Tips for Senior Care Financing
Life Insurance to Fund Long Term Care
Many seniors have funds invested in a life insurance policy but need ready money once there’s a change in a health status or a living situation. There are a number of options for using life insurance as a source of funds; choosing a method of accessing these funds requires careful consideration.
Policy holders can access the accumulated cash value using withdrawals, loans from the policy, or a cash surrender of the policy. In a cash surrender be aware of surrender fees, depending on how long you’ve owned the policy, and note that the gain on the policy is subject to income tax and it may be difficult or expensive to replace this coverage later.
Keep in mind that the cash from a death benefit may change a senior’s financial status, making him or her ineligible for other financial compensation. There are also tax implications to consider. Consult a tax professional to understand all tax implications of a settlement.
Check Your Benefits – Veterans Aid and Attendance
Did you know that the Veterans Administration will pay a monthly benefit to any active-duty veteran or their spouse who needs care? Any vet who has served even one day during a period of foreign war can apply for this Aid and Attendance Special Pension; beneficiaries need not have served overseas, retired from the military, or seen combat. Surprisingly, however, only a few of those who are eligible for these benefits take advantage of them.
The pension is “medically driven,” says Chris Merrill of the National Care Planning Council, an organization that helps families plan for long term care. The disability does not need to be service-related. Any vet who has difficulties with one or more activities of daily living, such as eating, bathing and dressing, as well as financial planning and medication management, may be eligible.
Other Sources of Help
For instance, the Alzheimer’s Association offers a $1000 grant to defray the cost of respite care. The money can be used to give families a break from daily caregiving responsibilities so they can provide better in-home care for loved ones suffering from Alzheimer’s.
Other programs include rebates from drug manufacturers on senior medications, assistance with paying utility bills, free or reduced dental care, and even free cell phone minutes. While many of these programs are for very low-income seniors, others are open to those with slightly higher incomes who are still having a hard time making ends meet.
Who is Eligible for VA Benefits?
•Any Veteran with 90 days of consecutive active duty services
•Any Veteran who served at least one day during active war time
•Veterans do not have to have served overseas or in combat
•A surviving spouse of a veteran is eligible if married to the Veteran at time of the Veteran’s death
Making the Most of Social Security
You can maximize benefits by taking advantage of delayed retirement credits. Also, a surviving spouse receives the entirety of that benefit upon the worker’s death, making those delayed retirement credits even more valuable.
If you are in ill health, if you have a family history of early mortality or if you simply need the money, delaying benefits may not be possible. But, with life expectancy at retirement currently standing at 17.2 years for males and 19.9 years for females, odds are that the larger monthly check will quickly pay off—and continue paying, with regular cost of living adjustments.
Married couples with similar incomes can also approach Social Security tactically. If one member of the couple decides to retire, the other can collect spousal benefits and delay receiving his or her own benefit in order to increase the size of the eventual monthly check.
Important Steps for Getting Your Affairs in Order:
•Gather everything you can about your income, investments, insurance and savings
•Put important papers and copies of legal documents in one place
•Tell a trusted family member or friend where you put all your important papers
•Give consent in advance for your doctor, lawyer and any financial advisors to talk with your caregivers as needed
Bridge Loans
Most people, their most valuable asset is their home. But, with houses lingering on the market for months or even years, that capital may not be available when the time comes to make the move to a higher level of care.
With its rapid turnaround time, this loan can be especially useful when dealing with urgent needs that must be met before other longterm financial resources can be tapped.
The Reverse Mortgage
Reverse mortgages let homeowners stay in their own home while also tapping into the equity they’ve built up over the years. Mortgage holders get tax-free cash flow as a loan against that equity—a loan that doesn’t need to be repaid until the house is sold or the owner moves out or dies.
Though, reverse mortgages can be expensive, too; fees are higher than a conventional mortgage, and closing costs run high, you may be forced to sell your home if you need to leave it for an extended stay in a hospital. Remember that taking out a reverse mortgage is actually withdrawing the equity from a home, and as interest compounds on the reverse mortgage balance, the value of the estate declines at a progressive rate. Mortgage holders will also not be able to pass the family home down to their heirs after their death.
Making Use of All the Tools Available
Paying for senior care can be a daunting prospect in the current economy, but a little knowledge can go a long way in preparing for this time of life. No matter what financial route you choose, it’s important to do your research, read the fine print and consult professionals when needed. Get creative and combine as many resources as you can. Planning means peace of mind.
