Financial Options for Long-Term Care
We can help you understand the different financial options available so you can decide which is right for your situation.
Making sure a loved one gets the right long-term care is a task in and of itself, and navigating the funding options and different payment methods adds additional levels of complexity to an already-arduous process. This primer of various funding options will provide you with the background you need to have the proper insight when seeking the assistance of a financial professional.
Long-term care insurance: This type of insurance provides varying levels of coverage to handle the cost of care that is typically not covered by other forms of insurance, such as at home and memory care assisted living. Long-term care insurance is an anticipatory protection and will not apply for preexisting conditions.
Veteran’s benefits: Veterans who served during wartime may be eligible for this benefit. It pays up to $2,000 per month of supplemental income that may be used to offset the cost of assisted living, in-home care or other expenses as defined under the Aid & Attendance portion of VA Pension benefit.
Secured lines of credit: A line of credit can be secured by certificates of deposit (CDs), equities (stocks), personal property and cash. This is similar to a bank account; however instead of depositing money into the account, money is borrowed against a line of credit to fund the cost of long-term care. This form of credit may be consistently borrowed against without having to renegotiate terms.
Reverse mortgage: Homeowners age 62 and up can have the option of using a reverse mortgage to provide access to their home’s equity. In short, the homeowner is mortgaging their home to the provider, who pays in one lump sum or multiple payouts to help cover the cost of assisted living or in-home care. Repayment of the loan is deferred until the owner passes away, moves out or the home is sold. As long as one of the homeowners remains in the home, these funds may be available.
Life Insurance: Some forms of life insurance can be used to fund the costs of assisted living and other care services.
Gift Tax Exemption: Family members can offset the costs of a loved one’s memory care by taking advantage of the IRS gift tax exemption. This allows individual family members to gift up to $13,000 per person, per year without paying gift tax.
Tax Deductions: Residents and their families may be eligible to deduct some or all of their long-term care services, including assisted living and home care as unreimbursed medical expenses on their federal tax return.