for, and most communities limit the number of Medicaid rooms they have, if they have any, because the reimbursement rate is so low. This is why most Assisted Living facilities are private pay. Most assisted living residents pay from their own social security, pensions, savings or with help from family members. Often funds to pay for Assisted Living comes from the sale of a home or the sale of stocks and bonds. Below is a list of some other excellent options and resources for Assisted Living financing options:
Long Term Care Insurance
This is one of the most underutilized and best options for paying for Assisted Living. It may be too late to cost effectively start a long term care insurance policy for you depending on your current age. But inform and educate your children to start now and plan for their future.
Reverse Mortgages
A reverse mortgage is a loan available to seniors age 62 and above. It's used to release the home equity in the property as one lump sum or in multiple payments. The homeowner's obligation to repay the loan is deferred until the owner passes away, the home is sold or the owner moves out. In the case of couples, as long as one person still lives in the home, the payments do not need to be made on the loan.
Secured Lines of Credit
A secured line of credit is a loan from the bank, credit union or other financial institution. Similar to a bank account, you may draw funds as needed, but you only pay interest on the amounts drawn. A line of credit can be secured by real estate, CD's, equities (stocks) and cash that you may have. You can borrow from it over and over again without having to renegotiate terms.
Life Insurance
Some life insurance policies have a cash value that may be withdrawn or borrowed against. You may also obtain the proceeds from a life insurance policy by selling or liquidating it before death.
Tax Considerations
Families often help support their loved ones at Carrington Court. Each individual may give up to $14,000 in 2015 & 2016 and married couples, filing jointly may give up to $28,000.00 in 2015 & 2016 without being subject to Gift Taxes.
Costs related to senior living may be tax deductible as medical expenses for both the resident and their family caregiver if they meet applicable Internal Revenue Service requirements. You should obtain your own qualified tax counsel in these matters.
Companion Living
Two residents may share a suite as companions. This offers a more affordable option, with all the benefits and assistance of Assisted Living remaining the same. A roommate can often help ease the transition to a new community.
Veterans Benefits
The United States Department of Veterans Affairs administers the veterans pension program which also includes aid and assistance and housebound benefits. For more information on qualification for and how to apply for these benefits go to http://www.vba.va.gov/bln/21/pension/vetpen.htm#7.
If we start doing our due diligence to plan and provide for the end of our circle of life the future will begin to grow bright!

Editors Note: This article was submitted by Michael Nielson, Administrator of Carrington Court Assisted Living and Memory Care. He may be reached at 801-676-8787 or by email at michaeln@carringtoncourtal.com

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Everything-from vehicles to homes and real estate-must be divested five years before you become eligible for Medicaid.For many, a spend down-the process of reducing your income and assets in order to be eligible for Medicaid-is a valuable tool. However, there are requirements in place for the spend-down process. Money spent on the senior's care, whether it's a burial plot or paying for medical care, is an example of an acceptable choice when spending down one's assets.There are also eligibility requirements to consider. For example, people who move to North Carolina in order to move into senior living must have either lived here for a minimum of six months or have established a permanent residence for a minimum of 60 days in order to become eligible for Medicaid assistance.When you apply for Medicaid, the state of North Carolina will initiate what's called a 60-month Medicaid Look-Back Period. This means that the state will examine all your asset transfers over the past five years to ensure that no assets were sold for less than fair market value or given away. This look-back review includes examining asset transfers made by one's spouse. If the state determines that the look-back rule has been violated, the state assumes that the violation was committed to meet Medicaid's asset limit. The state will then calculate and impose a penalty period of Medicaid ineligibility.An online spend down calculator can help you determine exactly how much of your assets must be spent down in order for you to be eligible for Medicaid long term care. The spend down calculator is available here: medicaidplanningassistance.org/medicaid-spend-down-calculator.Alternative AssetsWhen the time comes to work out how to pay for long-term care, it's important to explore all options. There are some methods of generating funds that work well for people but can be overlooked.Life InsuranceSome people have life insurance policies that can be sold, converted, or liquidated through a viatical settlement. A viatical settlement is an arrangement whereby an individual sells their life insurance policy to a third party for less than its mature value in order to benefit from the proceeds while still alive. Alternatives to Selling Your HomeMany residents sell their homes as they transition to long-term care. For others, it makes more financial sense to take out a reverse mortgage or to open a home equity line of credit. Another option is to rent out your home in order to fund your care.INFORMATIONAL PURPOSES ONLY: The materials and information on this website have been prepared or assembled by the Community and are intended for informational purposes only. The information is general in nature and is not intended to be, and should not be relied upon as, legal advice. Some of the information may be out-of-date and may not reflect the most current legal developments regarding Medicaid eligibility. This website contains information on legal issues and is not a substitute for legal advice from a qualified attorney licensed in the appropriate jurisdiction. Establishing Medicaid and Medicaid PCS eligibility can be a complicated process, and the Community urges you to consult an attorney or specialist in North Carolina elder law to help you navigate these issues. The Community expressly disclaims all liability with respect to actions taken or not taken based on information contained or missing from this website.