Assisted living is expensive, but most people will need it at some point.
Aging is a part of life.
As you age, your body will not work the way it once did.
You will need assistance with one or more of the "activities of daily living," or the things most folks do when they get up in the morning and start their day.
These activities commonly include getting out of bed, going to the toilet, bathing/showering, dressing, grooming, and self-feeding.
Having assistance with these basic activities can be costly.
In fact, your Social Security and savings probably will not cover the expense.
How can you pay for this care?
According to a recent Consumer Reports article titled“11 Ways to Afford the Assisted Living Care You Need,” there are ways to help make these payments.
What can you do?
Have you been paying premiums on whole or universal life insurance for 10 or more years?
If yes, you can access the built-up cash value for the policy.
You will not owe taxes if you withdrawal your cost basis or borrow from the policy.
You may owe income tax if you cash in the policy entirely.
Is income tax owed on the whole amount?
No. Cost basis is excluded.
Apply for Veterans Benefits.
Did you serve in the military?
If so, you could be eligible for a Veterans Affairs pension.
This would provide you with an enhanced or special monthly pension.
This benefit is not automatic.
You will need to meet net worth and income limit requirements.
Still, this is not guaranteed.
It often depends on who is reviewing the application.
Get a Home Equity Loan.
If you need to keep your home, you may want to apply for a home equity loan or home equity line of credit.
This may or may not be the best choice for you.
Remember, there will be fees for loan processing, underwriting, origination, appraisals, and document preparation.
There are also usually setup costs.
Take Out a Reverse Mortgage.
Are you age 62 or older?
Is your spouse entering assisted living?
You could use a reverse mortgage to get some cash for your home equity.
Find Assisted Living with Flexible Pricing.
Not all assisted living is the same.
You may not need all services.
Instead, you could get a model to meet your specific needs while paying less.
Go to an Older Facility.
A new or larger assisted living community may seem nicer.
But they also cost much more.
Set your sights a little lower when it comes to bells and whistles.
Plan for Coverage Gaps.
If your parents have long-term care insurance, they may be required to wait up to six months for payments to start.
What happens then?
You could cash in a CD early.
This may draw a penalty, but it will be small.
Take Tax Write Offs.
You may be able to deduct the remainder of your medical expenses from your federal income taxes, if your total medical expenses exceed 10 percent.
An elder law attorney can help you wade through your options.
I am a strong advocate for long-term care insurance.
Gretchen and I obtained our policies nine years ago now.
Although we do not enjoy paying the premiums, we do appreciate the peace of mind this insurance affords.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Consumer Reports (August 31, 2017) “11 Ways to Afford the Assisted Living Care You Need”