In a matter of seconds, terror had drained the color from my father’s gaunt face. I had no idea that my question would frighten him.
“Dad, you need help around the house. Why won’t you hire someone to help you?” I pressed him not willing to take no for an answer.
“Because I’m afraid I’ll run out of money!” his voice waivered.
“Oh…” I softened my voice to allow him time to regain his composure.
My Dad was a very private man. Fortunately, he was willing to share his financial information with me. So I was able to find the documents I needed to piece the puzzle of his finances together.
For many family caregivers, though, figuring out how to pay for elder care is stressful and confusing. Alex Guerrero has written a very helpful guest post for 3GenFamily Blog that takes some of the confusion out of finding ways to pay for care for your aging parents. I hope you find it helpful.
◊ ◊ ◊ ◊ ◊
The Paying For Elder Care Puzzle
By Alex Guerrero
Thinking about paying for elder care? It can be overwhelming to consider the many different financial and care options. Differing eligibility requirements and different types of benefits can further the confusion. Grouping options into categories can help families better understand programs available to them.
Paying for elder care often begins by using short term resources. Medicare, Medigap, private health insurance, and similar programs for military retirees and veterans such as TRICARE and CHAMPVA, all provide limited time benefits for care. These programs’ benefits are designed for seniors recovering from surgeries or accidents and are not meant as a long term care solution. However, they will pay a high percentage of the cost of nursing home care for up to 100 days.
Resources for ongoing elder care costs can be grouped into 5 categories.
1. Pensions and Retirement Resources
The first resources most families tap for the cost of elder care are recurring pensions and retirement savings. These include social security benefits and veteran’s pensions such as the Aid and Attendance benefit and a family’s own savings. The costs and types of long term care have changed dramatically in recent years and, unfortunately, many of those who require care today did not retire with the recurring monthly income to cover those costs.
2. Home Equity
With inadequate recurring monthly income to pay for long term care, many families use the equity in their homes as a financial resource. Reverse mortgages and, to a lesser extent, home equity loans can provide a significant amount of monthly income. There are several new financial programs that allow seniors to tap their home equity as an alternative to reverse mortgages. However, these are only available in some states and their value is somewhat diminished due to the drop in home prices in recent years.
3. Insurance: Long Term Care and Life
Most families do not have long term care insurance, but those that do receive direct payments to help them with the cost of care. Life insurance is more common and there are multiple options for exchanging a policy for cash. For seniors in poor health, viatical settlements and accelerated death benefits allow them to receive a lump sum payout. Life settlements and death benefits loans are two other options for seniors with life insurance that need money for care but are not terminally ill.
4. Programs for the Financially Challenged
There are a variety of programs provided by federal, state and non-profits organizations for the financially needy. Chief among them is Medicaid in its various forms. Qualified seniors can receive Medicaid benefits in various ways; direct care, waivers to receive home care, and family caregivers can even receive payment for the care they provide. Supplemental Security Income can provide a boost to Social Security checks. Some cities offer government housing with assisted living services.
5. Elder care Loans
In the last few years, there has emerged a new class of loan specifically targeted at helping families pay for assisted living. The loans have rapid approval processes and are structured to allow multiple family members or friends to share the cost of paying for an elderly individual’s care. These are a good option for families in shorter term, crisis situations.
Another way to think about paying for long term care is to think about how one might reduce the cost of care. This is especially valid for families that care for their loved ones at home. Some respite care programs offered by non-profits and Area Agencies on Aging offer as much as 30 hours / month of care for free or for very reasonable fees. This can offset the need for full-time home care services. There are also federal and state tax credits and deductions for caregivers. The cost of medications can be reduced by purchasing prescriptions online in bulk or from Canadian pharmacies. By combining many of these ideas, families can reduce their cost of care by hundreds or even thousands of dollars per month.
The website, PayingForSeniorCare.com, offers a deeper investigation of the Pros and Cons of each of these financial and care resources. Their Eldercare Financial Resource Locator Tool helps families find which options are relevant to them to help pay for home care, assisted living and long term care. Alex Guerrero serves as the Director of Operations for the organization.
Use the “Share” button below to email this post to a friend or share on a social networking site. Thanks for reading! Did this blog post help you? Let me know by leaving a comment.
I don’t receive payment for guest blog posts. They come from reputable bloggers and companies to provide the readers of 3GenFamily Blog with great information. Some of the links on this website connect to programs that provide a small commission (books from Amazon, for example.)