What are Some Options in Paying for Assisted Living?

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In California, everything is expensive: housing, gas, taxes, food and health care. Assisted living is also expensive and many families are not prepared for the costs of care. Most people do not plan to live in assisted living, but many individuals find this to be their reality.

Many of the large communities, like Brookdale, Sunrise and Belmont Village, offer a lifestyle of a well-appointed apartment, activities, in-house salons, transportation, and chef inspired cuisine. These amenities add up to a significant amount. Then they add on the level of care costs. Therefore, the apartment you thought was $4500 is now $7200 per month. Of course, this is for a small studio or one bedroom apartment in a city with lower priced real estate. Move to Beverly Hills and the cost is upwards of $10,000 and more.

So how do people afford assisted living? Well the generation currently receiving care has an advantage many Boomers will not: a house that is paid for. The cost of a home in California costs on average 45 times more than a house sold in 1962.  Liquidating a home for cash is what many people do. The funds are invested, and the dividends help offset the cost of care.

Some individuals bought a Long-term Care insurance policy back in the 1980’s. Many of the policies sold had no cap on yearly increases and included care in assisted living. Back in 1980, life expectancy was only 73 years. The insurance companies hedged their bets that if a person retired at age 65, the insured individual would only live maybe eight more years. Many of those companies are no longer in business because they were so wrong about life expectancy.

Life insurance policies with a “Life Benefit” is another possible answer for funding care. Some insurance companies allow the insured to use the cash value of the policy while living, instead of paying a cash benefit to the beneficiary.

Social Security is another source. Those looking to have their retirement or care covered by Social Security are in for an unpleasant surprise. Today, the average check is $1300. That will not completely cover the cost of renting an apartment, let alone care needs.

The Veteran’s Administration Aid and Attendance program for wartime veterans 65 and older and/or a surviving spouse, provides up to $3032 per month. The application is tedious, but worth the time spent for the additional funds.

Another source of income is a pension. This form of income is rapidly decreasing. Many current retirees worked their entire career for a single employer and for their long-term commitment, the employer provided a pension upon retirement. State governments, utility companies, health care organizations and civil service are but a few examples.

Annuities, stocks and bonds also provide an income stream to finance long term care.  Earnings deposited into a savings account is a common source of funding. A large portion of the current generation lived within their means, paid cash for most items and saved for a rainy day.

A common problem many families face is the older adult who is in need of care, may outlive their resources. People are living longer, and many did not plan to live to be 80, 90 or even 100 years. When the money runs out, then what happens?

The Assisted Living Waiver (ALW) is a Home and Community-Based Services (HCBS) waiver that was created by legislation that directed the California Department of Health Care Services (DHCS) to develop and implement the project to test the efficacy of assisted living as a Medi-Cal benefit. Therefore, a resident who qualifies for Medi-Cal has options.

The information provided is meant to be a resource of different options available to help finance assisted living care for you or a loved one. No claim is made that everyone qualifies for any or all of the mentioned options. If you have more questions, please call the Colony, we are ready and willing to help you on this journey.