7 Practical Ways to Pay for Senior Care in Dayton

As the number of people in the U.S. over age 65 grows, paying for nursing home care, assisted living, and other forms of elder care is an increasingly pressing issue for many Americans. Although rates vary by level of care, long-term costs add up and strain many families’ finances. For instance, the average cost of a semi-private room in a nursing home is over $112,000 per year. When you factor in inflation, that cost could skyrocket to $186,000 after about 20 years.

More than 40% of U.S. adults fear they won’t have the financial resources to access much-needed care as they age. If you count yourself among the 40%, it’s easy to feel overwhelmed, but take heart. You likely have resources that can make future elder care more feasible. At Senior Care Partners in Dayton, our assisted living and elder care consultants can review your financial situation and help identify affordable care options as you approach the need for long-term care.

Many families who’ve worked with us at Senior Care Partners say they’ve used a combination of any of the following seven resources to pay for senior care services:

Long-Term Care Insurance

Long-term care (LTC) insurance is a private insurance product that helps you pay for elder care services. Benefits cover a range of care and assistance, both at home and in a residential facility. LTC insurance may stand alone or be included in a hybrid life insurance policy with a long-term care rider.

Even if you don’t expect to need long-term skilled nursing care, it’s still wise to plan for this possibility well before you need it. If you’re in your 50s or early 60s, now is a good time to consider an LTC policy.

Veterans Benefits

The U.S. Department of Veterans Affairs (VA) provides benefits to military veterans, their spouses, and dependents. Surviving spouses of deceased veterans are also eligible for benefits, including VA Aid and Attendance and the Housebound allowance, which help pay for senior care at home, in assisted living, in nursing homes, or at adult day care centers. Covered services include personal care, physical therapy, and medical care.

Retirement Accounts

You’ve worked hard in your professional life to save extra money for your senior years. If you anticipate needing long-term care, it makes sense to finally let your retirement funds work for you. To pay for senior care, you can tap into any of these retirement accounts:

• Health Savings Accounts (HSAs): These funds are tax-free and can help chip away at your health insurance deductibles.
• Traditional 401(k)s: Your employer-sponsored fund, which you’ve contributed to over the years, can now help finance your senior care.
• Traditional Individual Retirement Accounts (IRAs): If you don’t anticipate assisted living or nursing home care for several years, now is a good time to set up or contribute to an IRA, which can supplement a 401(k).
• Roth IRAs: The advantage of these products over traditional IRAs is that qualified withdrawals are typically tax-free, giving you more flexibility when paying for care.

Personal Property and Assets

If you’re ready to simplify your life and belongings, consider selling one or more of your major assets. One option could be a house that’s paid off but has high property taxes or is expensive to maintain. Doing so would free up cash that you can use immediately to pay for medical care or reduce your long-term care bills.

Home Equity Line of Credit

You don’t have to sell your house to use it as an asset. Consider a home equity line of credit (HELOC), which lets homeowners borrow against their available home equity, using their house as collateral. During a specified borrowing period, you can draw on as much of the equity as you need, and you repay the loan balance plus interest.

A HELOC is a better option for homeowners with substantial home equity and the financial capacity to repay the loan. Keep in mind that interest rates fluctuate, so your monthly payments will vary with market conditions.

Cashing in a Life Insurance Policy

If you have an established life insurance policy with sufficient cash value, cashing it in may be a wise option, depending on your circumstances. Although a life insurance policy is designed to pay out to your beneficiaries after you pass away, you can access the funds while you’re still alive. When consulting with our Dayton clients, our senior care strategy specialists often recommend this approach when feasible.

You can access the money by requesting a cash surrender, which means canceling the policy and receiving any remaining balance after paying outstanding loans or fees. Another option is to sell the policy through a life settlement, which involves a third party rather than the original insurance company. Although a life settlement is more complex and takes longer to resolve, it’s typically worth much more than a cash surrender.

Reverse Mortgage

If you own your home outright—or are close to paying it off—and are at least 62, you might consider a reverse mortgage. This financial tool lets you convert your home equity into cash payments to fund your medical care. This option may be suitable for individuals who need immediate access to cash during retirement.

Think carefully before taking out a reverse mortgage. A significant drawback is that it can increase interest and fees on any remaining loan balance, reducing your equity. While repayment is generally not required until you move out of your house, sell it, or pass away, you’re still responsible for property taxes, homeowners’ insurance, and maintenance costs. Failing to keep up with these expenses can put your loan in default and potentially result in your losing your home.

Finding Peace of Mind When Paying for Elder Care

Do you lose sleep at night worrying about how you’ll pay for elder care, now or in the future? Remember that you likely have resources available to help with the expenses. If you’re already making arrangements for senior care for yourself or a family member, you can also consult with the experts at Senior Care Partners. They can review your budget, help you develop financial strategies, and recommend care options that fit your budget. Schedule a FREE, no-pressure consultation with us today so we can answer your questions and assess your situation.