How to pay for senior living - can the government help?
If you are an avid reader of this magazine, you have read my last three articles on the different aspects of the senior living world. There is a lot to understand!
We’ve talked about assisted living, independent living, nursing homes, memory care, licensed communities, unlicensed communities. We’ve talked about quality of care verses quality of life. And I’ve talked about how we like the term “Living, with Assistance” at our Orion Oaks Assisted Living and Memory Care, where the idea is to “live your life” while you are getting the assistance you need.
Write to us at firstname.lastname@example.org if you would like copies of those articles.
Today, I’m going to talk about how you pay for senior living, once you have figured out which kind of senior living you need.
First, you should know there are three basic ways one can pay for senior living:
- Private pay – you pay the money yourself. This either comes from your income – the monthly amount you receive from Social Security, pensions, stocks, annuities, gifts or work – if you are still working; or your assets – your savings, stocks, bonds, or money from the sale of your house. Often, it’s a combination of the two.
- Government programs - Medicare, Medicaid, Veterans Benefits, or a combination of all of them.
- Long Term Care Insurance – most people don’t have long-term care insurance, but if you do, good for you! It’s like cash. You can use if for most senior living services. Most policies will pay out approximately $3000- 10,000 per month, depending on when you bought it, and the premium you choose. If you are approximately below 60 and can afford it – buy it!
Now, I’m going to list the types of senior living situations there are, and how most people pay for them. And I’ll do them in order of “acuity” or how much personal care you need. (see I’m trying to teach you the lingo as we do this). I’ll do this from the least amount of care, to the most.
- Independent Living Community – This is a “retirement” community where you usually do not have any personal care. You pay rent, and maybe food. This is all private pay – you foot the bill. Government programs do NOT cover Independent Living.
- Assisted Living Communities – this is where you receive personal care, along with your room and board. This is mostly private pay. However, most assisted living communities will take long-term-care Insurance, if you were lucky enough to sign up for one. However, there are some government programs which can also help, if you are eligible.
- Veterans Administration (VA). The program is called the Aid and Assistance Program. If you are a veteran, or a spouse of a veteran, and are middle income, you generally will quality of some VA benefits. They currently offer approximately $2,229 per month for veterans, $1,432 for a surviving spouse, and $2,642 for the couple. There are many places to go for more info on this – try https://americanveteransaid.com. It’s somewhat of a pain to get this program, and it takes about six months. But it is retro-active to the time of application. So, if you are near the point of going into an assisted living community – apply now!
3. Medicaid Waiver, sometimes known as MI-Choice. This is a program that was designed to keep people out of nursing homes, and lets them stay in their home. However, the state considers an assisted living community your “home,” so many assisted living communities (though not all) are in the Medicaid Waiver program. The main thing you need to know is that you have to be “Medicaid Eligible.” That means you have to have spent down all your money – except for $2,000 dollars. (yikes). But you can keep your house and a car. And your spouse can have an income of approximately $2,742 per month. You also can only have an income of approximately $2,742 or less each month – not a penny more. You first have to apply for Medicaid, then you apply to your local MI-Choice agent for the MI-Choice Waiver. In Oakland County, that would be the AAA-1B office. https://aaa1b.org. Phone: 800-852-7795
It’s a lot of work. Sometimes it goes smoothly, and sometimes not. I just went through this for my brother-in-law, and it is was a pain! Some people may want to retain an attorney. There are plenty out there. Google: long-term care attorneys in Michigan.
The MI-Choice program does NOT pay for the entire amount of assisted living. Unlike the nursing home Medicaid benefit, it only pays for the “personal care” you may need, NOT the room and board. For that you have to pay through your Social Security and other income. Generally, they will give an average of $1,500-2,000 per month.
Now, let’s talk about one more thing – your home. Let’s face it, for many people, their primary asset is their home. If you bought your home years ago and have paid off the mortgage, then you may have accumulated anywhere from $100,000 to hundreds of thousands of dollars, or more. The average person at age 80 has approximately $250,000 of equity in their home.
Many people, if they need personal care and don’t want to have to go to a nursing home, and choose assisted living instead, use a combination of income and proceeds from their home to pay for assisted living. For example: let’s say it costs 5,000 a month for assisted living. And let’s say you have $250,000 in the bank from the sale of your home. Let’s assume your social security and other income is $2,000 per month. You will need another $3,000 more per month. Most people then take that from their savings. With $250,000 in the bank, you would have over 7 years’ worth of payments to cover your assisted living bill.
In the next installment, I’ll talk about how to pay for Nursing homes.
Whew! I’m exhausted just writing about this. I can imagine how you feel!
If you have any questions, feel free to write me at the email below. I hope you enjoy the fall season. Keep living, learning and loving!
The Senior Living Guy
Dean Solden is the CEO of Creative Senior Solutions (CSS), a management and development company specializing in managing senior living communities for the last thirty years. CSS currently manages Orion Oaks Assisted Living and Memory Care in Lake Orion, Michigan. (www.orionoakassistedliving.com). Call Krystal at (248) 688-7464. You can reach Dean at (734) 260-3600 or email@example.com.