Financial Support Options
The value of senior care in an assisted living community
Whether your loved one has specific health needs or just wants some basic assistance and more convenience, assisted living communities can improve quality of life.
Communities like Kensington Park are full of amenities and social opportunities. Enrichment programs, regular entertainment, and exceptional dining offer seniors so much more than care. There’s no need to worry about maintenance, housekeeping, and security — or the future costs that will be associated with them.
Seniors can downsize while improving their lifestyle, and remain safe because there’s 24-hour assistance available and no need to clean, cook, or do yard work.
Paying for senior care might seem daunting, but there are several common, attainable ways to approach these expenses.
What are common ways of paying for senior care expenses?
Affording senior care starts with careful planning as early as possible. Once you dig into the possibilities, you’ll most likely find that you have better control over the situation than you thought. Financially, moving to assisted living is a transition from one living space to another, so the monthly expense may not be that different. And fortunately, seniors often have access to government benefits and insurance to assist you.
It can be helpful to take a step back and first run the numbers on your current living expenses. Even if your home is paid off, there still are plenty of expenses left for maintaining it, including taxes, insurance, utilities, security, lawn and snow care, and more.
With that being taken into account, in addition to life insurance and veteran’s aid, there are many straightforward options for paying for senior care expenses. These options include your home equity, investments such as your retirement fund, and trusts. Plus, tax-deductible payments and gift tax exemptions can be a major relief for families.
To start your payment considerations, it’s helpful to think of the expenses as an extension of your current housing expenses rather than a new financial burden. Once you explore your options you might be relieved to find it’s more affordable than you imagined.
The most common way to finance assisted living is with equity you have accumulated in your home. This equity, or the amount your home is worth minus any outstanding mortgage loan due, can be leveraged in a variety of ways. In many cases, people ready to move to assisted living have paid off their home. If this is the case for you, you can choose to sell it or borrow from your equity to pay for assisted living.
Another common source of financing is investments. For example, the retirement savings you acquired during your working years can be significant. A financial advisor can offer assistance on how to use these funds.
Trusts allow one person, the trustor, to transfer assets to another person, the trustee. The trustee then can control the assets for the trustor. Trusts are a common way to provide flexible control of assets for future senior care expenses.
Does health insurance pay for senior care?
Medicare and Medicaid are federal and state-run programs that assist seniors in covering home healthcare and personal care services. Depending on your state-determined eligibility, your coverage and assistance can vary.
Typically, these programs only cover nursing home and personal care services, but some states have begun enacting waivers for assisted living communities. Reach out to your insurance contact or the team at Kensington Park if you need guidance. Consulting financial and legal experts will help you find the best solutions for you.
Life Insurance Converted to Pay for Senior Care Expenses:
Did you know a life insurance policy (long term care benefit plan) may be converted to pay for care at an Assisted Living Community like Kensington Park? The conversion process transfers ownership of a life insurance policy from the original holder, to an entity that acts as the benefits administrator. The benefits administrator assumes all responsibility for paying the monthly premiums on the policy to the insurance company, and agrees to pay the previous policy holder a series of monthly payments based on the value of their policy.
These payments can then be used to pay for a person’s home care, nursing home, hospice care and assisted living costs. There are pros and cons to this conversion and if you are interested in learning more about this process, please consult the services of an independent financial adviser who specializes in the finances of older adults.
Veteran’s Aid and Attendance Program:
The US Department of Veterans Affairs Aid and Attendance Program provides benefits for veterans and surviving spouses who require the regular support of another person. If eligible, you may be able to receive this benefit of up to $2000 per month while residing in an assisting living community such as Kensington Park. To qualify for Aid & Attendance your physician must establish that you require daily assistance by others in reference to several activities of daily living such as eating, bathing, and dressing. And eligibility must be proven by filing several documents from the VA.
Veterans must have been in service during official periods of wartime:
World War II: 12/07/1941-12/31/1946
Korean Conflict: 6/27/1950-1/31/1955
Vietnam Era: 8/5/1964-5/7/1975
Tax Deductible Expenses to Live in Assisted Living:
In many cases, payments made to live in an Assisted Living community may be tax deductible. Under the Health Insurance Portability and Accountability Act, the cost of maintenance of personal care services that are required by an individual who is either 1) unable to perform at least two activities of daily living or 2) who suffer from severe cognitive impairment and who require supervision to protect self and others from threats to health and safety, may be tax deductible if such services are provided pursuant to a plan of care prescribed by a licensed health care practitioner. You may be required to obtain a letter from a physician prescribing such plan of care. In addition your loved one may be required to meet certain other conditions.
If you are an adult caregiver and you have provided over half of your loved one’s total financial support for the calendar year living in an assisted living community, you as the caregiver may be able to deduct your loved one’s medical expenses. Kensington Park is unable to provide tax advice and we encourage you to explore this opportunity further and seek the advice from your tax adviser.
Gift Tax Exemption:
Family members can pitch in toward the cost of assisted living and take advantage of the IRS gift tax exemption. For 2017, individual family members can provide gifts up to $14,000 per person, per year without being required to pay the IRS gift tax. Before making any kind of financial decision, we advise that you contact your personal financial adviser or tax professional.
Long-Term Care Insurance Can Help Pay to Live In Assisted Living:
Many of our Kensington residents with long-term care insurance are able to utilize their existing policy to cover all or a portion of their stay. Because of the varying terms of individual polices, coverage will vary. Our team can assist you in identifying what is covered under your current plan.
Steps to Starting a Financial Plan for Senior Care
Follow our four steps to creating a financial plan that will guide you through the process of paying for senior care.
- Start planning early: Planning early means more time to explore options, ultimately leading you to the most savings and best choices for everyone involved. You’ll have more insurance options, time to contribute to annuities, and time to allow your investments to grow.
- Create a worksheet: Your first step should be to make a list of all of your current housing and living expenses, then all of your assets. As you begin to consider assisted living options, these worksheets will give you confidence in your plan and identify areas where you need further financial planning.
- Consult professionals: Don’t do this critical planning alone. Consult financial and legal experts to structure the best strategy for your specific circumstances.
- Compare the numbers: With your worksheets and expert counsel assembled, start running the numbers and create a plan to make your senior living future stress-free.
Special Offers at Kensington Park Senior Living
We believe in the promise of Kensington Park to love and care for your family as we do our own. We also believe in teamwork. And we understand the importance of gratitude…
When a new resident comes to us through you, we feel fortunate to have inspired your loyalty. As a token of our thanks, The Kensington Park Family & Friends Referral Program is available to you. Every time you refer a new resident who moves in and lives at Kensington Park for 90 days or more, your loved one (current resident) gets a one-time credit toward monthly fees.
Here is how the Family & Friends Referral Program works:
- Refer a possible new resident by calling Perri or Barbara at 301-946-7700.
- If your referral moves in and lives at Kensington Park for 90 days or more, then your loved one (current resident) gets a one-time credit toward monthly fees.
- When you’re ready to share a name, just give us a call and we’ll take it from there. We’ll let you know the results.