There are various ways of paying for senior housing and long-term care; some of the most frequently accessed sources are summarized here.
- Private Funds
- Senior Living Line of Credit
- Long-Term Care Insurance
- Supplemental Security Income (SSI)
- Veteran’s Benefits – Aid and Attendance
- Life Settlements
Most people pay for independent living, assisted living, and CCRCs out of their own pockets with private funds. There are some states which accept Medicaid for assisted living, but there is currently no program on the federal level, and private funds still account for approximately 90 percent of assisted living payments. About one-third of long-term care at nursing facilities is paid with private funds.
Senior Living Line of Credit
Specially tailored for families who want to move to senior living and assisted living, a Senior Living Line of Credit is now available nationwide to help families pay for a loved one’s senior housing and care. This payment option is especially helpful if families’ and seniors’ need time to sell a home or other assets with which to pay for care, or if a senior is waiting for federal benefits to start. Typically structured as a signature or personal line of credit of up to $50,000, these lines of credit allow families to borrow only what is needed on a monthly basis to help finance their loved ones senior housing and care needs. Like any loan, a Senior Living Line of Credit is subject to credit approval. While accepted at thousands of communities across the United States, not all communities may offer such an option.
What is Medicaid?
As defined in Title XIX of the Social Security Act, Medicaid is a joint Federal-State program which pays for medical services to eligible needy and vulnerable families and individuals. The State must offer basic services in order to receive Federal matching funds, and the Medicaid program varies from State to State. Qualifications for Medicaid
Medicaid is intended to pay for health and long-term care for persons with limited financial resources. Common services include, but are not limited to:
Payment for Medicaid Services
- outpatient hospital services
- inpatient hospital services
- nursing facility services for persons aged 21 or older
- prenatal care
- physician services
- medical and surgical dental services
- home health and community-based care for persons eligible for nursing facility services
- laboratory and x-ray services
- nurse-midwife services
- pediatric and family nurse practitioner services
- family planning services and supplies
Medicaid is a vendor payment program, and States may pay for Medicaid services through HMOs or directly to providers. The Medicaid payment rates must be accepted as full payment in full. States may elect to impose deductibles, coinsurance, or co-payments on Medicaid recipients for some services. Medicaid and Nursing Home Care
Medicaid currently pays for 60% of nursing facility care. Medicaid and Assisted Living / Home and Community-Based Services
Medicaid pays for only about 10 percent of assisted living services, the majority being paid for with private funds. Several states have adopted Medicaid waiver programs to earmark funds towards assisted living, and this trend is expected to continue as cost containment remains a critical issue for both State and Federal governments.
What is Medicare?
As defined in Title XVIII of the Social Security Act, Medicare (“Health Insurance for the Aged and Disabled”) is a Federal health insurance program for aged (65+) and certain disabled individuals (e.g., persons with end-stage renal disease (ESRD) who require dialysis or a kidney transplant), regardless of income. Medicare is comprised of two parts, defined as follows:
Part A (Hospital Insurance): Provided automatically to individuals 65 and over who are entitled to Social Security, and to disabled persons who have received such benefits for at least 24 months. The health services covered under Part A are:
- Skilled Nursing Facility (SNF) Care: Covered by Part A only if it follows within 30 days of a hospitalization of three or more days, and is certified as medically necessary. Medicare does generally not pay for long-term care in a nursing facility, and the number of SNF days provided for is limited to 100 days, with a co-payment required for days 21 to 100.
- Home Health Agency Care: Can be furnished by a home health agency at the residence of the beneficiary. Part A may also pay for some medical equipment and medical supplies.
- Hospice Care: Provided to terminally ill individuals who have a life expectancy of six months or less, and who choose to forgo standard medical treatment.
- Inpatient Hospital Care: Includes coverage of the costs for most hospital services, including operating room, intensive care, laboratory tests, inpatient prescription drugs, X-rays, rehabilitation, long-term hospitalization,, meals, and semi-private room.
Part B (Supplementary Medical Insurance): Provided to almost all U.S. residents 65 or older, certain aliens 65 or over, and disabled individuals entitled to Part A. Part B coverage requires payment of a monthly premium, and primarily covers physician services. Also covered by Part B are non-physician services, including diagnostic tests, ambulance services, clinical laboratory tests, flu vaccinations, and some therapy services.
Long-Term Care Insurance
What is Long-Term Care Insurance?
Long-term care insurance covers the cost of long-term care in certain types of care facilities, depending upon the policy. Policies may cover stay in licensed nursing facilities and home health care. Often, those persons with a sizable asset base may wish to purchase a policy to protect these assets.
Where can Long-Term Care Insurance be Purchased?Long-term care policies are sold by private insurance companies (not all insurance firms offer this type), through agents, mail, and various organizations. Another source is employers, who offer this coverage as a benefit to employees and their parents. An insurance company must be licensed in your state to sell long-term care insurance.
How Much do Policies Cost?Premiums for Long-Term Care Insurance are based on the age of the person at the time of purchase, the benefit amount, the benefit time period, elimination or deductible, and special options (i.e. inflation adjustment, non-forfeiture benefits and spousal discounts).
Supplemental Security Income (SSI)
SSI is a monthly cash payment from the government for eligible individuals in financial need who are aged 65 or older or persons who are blind or have a disability (including children). Typically, a person eligible for SSI payments has no or little income, total assets of less than a few thousand dollars (within certain limits set out in regulations, not including a home used for self support, automobile, values of household goods, personal effects, and life insurance), has U.S. citizenship or qualified alien status, and U.S. residency.
In certain circumstances, the SSI payment may be used towards some housing and care needs of the individual.
The SSI program is run by the Social Security Administration (www.ssa.gov), but the SSI is not the same as Social Security. Money for SSI payments comes from the general fund of the U.S. Treasury, and some states add money to the federal payment.
Veteran’s Benefits – Aid and Attendance
If you are a United States veteran or surviving spouse of a veteran, you may qualify for the Aid & Attendance Program and receive monthly benefits to help cover the costs of your senior housing and care.
Aid & Attendance is a Federal benefit that was added onto a need-based pension offered through The Department of Veteran Affairs. It provides benefits for veterans and surviving spouses who need assistance with their activities of daily living and meet specific requirements.
Aid and Attendance can help pay for care in the home, in a nursing home or in an assisted living community. A Veteran is eligible for up to $1,644 per month, while a surviving spouse is eligible for up to $1056 per month. Couples are eligible for up to $1,949 per month.*
Life Settlements – A life settlement is the sale of an existing life insurance policy to a third party for more than its cash surrender value but less than its death benefit.
Proceeds from a life settlement can be used for any purpose, including financing senior living and healthcare needs.