Financial Assistance for Seniors
Paying for senior care is one of the biggest challenges for older Americans and their families. Planning for senior care can be almost as daunting. Most of us don’t want to think about needing help or spending a lot to get it. But by thinking now about how to pay for senior care, you can create a plan that’s good for you, your family and caretakers, and your finances so that you don’t have to scramble for solutions later on.
Build your senior care support network now
It’s never too early to start talking to trusted advisors like your accountant, lawyer, and financial advisor about how you’ll pay for senior care when you need it. When you reach retirement age, it’s time to start talking with your family about how you’d like to handle any care you need later on.
Start imagining what your preferred care situation would look like. Would you like to stay in your own home as long as possible, relocate closer to relatives, or move into an assisted living community in San Diego, CA? Can family members commit the time to help you with errands, transportation, and household help, or do you need to look into hiring a homemaker service? Getting a clear picture of your options makes it easier to plan how to pay for what you need.
Get all the benefits you’ve earned
Medicare is the best known entitlement program for people 65 and older, but Medicare doesn’t cover long-term nursing home stays or home health care. For that kind of care you’ll need other resources.
Medicaid, for seniors with limited assets, does pay some of the cost of long-term nursing home stays. Even if you have a big nest egg now, unexpected expenses might mean you qualify for Medicaid eventually, so it’s a good idea to talk to your lawyer about the ins and outs of qualifying, especially “spending down” savings in a way that doesn’t disqualify you from the program, and arranging for a relative to inherit your home even if you enroll in Medicaid later on.
Social Security retirement benefits may provide a big chunk of your post-retirement income. To maximize the amount you receive, consider a few things before you apply. Social Security’s online retirement calculator can show you how much you can expect to receive. You can apply for benefits at age 62, but the amount you get won’t be as large as if you waited until your full retirement age (65 to 67, depending on your birth year). You can also delay applying until you are 70 to receive more each month.
Social Security may also pay benefits to your spouse, dependent children, and dependent grandchildren if they live with you when you apply. This can add to your household income and help build savings. If you have ever been divorced, you may qualify for Social Security benefits based on the length of the past marriage, your former spouse’s earnings, your current marital status, and the amount of benefits you earned on your own.
Veterans, spouses of veterans, and widows of veterans can apply for the Veterans Aid and Attendance benefit from the VA that pays a monthly amount for long-term care and medical costs.
Cover your insurance bases
Long-term care insurance can help reduce the out-of-pocket cost of a nursing home stay or hiring a health worker at home. Many people confuse disability insurance with long-term care insurance, but they don’t cover the same things. Disability coverage is designed to replace working adults’ lost income if they cannot work, and it typically ends at retirement–which means it won’t help with senior care costs.
Long-term care coverage is usually less expensive the earlier in life you apply for it. Some employers offer long-term care as part of their benefits package. If yours doesn’t, you can buy a private policy or purchase coverage through a participating group like a union or professional society.
It’s also a good idea to review your life insurance policy, find out the current cash value, and go over the terms for borrowing against that amount if you need to. You may also be able to “surrender” your policy—the insurance company gives you the (taxable) cash value minus a surrender fee, and you forgo the policy’s death benefit.
Home is where the equity is
Homeowners have the option to tap into their equity for cash, and there are a couple of ways to do this. The most common is a reverse mortgage, in which you receive a cash loan that’s repaid when your house is sold or when you die. If you need to move into a nursing home very soon and must use your home’s equity to finance the cost, some banks may offer you a bridge loan to cover your cash needs until your home sells. Reverse mortgages and bridge loans both come with fees and restrictions that you must understand clearly before you commit to using your home as collateral.
Ask around for savings
You may not have to pinch every penny in retirement, but saving money feels good and can help you put away more for care. Make a habit of asking if your favorite shops and service providers offer senior discounts. If you take medication, ask your doctor and pharmacist about prescription assistance programs that might help cover the cost. Call your utility company or go online to see if there are free or reduced-cost programs for water conservation and weatherization that could lower your bills. Then check with your property tax authority to find out what exemptions you qualify for to lower your annual tax bill.
All this practice looking for discounts can pay off now and even more later. If you need home health services or assisted living care that won’t be covered by Medicare or Medicaid, you may be able to negotiate with those companies for a lower monthly rate and waived or discounted fees. Get in the habit of asking now so you can receive the best deals on big-ticket senior care expenses later on.