What are the Options for Senior Citizens and Their Families to Pay for Long-Term Care?
As the older generation enjoys a longer life expectancy, the challenge of maintaining financial security throughout their senior years is becoming more difficult, especially when paying for long-term care.
Senior living encompasses a whole array of services and providers. Options include a family caregiver, in-home care, and assisted living. The best option for you will be determined by the level of care you need, the location, affordability and personal choices. Before diving too deeply into the specifics of funding senior care, let’s compare the different types of service providers.
In-Home Care
Family Caregiver
As the need for care increases, family members often fill in by carving out the necessary time to provide care.
The experience of caregiving can be rewarding, but the physical, financial, emotional and psychological strain of caring for a loved one is deep and real for caregivers.
Many family caregivers have found that providing care “negatively affected” their ability to satisfy the requirements of employment. A surprising number of men and women believe that they lost a majority of their annual income as a result of caregiving. But, the cost to the family caregiver is not always measured in dollars and cents. About half of all family care providers believe their own health has been negatively affected. A significant number of family caregivers also experience sleep deprivation, insomnia, a sense of isolation, guilt and/or weight gain as a result of providing care. It’s important to consider everything involved so that you can accurately and adequately count the costs of caregiving, if you are seriously considering that option.
Homemaker Services
This is an option for seniors who need help with cleaning, laundry, meal preparation, shopping and chores. These services can be extremely beneficial to many seniors. However, it is important to know that, according to state law, homemaker service providers cannot perform any personal care or nursing services.
Additionally, these services are not cheap. The monthly median cost of homemaker services in our area is $5,720 based on an average of 44 hours per week (about $30 per hour).
In-Home Health Aide
In-home health aides are a common solution for seniors needing elderly care. Home health aides check vital signs, help patients get out of bed and go to the bathroom, change bedpans and clothes, as well as manage basic medications. They may also operate certain medical equipment with more training (e.g., ventilators). Home health aides can also assist seniors with activities of daily living such as eating and bathing. The median cost for a home health aide in Lee County is approximately $33 per hour or $6,292 monthly for 44 hours per week.
Assisted Living Facilities
Assisted living facilities are vital to the quality of life for senior citizens. When you need help with one or more activities of daily living like mobility, bathing, dressing, maintaining good hygiene, preparing food and eating, cleaning, or managing medications; an assisted living facility may be the best and most affordable option.
There are seventy-four licensed assisted living facilities in Lee County. They vary greatly in size, environment, and services offered. Options include small family homes, mid-size facilities that offer more services and amenities without the feel of a large institution, or large facilities where you will have many neighbors.
We have compiled a list of Assisted Living Facilities in Lee County for your convenience.
The median monthly cost of assisted living in our area for a private room is $5,675 per month, significantly less per month than in-home aides and homemaker services, but including most or all of the services of both.
Total Cost of Long-Term Care
Now that we have a good understanding of the multiple forms of senior care and their costs, let’s explore how the costs can be covered by seniors and their families.
Before considering how to pay for long-term care, you need an estimate of expenses beyond the monthly ALF fee. They include the cost to move into the facility, your personal needs, annual rate increases, and the length of time you are likely to live in the facility.
Personal Needs
ALF residents use personal funds for clothing, salon/hairdresser, magazines and books, entertainment and events, your favorite brand of hygiene and toiletry products, vitamins and supplements, birthday cards to send to family and friends, along with the cost of health insurance, deductibles and co-pays.
Move In Cost
The upfront cost to move into an assisted living facility will vary depending on the type of facility and their pricing policies. Life care facilities that provide every level of care for the rest of your life typically require a large contract entrance fee that can be in the hundreds of thousands of dollars. Smaller, independent assisted living facilities typically charge a one-time, upfront administrative fee.
Monthly Fee
You will find that assisted living facilities typically charge a flat monthly fee that includes all services; or an a la carte fee system where you pay a flat amount for basic services and an additional amount based on the level of care you require.
Annual Rate Increases
The cost for assisted living facilities has risen about 3.4% each year for the past few years, mostly as a result of inflation and expanding government regulation. Rate increases are an important number to consider when estimating the cost of long-term care.
Anticipated Length of Stay
Nearly seventy percent of 65-year-old people will need long-term care services or support. Women typically need care for an average of 3.7 years, while men require it for 2.2 years.
Genetics, lifestyle, and health condition are important variables in predicting longevity. John Hancock Insurance has an online “Life Expectancy Calculator” that you might find helpful. Since a life expectancy calculator can only give you an estimate of longevity, you might want to consider adding a few years to the estimate, just in case.
Paying For Long-Term Care
Retirees usually have a number of sources to fund their long-term care needs. The median income for persons 65 and older is about $27,400. In addition to income, most retirees have savings, investments and other financial resources. This diversification of revenue sources gives seniors, and their families, multiple options to pay for long-term care:
- Retirement Income
- Long-term care insurance
- Savings
- Assets and investments
- Assistance from family members
- Veteran benefits
- Medicaid
Retirement Income
You probably have income from social security, maybe a subsidy from a pension plan from a previous employer or a government pension if you worked for a local, state or federal agency.
It isn’t uncommon for seniors to generate an additional stream of lifetime supplemental income by purchasing annuities.
Most seniors will find that their retirement income is not adequate to cover the cost of long-term care.
Long-Term Care Insurance
A typical monthly benefit from long-term care insurance ranges from $2,000 to $10,000.
According to the American Association of Retired Persons (AARP), most people who purchase long-term care insurance are eligible to begin receiving benefits by age sixty-five. If you need care now, it is probably too late to purchase a policy. If you purchased long-term care insurance in the past, check the policy to make sure you know what care options are covered.
Savings & Retirement Accounts
Withdrawals from your savings account, IRA, 401(k), or similar account can provide an additional stream of income to pay for your long-term care. However, it is important to retain a sufficient emergency fund, particularly in retirement. Having an emergency fund means that you won’t have to tap your IRA, 401(k), or other taxable assets to pay for unexpected expenses. The key to staying on budget as a retiree is to estimate an adequate amount for your emergency fund. You must also identify the right type of account to hold the money.
Assets & Investments
One of the most common assets used to fund the cost of an assisted living facility is equity in your home. If you have someone to manage the property, you can access that equity by renting the home and applying that income to your cost of care and retain ownership. You also have the option of selling the home. And, a home equity loan or home equity line of credit may be a source of income while you’re waiting for the property to sell.
If you own stocks, bonds, mutual funds, or other investments you may want to discuss the best way to use those assets to help fund your long-term care with your trusted financial advisor.
Family Assistance
If seniors are unable to afford the cost of care when they are unable to adequately perform the normal activities of daily living, family members frequently provide assistance to pay for eldercare expenses. Adult children often discover that the only solution is to provide assistance to help pay a portion of the amount needed for their parent’s assisted living.
Veteran Benefits
Assisted Living Facilities are places where Veterans can receive financial assistance with activities of daily living (e.g., bathing and getting dressed). Veterans may also be able to have the Veterans Administration arrange for a health professional (e.g., a nurse) to visit and give them extra care.
The VA does not pay for the Veteran’s rent, which usually includes basic services. However, the VA may pay for some of the personal care services in an Assisted Living Facility.
Medicaid
In 2011, the Florida Legislature created a new program called the Statewide Medicaid Managed Care (SMMC) program. That program includes The Long-Term Care Managed Care (TLC) program. Medicaid recipients who qualify and become enrolled in SMMC TLC will receive long-term care services from a long-term managed care plan. Low-income Florida senior residents who want Medicaid help for long-term care services must meet both medical and financial eligibility requirements. Many assisted living facilities do not accept residents receiving these optional supplementation payments.
Medicaid is a jointly funded federal and state health care program for low-income individuals. There are several different Medicaid long-term care programs for which low-income Florida senior residents (age 65 and over) may be eligible.
Seniors wishing to apply for Florida Medicaid can do so online via ACCESS. For additional information or application assistance, you can contact your local ACCESS Service Center or call the ACCESS Customer Call Center at 1-866-762-2237.
Conclusion
As we have seen, when it comes to paying for assisted living costs, seniors and their families have a variety of options. Alva Senior Living is designed to feel like home, a place where faith, hope for the future and love expressed through care, kindness and support are guiding principles. If that sounds like the right place for you, click on the button below to be one of the first to know. We think you’ll find that life will be better in the country with friends!
