How to pay for care now and in the future

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Is your family prepared financially for the expense of assisted living care?  This can be a financial hurdle for many families with parents who are on a fixed income or who may not have properly planned for future care needs. Fortunately, there are resources and options to help find a solution to your financial situation.

How to Pay for Assisted Care

Here are a few options to consider when determining how to pay for assisted living for your parent now.

Private Pay:

If you have savings, investments, real estate options that can we used to pay for care this is the best option. Of course, this may not be possible for all families.   As you assess your assisted living or care options, it’s a good idea to have a budget in mind that you are comfortable with. First, have a clear understanding of your parent’s financial picture and what finances and assets that may have available. If they own their home, you may want to consider selling the house or renting it for additional income.  Second, determine if you or any other family members are able to contribute money towards expenses.  Once you have this determined, you will be able to create a budget.   Like any search for housing whether renting or purchasing, the cost of an assisted living community can vary greatly depending on the location, the types of amenities that are offered and the quality of care.  We strongly suggest that you tour and meet with multiple assisted living properties to compare costs and savings.

Veteran’s Benefits:

If your parent has served in the military or is a military spouse, this is a great option to research and inquire about to help defray the expense of assisted living. Under the VA Aid and Attendance Special Pension, also known as the A&A Pension, qualified veterans or their surviving spouses can receive tax-free monthly sums meant to help defray the costs of assisted living. Two married veterans can receive up to a maximum of $2,837 each month in 2018 for this purpose, while a veteran and his or her spouse can receive up to $2,120. A sick spouse of a veteran may receive $1,788, and a surviving spouse may be entitled to $1,412 each month. For complete details and to understand if your parent may qualify, check out the website of the U.S. Department of Veterans Affairs.

Life Insurance:

If your parent has a life insurance policy, you may have the option to cash out their policy for a lump sum to help pay for the cost of assisted living.  The first step is to contact the life insurance company to ask about “accelerated” or “living” benefits.  The company that issued the policy will typically purchase it back for 50-70% of its value.  The benefit is determined by the policy amount, monthly premiums, the policyholder’s age, or their health condition.  But each company’s policy is different and must be contacted directly to clearly understand their rules, guidelines, and procedures.  Cashing out a life insurance policy has both advantages and disadvantages, so we suggest that you research your options carefully to best understand if this is a good fit for your financial situation.


Medicaid is a federal program for older people with low income and limited assets.  The program is administered by each individual state with each state setting its own guidelines regarding eligibility and services.   Over 40 states permit some type of funding for assisted living, but it can vary greatly. To understand what could be covered under Medicaid within your state, visit the Centers for Medicare and Medicaid Services online. Also, research the assisted living communities in your area and ask if they take Medicaid as a form of payment.

Planning for Future Care Expenses

If you are planning for your future and the care needs that you may face later in life, here are a few suggestions to save and plan for those expenses.

Long-Term Care Insurance:

If you are looking to plan for the future care costs, you may want to research long-term care insurance. Long-term care insurance is different than traditional health insurance.  The insurance is designed to cover the costs of services and support when you are unable to care for yourself.  This might be at home, in an assisted living community, memory care community, short-term care, hospice, or in a nursing home.  The policyholder has a full range of care options and benefits to choose from.  Services may include caring for the activities of daily living (ADLs) such as dressing, toileting, or bathing.  Or services can consist of healthcare options such as skilled nursing or occupational, speech or physical therapy.  Long-term care insurance often covers what is not covered by health insurance, Medicare, or Medicaid.

Retirement and Savings

Planning for retirement and saving for your future housing or care needs is essential.  If you are just starting to put away money for retirement, start saving and investing as much as you can now. Investing when you are young will give your compound interest an opportunity to generate more earnings for you.  Also, contribute to your company 401K if offered by your employer.  A 401K will enable you to contribute pre-tax money to a significant advantage with less of an impact on your monthly budget.

Catch-Up Contributions

The benefit of saving early is that yearly contribution to your 401K and IRA plans are limited, but it allows you to save money over a more extended period of time. If you have not been able to save enough, the good news is you can catch up once you reach age 50 years old.  At 50, you are eligible to invest beyond the usual limits with catch-up contributions to IRAs and 401Ks. Catch-up contributions can give a significant boost to your retirement savings.

There are many options available to families to help find the best assisted living care for their loved one.  It is always advised to speak with a professional in each of the areas of financial and estate planning to ensure that you fully understand the advantages and disadvantages of using the options available or to discuss the best way to plan for the future.

If you need referral for financial experts contact your local Aegis Living community and the Marketing Director there should have a few recommendations to help.

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