5 Ways to Pay for Assisted Living Costs

Clock November 14, 2023


30-second summary

Navigating the financial landscape of assisted living can be challenging, but a variety of strategies exist to help cover these costs. This detailed guide explores five ways to finance assisted living, empowering you to make an informed decision that best aligns with your circumstances, including:

• Personal savings
• Long-term care insurance
• Life insurance policy with a long-term care benefit
• Medicare and Medicaid
• Life Settlement

Any of these, or a combination of two or more, can significantly help with the challenge of paying for rising assisted living expenses.

According to the American Senior Communities, about 70% of people turning age 65 can expect to use some form of long-term care during their lives. While this statistic includes various types of care, such as home health services and nursing homes, a significant number of these individuals will likely spend time in an assisted living facility.

The National Center for Assisted Living reports that there are approximately 28,900 assisted living communities with nearly one million licensed beds in the United States as of 2022. This indicates a high demand for assisted living facilities. As the population continues to age, the number of individuals needing and utilizing these services is expected to rise significantly.

The following five strategies can help you pay for assisted living costs today or in the future.

  1. Personal Savings

Using personal savings to pay for assisted living is the simplest and most straightforward route. It gives you direct control over your funds and choices but requires careful budgeting and planning. This strategy lets you decide when and how much money to allocate towards assisted living costs.

However, it’s important to remember that the cost of assisted living can be high, and depleting your savings too quickly could leave you in a precarious financial situation down the line. In addition, using personal savings for assisted living expenses means you’re not relying on any external factors, such as eligibility for insurance coverage or government programs.

  1. Long-Term Care Insurance

Long-term care insurance policies are designed to cover long-term care costs, including assisted living. These policies can be expensive and have specific eligibility requirements, but they can significantly reduce out-of-pocket expenses. They offer a safety net against the high costs of long-term care, providing peace of mind that you’re financially prepared for this stage of life.

However, it’s important to note that these policies usually come with waiting periods, during which you’ll need to cover your own costs. Additionally, they may not cover all services an assisted living facility provides. It’s crucial to understand the terms of your policy thoroughly and consider these factors when deciding whether long-term care insurance is the right choice for you.

  1. Life Insurance Policy With a Long-Term Care Benefit

Life insurance policies can serve a dual purpose. Besides providing a death benefit, certain policies allow policyholders to access a portion of their death benefit while still alive. This feature, known as the “living benefit,” can cover long-term care costs, including assisted living.

Keep in mind that accessing your death benefit early will reduce the final payout to your beneficiaries. It’s important to discuss this option with your family and consider their financial needs after your passing. However, if you’re faced with immediate assisted living costs, this strategy could provide a valuable financial lifeline.

  1. Medicare and Medicaid

Medicare and Medicaid are government programs designed to assist with healthcare costs. While Medicare typically doesn’t cover assisted living costs, it can help pay for some health care services provided within the facility.

On the other hand, Medicaid may cover a significant portion of the costs, depending on your income and assets. Each state has its own rules about Medicaid eligibility and coverage, so it’s crucial to research your state’s program or speak with a Medicaid expert. While navigating government assistance programs can be complex, the potential financial aid they offer makes them an essential consideration.

  1. Life Settlement

Selling a life insurance policy through a life settlement is a viable strategy to fund assisted living costs. A life settlement involves selling your existing life insurance policy to a third party for a lump-sum cash payment.

This cash payment is usually higher than the policy’s cash surrender value, providing you with much-needed funds to cover your expenses. Obtaining a life settlement allows you to capitalize on your life insurance policy now, helping you pay for your expenses, like those associated with assisted living.

No matter which strategy you choose, it’s essential to do thorough research and seek professional advice. If you have a life insurance policy, one option that could help significantly is selling your policy through Lighthouse Life. We specialize in helping individuals unlock the value of their life insurance policies to cover costs like assisted living. Contact us today to explore this beneficial option further.

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