Around the clock care for Seniors is expensive for sure. It is really not something that any of us want to pay for. Hopefully, you’ve saved for your retirement years but those funds can be eaten up quickly with the cost of assisted living when long term care is needed at any level.
In this article we will explore:
- Costs and levels of care
- Payer sources
- How you can plan ahead
The national median cost for Assisted Living is approximately $4000 which breaks down to $133 per day or $48,000 per year.
A very helpful and interesting website that calculates pricing by state and city is at Genworth. It compares costs of home health, assisted living and nursing home care.
You can look up Assisted Living in Kansas City on this site.
Not surprisingly, areas where the general cost of living is high, tend to be more expensive for all levels of care.
The highest reported fees are in San Francisco, New Yor City, San Jose, Boston, and Los Angeles.
Living in your own home is certainly not free, even if it is paid for.
As you consider the expense of moving to Assisted Living in Kansas City or Memory Care in Kansas City, you have to consider what current expenses will be discontinued when leaving your home.
Normal expenses like the following are no longer a part of the budget:
- Mortgage payments
- Basic home repairs
- Utility bills
- Landscape maintenance
- Real estate upgrades to maintain values
- Property taxes and insurance
- Activities and outings
- Security systems and alarms
When considering a move into Assisted Living it is important to tour and compare costs, levels of care and future cost increases. Communities may vary in the way they calculate rent.
It may be an all-inclusive price or it may be à la carte for various services. It is important to compare apples to apples.
Who pays for Assisted Living?
Oftentimes we get calls from the adult children of Seniors who are completely confused about the role of Medicare, thinking that Medicare will pay for Elder Care.
Medicare does not pay for Assisted Living or Long Term Care.
If a short rehabilitation is needed after a hospital stay, Medicare will pay for up to 100 days in a nursing home or rehab facility.
Long Term Care Insuance is a possible payer source.
If an individual has purchased Long Term Care insurance earlier in life and kept up the monthly premiums, it can be activated to cover expenses based on the policy specifics. Many policies will cover a portion of Home Health Services, Assisted Living, Memory Care, and Nursing Home Care.
If the policy does not cover the full per diem amount, the individual will private pay the balance.
When the policy is activated the premiums are no longer paid by the individual. Not only are extra funds available, but monthly expenses go down.
The majority of residents are paying privately from their savings, the sale of real estate, pensions or annuities.
How can you calculate your ability to pay and for how long? The simple approach is to consider these four areas:
- Real estate to sell
- Long Term Care Insurance
- Insurance policies
- 401 K, etc.
- Mortgage payments
- Car payments
3. Monthly Income
- Social Security
- Rental income, etc.
4. Monthly Expenses
- Monthly bills that will continue after moving
- Assisted living monthly cost
By calculating the monthly income amount available and the needed monthly expenses for Assisted Living costs then the total assets (after debt is paid off) can be used to supplement the monthly expenses.
As a simplified example, if an individual has assets of $300,000 (after any debt is paid) and had a monthly income of $2500 and is planning a move to Assisted Living at $4000 a month, then they would need to withdraw $1500 a month to supplement their monthly income.
The assets of $300,000 would last 200 months or 16 years.
This example does not take into consideration increase care needs or personal care items, but those can be calculated also.
When touring a facility it is important to have a candid conversation about finances.
Possible questions might be:
- Is there an entrance fee or deposit?
- What are the monthly fees based on care needs?
- What are the estimated annual increases?
- Are there hidden fees?
- Are there transportation costs?
- What happens if an individual runs out of money?
- What other expenses can we expect?
It is critical that families feel comfortable discussing these issues and the staff members in the community are helpful and transparent about costs both now and in the future.
Individuals who do not have the means to private pay may qualify for Medicaid.
The Federal program that is managed by each state that pays for care of those who cannot pay is called Medicaid (not the same as Medicare).
Home and Community Based Services or HCBS provides support services in an individual’s home.
Once an individual cannot stay in their home and needs full nursing home care they can access Medicaid payment in a long term care facility.
The government has specific ‘spend down’ requirements before one can qualify.
The goal is financial clarity.
When touring communities the staff should be able to explain in a way that is easy to understand what each of the payment sources would apply to an individual.
One on one planning can assure that there is a good fit for the Elder and the community.
Contact The Piper to discuss assisted living decisions today.