Finding the best assisted living community isn’t easy. And it shouldn’t be. This is a new and important chapter in your life. The decision to leave your old life and start new is an emotional one. It’s a financial one and for many seniors, a necessary one. But it is a process that can be made easier with some guidance.
Assisted living communities are for those seniors who want an independent lifestyle but who may need assistance for their individual needs. In these communities, you should feel like your independent and have the peace of mind knowing that your specific daily needs are met. These needs include daily meals, dressing, bathing, help with medication, transportation and personal mobility.
Most assisted living communities also provide (at extra cost) housekeeping, access to health services, Alzheimer’s care, staff available for personal needs, 24-hour security, an emergency call system, exercise programs, medication management, personal laundry service, and social and recreational activities. Communities typically consist of apartments of 25 to 120 units from single rooms to full apartments. Some are even in subdivided houses with live-in staff. They can be operated by non-profits or for-profit companies.
With assisted living seniors can get support in five main areas: bathing, dressing, medication management, meal preparation, and transportation. Other services such as laundry and housekeeping are generally part of assisted living too. Some assisted living facilities allow pets, and ideally social support from peers is part of the package too: In the best assisted living scenario, residents form close bonds with their neighbors. For high quality of life it’s critical to find a good social match, not just a facility that meets basic needs.
The best way to find the right community is to visit one. Then another. Then another until you find one that is just right. And how do you know if it’s right? Before you visit, think about these different aspects and questions. These questions will get you thinking about other questions.
It’s important to know that “assisted living” is an industry term. It isn’t strictly defined, and there’s great variety in terms of assisted daily living services provided. For example, some but not all assisted living centers have 24/7 nurse staffing. The following facts about assisted living can help you understand the diversity. The more you know about possible differences from place to place, the better your odds of making a great move.
Cost is usually a top concern whenever people hunt for housing. Below we give details about assisted living expenses and how to pay for long-term care. But here’s a good basic fact: Assisted living generally costs much less than nursing home care.
In 2016 the licensing group CareScout compared costs using data they collected from 4,400 geographic regions of the US. They report than on average, the cost of assisted living per month was about $3,600. Nursing home care was more than double at around $7,700 for a private room and $6,800 for a shared room. Of course, $3,600 /month isn’t small change for most — but if the price looks intimidating, stay strong. Prices vary by region and the services needed. Also, individuals and families find many ways to pay for assisted living without draining their resources. Below we look at veterans’ benefits, Medicaid, long-term care insurance and other solutions.
Services with assisted living vary from place to place. The US lacks a nationwide or federal definition for assisted living, and state governments all have different industry regulations. Many states issue more than one type of license for assisted living facilities, resulting in different levels of care being allowed. Licensing also matters for payment to be covered by Medicaid, private insurance and other sources. Facilities with the most advanced licenses may provide advanced medical care when a resident becomes bedridden or has symptoms of dementia. Others might need the resident to transfer to a nursing home, hire a personal nurse, or choose in-home healthcare. Main categories of assisted daily living services (ADLs) are:
Residents might also get help with housekeeping needs such as dishwashing, laundry and vacuuming. Examples of specialty services that might cost extra are hairdressing, physical therapy, memory therapy, and help with scheduling appointments. Besides providing personal care services, most independent living centers facilitate social groups and outings. With everything from Bible study groups to casino gambling trips, there’s something for everyone! Educational activities such as art classes and computer lessons are offered too. Generally the larger the assisted living community, the more activities it sponsors.
Memory care is an option at select assisted living centers. If you or a loved one is in an early stage of Alzheimer’s or other dementia, then choosing an assisted care facility might be your best option in terms of stretching your money and allowing a longer period of independent living. Staff at specially licensed centers can help delay the progression of dementia with various therapies. They can also help minimize or prevent common dementia-related challenges such as wandering and anxiety. When the condition becomes advanced, it might be possible to live at the same facility, but in a different area with secured doors and other special accommodations.
Culture or “personality” matters. The US has thousands of assisted living facilities and no two are quite alike…
And of course residents bring different cultures along. When you search for assisted living centers, you can find homes that tend to attract residents from specific ethnic backgrounds, language groups, religious affiliations and so forth. Lately as more baby boomers are moving to assisted living, we’re seeing more and more “special interest” communities too. Residents are brought together by shared interests in areas as diverse as art, golf, LGBT issues, vegetarianism and community service.
Pets are welcome in many independent living communities. Sometimes animal care services such as grooming and dog walking are available for an extra charge. Some communities have their own “mascot” dogs and cats. When animal companions are allowed, generally there are restrictions about the size or breed. Homes have different policies about aquariums, birds and other “pet issues” — so before choosing an assisted care facility, verify that the pet policy fits your preferences.
Prices for assisted living in the US vary from about $2,000 to $5,000 per month. Cost is shaped by the usual housing factors (e.g., room size, amenities and geographic location) plus care services. In 2016 a nationwide survey of more than 6,000 licensed centers found that the average flat fee was $3,628 for a private bedroom and main services. Residents might have separate fees for help with laundry, pet care, physical therapy and other needs. If the need for care advances, then a person might bring in extra help to avoid transfer to a nursing home. Where can you find the funds? It’s common to combine sources. Just a few sources explored here are personal savings, Medicaid, long-term care insurance, and veterans’ benefits. Some independent living communities have staff available to guide you through the options and paperwork. You can also privately hire a geriatric planner. To help you get started on your own, below we introduce common ways that people pay for assisted living.
The major benefit of private pay for assisted living is the flexibility it brings in terms of choosing care providers. Using savings or personal income is the most straightforward way to pay privately for long-term care. Related options are selling property or cashing in 401K plans, IRAs and other investment portfolios. However, for most people paying out of pocket isn’t sustainable for very long. Medicaid may be available after personal resources have been exhausted. State-level non-Medicaid programs may also offer care for free or at low cost.
An annuity can be useful for somebody who has a good deal of savings but is still concerned about outliving their nest egg. When you buy an annuity, you pay a lump sum to the underwriters, then receive regular payments for the rest of your life. The annuity might not cover all your costs of assisted living, but you will be getting some income every month of your life — even if you live much longer than you anticipate. This means that if you live rather long, you could actually draw more from the annuity than you put in. Another advantage of buying an annuity is that it’s shielded from consideration if you apply for Medicaid. Your monthly income is counted as a resource but the lump sum that you paid is not.
Financial benefits of a whole life insurance policy can kick in long before a person’s death. However, this reduces the policy’s overall value. Three options to help pay for long-term care are:
First, possibly a whole life insurance policy can be “cashed out.” (Some companies are more flexible than others.) The agency will buy the policy back for roughly 50 to 75 percent of its face value. They might call this option getting “accelerated benefits” or “living benefits.” When a life insurance company has a poor cash-out protocol, the owner might sell their policy to a company focused on “life settlements” or “senior settlements” for a better deal. Again though, the typical offer is about 50 to 75 percent of the policy’s face value. When a policy is sold the third party continues to pay the premiums. When the policyholder passes away, then the company receives the financial benefits. A third option called “life assurance” or “life insurance conversion” is designed specifically to help pay for assisted living. The total received would be less than in the scenarios described above, but a death benefit is preserved for beneficiaries. Life insurance conversion programs typically pay from 15 to 50 percent of a policy’s value. Note that only a whole life policy builds savings value. A term life insurance cannot be cashed out. However, you can convert a term life policy to a whole life policy.
Long term care insurance can pay for assisted living either partially or completely. Monthly benefits range from about $2,000 to $10,000. For a policyholder to qualify, generally he or she must require help in at least two activities of daily living. To get approval it can be helpful to work with a customer advocate at the assisted living center. He or she can contact the insurance company to help minimize the chance of the claim being denied. Who should buy long term care insurance? Generally it’s advisable to the middle class. If your income is high, you could pay for long-term care out of pocket. If your income is low, then paying the insurance premiums would be a financial burden — but Medicaid could cover your long-term care costs.
Tip: When purchasing long term care insurance, opt for inflation protection. It will increase your premium, but you won’t need to cancel coverage if rates skyrocket.
Veterans and widows of veterans may be eligible for assisted living benefits through the Veteran’s Administration (VA). Here we focus on a benefit nicknamed “Aid & Attendance.” Formally the Aid & Attendance benefit is the “Non-Service Connected Improved Pension Benefit with Aid and Attendance.” It is open to veterans who served at least 90 days of active duty, with at least one day being during a period of war. Unless the applicant is more than 100 years old, the relevant service periods as of publication are World War I, World War II, the Korean Conflict, the Vietnam Era and the Persian Gulf War. A surviving spouse of such a wartime veteran may also apply. Aid & Assistance is a need-based program; often applicants are rejected for having too many assets. A financial adviser can help you understand possible moves to make with your assets to increase your benefit. Even so, this VA program won’t necessarily cover all costs of assisted living in pricier regions of the US. Married veterans receive about $2,100 /month at most. Benefits are lower for surviving spouses and unmarried vets. When applying at the VA, you’ll need military discharge papers and a doctor’s letter explaining the need for assisted living. Before you’re completely ready to file, you can submit an “Intent to File” with the one-page VA Form 21-0966. This can speed up your application process. Ultimately you can complete VA Form 21-527EZ (for Veterans) or VA Form 21-534EZ (for Spouses).
When a senior moves from home to assisted living, their old living space can pay for the new. If he or she was a renter, then consider finding a responsible subletter (if permitted by the lease) to avoid paying for two properties. If he or she owns the home, consider helping them rent out or sell the property to cover the costs of assisted living. Renting the house for awhile, instead of selling it quickly, might be the prudent way to go. For one thing, you’ll want to “test drive” the assisted living center before you giving up a comfortable home. Plus, just relocating yourself or a loved one is a drain on emotions and time. Usually it’s not necessary to add the pressure of handling a home sale. (If cash is needed, a bridge loan can tide you over until the home sells. See below.) And of course, without the pressure to sell fast, you have the flexibility to sell when real estate market trends are in your favor. Selling a home can be especially complex when the owner has Alzheimer’s disease or other dementia. After all, only the owner can sell real estate unless he or she assigns power of attorney or someone is granted guardianship. Even in these cases, red tape can make home sales take longer than usual.
Bridge loans are short-term loans for people who want extra time to liquidate their assets. Common scenarios for getting a bridge loan for assisted living are 1) waiting to sell property and 2) waiting for pension payment approval. Sometimes the first bridge loan payment isn’t due for 90 days, further easing financial worries at transition time. But it’s best to consult one-on-one with a financial advisor before choosing a bridge loan over a home equity loan or other alternative.
Reverse mortgage loans let couples keep their real estate, but also borrow money for assisted living. The maximum amount granted is based on built-up equity. The main advantage of reverse mortgage loans is that both spouses get housing. However, when the second half of the couple no longer lives in the home, the loan becomes due. Heirs will need to repay the loan in order to keep the property — and to do so, typically they will sell the home. Thus reverse mortgage loans generally aren’t the best solution for people intent on passing wealth to the next generation.
Can Medicaid help pay for assisted living? Generally yes, for people with low income and low net worth. Medicaid is accepted for assisted living in most US states and Washington, DC (although not at all assisted living centers in these regions). Usually Medicaid coverage for assisted living is partial. It might cover personal care services but not room and board. You can see the latest state government policies at benefits.gov. In states that refuse Medicaid coverage for assisted living, residents can get Medicaid State Plan payments for nursing homes instead. Nursing homes are set up for people with more advanced care needs. They tend to cost more per month. State plans also offer respite care to help people avoid the need for assisted living. States have different ways of accepting Medicaid for assisted living. Most common is using the Medicaid Home and Community Based Services Waiver, called the “HCBS Waiver” for short. Much less commonly used are Medicaid 1115 Waivers, 1915 Waivers and Demonstration Waivers. Unfortunately Medicaid has enrollment caps, so qualified applicants might be added to waiting lists for months or years. As with VA benefits for assisted living, Medicaid benefits are strictly limited according the applicant’s assets and income. In the waiver situation (versus a Medicaid State Plan), monthly income limits are about three times higher. Still you might be disqualified even if you aren’t living large! For this reason it can be helpful to reduce your savings. For example:
Getting expert guidance is wise. The Medicaid office will consider your past five years of transactions, and any attempt at “funny business” could bring penalties in addition to denial of coverage. A financial planner or eldercare attorney can help you decide what’s best for your unique situation. Note that Medicare, unlike Medicaid, does not pay for assisted living except in relation to hospice care. Medicare is designed almost exclusively for medical payments.
When touring an assisted living center, you’ll be on the lookout for standards of cleanliness and personal interaction. Eating a meal at the facility can be a great way to start gaining an insider’s view — so if possible, arrange an interview over lunch or dinner at the facility. It’s also helpful to observe a class or facilitated social activity. Here are ten suggested questions.