Breaking Down the Financials: Assisted Living for Elders

Written By: Discovery Senior Living

You've just come from your grandmother's house and have had a difficult conversation. She has been having problems getting around her house and can't drive like she used to.

You both agree she should probably move into an assisted living center. Honestly, the toughest part of the talk was figuring out finances. Both of you are having difficulty understanding the costs of assisted living.

How much does assisted living cost and how can you foot the bill? Elderly care is vital for many older adults and their families, so understanding the associated finances is important.

Discussing Assisted Living and Other Types of Senior Care

Assisted living is when your loved ones have aid with their health needs, daily tasks, and personal care. Examples include medicine management, transport to doctor's appointments, and hygienic care.

Assisted living is centered around allowing aging seniors to live independently, with help when needed. For clarity's sake, let's discuss independent care for a moment.

Independent living is usually a residential or housing community for adults 55 to 65 and older. It's designed for healthy adults who don't want the hassle of homeownership.

Assisted living centers often have housekeeping services, health services, cafeterias or catering, and social activities. They're usually geared toward independent aging adults with health or mobility issues.

There's also memory care, a senior health service that helps people with Alzheimer's and other forms of dementia. It provides cognitive therapies and round-the-clock supervision for those who need it.

How Much Does Assisted Living Cost?

Assisted living costs an estimated average of $4,802 monthly or $57,624 yearly. However, costs differ according to the community or center, your state, and the level of care needed.

Paying thousands a month for a particular service may not sound too cheap to you. That said, Missouri residents pay less than in other states at a monthly average of $3,000 -- but even this differs across the state.

Citizens living in Kansas City or Branson can expect to pay $4,329 or $4,412 for assisted senior care. For comparison's sake, independent living in Missouri can cost $2,822 a month or $33,064 yearly.

You and your loved ones should choose the type of senior care that works best for them. An assisted living center is a better fit if your parent needs help with daily personal care.

Memory care is the costliest choice throughout the U.S. and within Missouri. You can enroll a senior loved one in memory care for $5,502 monthly or $66,024 yearly.

Note that someone must be diagnosed with Alzheimer's or another kind of dementia to qualify for memory care. Some assisted living centers, like Addington Place of Shoal Creek, provide memory care.

How Do You Pay For Assisted Living?

Understanding the costs of assisted living is one thing, knowing how you'll pay for it is another. Like many services, where the money comes from is irrelevant as long as it's legal.

But the issue is where you're going to find the funds. Many people use their private funds to pay for boarding at an assisted living center. This may include retirement accounts, pensions, or personal savings.

Many aging seniors' children or other family members cover their assisted living costs. Some people leverage existing assets like their home mortgages or insurance policies if they lack a source of personal funds.

Reverse Mortgages: Pros and Cons

A reverse mortgage is a home loan that allows homeowners to turn their home equity into a cash source. Home equity is the difference between what you've paid on your mortgage and your home's worth.

To simplify, home equity is how much of your home you own after making mortgage payments. You will receive the funds as a lump sum or in installments.

One issue with reverse mortgages is that homeowners must use their home as their primary residence. There are three exceptions to the rule that someone must stay in the house:

  • The borrower has been away for more than 12 consecutive months
    • Must be for healthcare purposes.
  • Someone living with the borrower is a co-borrower
    • The homeowner is gone, but the co-borrower stays in the house
  • The borrower's spouse is ineligible to borrow on the reverse mortgage

A disadvantage is that borrowers increase debt and use their equity. A reverse mortgage is still a loan and borrowers pay their lender a fee and interest.

Selling Life Insurance

Selling life insurance is when someone gives their policy to a life settlement company or broker in exchange for cash. The company becomes the policy owner, pays the premiums, and collects the death benefit.

Sellers must have an individual life insurance policy and a death benefit of at least $100,000 to qualify. Many companies only buy from people 75 years or older unless the seller can verify they have certain health issues.

Discounts, Budgeting, and Tax Credits

Some assisted living centers have discounts and flexible payment plans. You can ask about assisted living tax deductibles. Senior health care services are deductible, but not food and activities.

It helps to find a community that fits your budget. Prices and important features like transportation and an onsite nurse are things to consider when choosing.

Medicaid and Medicare

Medicaid and Medicare are two government-implemented, taxpayer-funded programs designed to help cover healthcare costs for U.S. citizens. Medicare eligibility has nothing to do with income.

Medicare is for people 65 and older or those with disabilities. Medicaid is for people of any age with low incomes and is often a last resort for those with few other options.

Medicaid nor Medicare don't fully cover assisted living costs. They do pay for the medical aspects like medicine management and nursing care. Both Medicaid and Medicare cover memory care.

Understanding the Costs of Assisted Living

Understanding the costs of assisted living will help you choose the right community for your loved ones. It's hard to find a good place for your parents to live if you're unsure how to pay for it.

Addington Place of Shoal Creek offers various amenities for your loved one in Kansas City. We offer daily personal care aid, memory care, and transport to events and doctor's visits.

Addington Place also has a discount program for veteran seniors. Contact us for a tour or to discuss payment options.

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