Financing Long-Term Care
Health insurance and Medicare generally do not cover the costs of long-term care, whether that care is delivered in a nursing home or in an assisted living residence. Medicaid will cover the cost of nursing home care, but only after patients have spent down their own assets.
Other sources that help pay for long-term care are briefly described below. White Oak can put you in touch with knowledgeable professionals (who have no business relationship with White Oak) should you want to explore these possibilities.
Long-Term Care Insurance
These policies generally cover a portion of the cost of both nursing home and assisted living services. The amount and duration of the benefit vary. If you have purchased long-term care insurance policy, check to see if it will cover any of the monthly fees paid to a assisted living residence.
Whole Life and Universal Life Insurance Policies
If you have these forms of life insurance, there are groups that will pay you an actuarially determined amount of the death benefit while you are still alive. For some, the ability to access a portion of the insurance benefit provides necessary cash to pay for assisted living care. This option is relatively new, but it is gaining recognition.
Couples who own their home and have built up equity may consider a reverse mortgage. Government agencies, non-profit organizations and private companies all offer reverse mortgages, although the conditions and the up front fees vary. A reverse mortgage allows you to convert a portion of the equity you have in your home into cash. You don’t need to repay the cash advance until you sell the house, and you do not have to make additional monthly payments while you continue to live in the home. This vehicle may be of help to couples, one of whom needs to move to an assisted living residence while the other spouse remains in the home.
Tax Deductions for Assisted Living Fees
The cost of assisted living care can be reduced if you are able to deduct the assisted living fees as a medical expense. To claim this deduction, you must file an itemized return, and the cost of the assisted living fees plus other medical expenses incurred must meet IRS thresholds for medical expense deductions. Consult your attorney or accountant to determine if you qualify for this deduction.
Veteran Aid and Assistance
This program pays a monthly benefit to veterans and their surviving spouses if they need regular assistance with activities of daily living and meet the income and net worth requirements of this program. For more information, go to: veteranaid.org/program.