What If You Can’t Afford Long-Term Care?

According to a 2023 analysis by the National Council on Senior Citizens and the Center for the Reading Age LTSS at the University of Massachusetts Boston, 8 out of 10 older Americans will live 4 or more years in an assisted living facility and 2 or more years in a nursing home. I couldn’t afford it.

This is especially true for people in the middle class, defined by the Pew Research Center as “individuals with an annual household income of approximately $52,000 to $156,000 in 2020 dollars for a household of three.” strict. They don’t have enough money to pay for long-term care, but they have too many assets to qualify for government assistance. Medicare also doesn’t cover long-term care. What options do the 47 million senior households facing this scenario have? to introduce.

Consider a reverse mortgage

If you have significant home assets and are at least 62 years old, a reverse mortgage can be a profitable source of income. A reverse mortgage is a loan or line of credit based on a residential property. When the house sells, use that capital to pay off the loan.

“Most people, especially in situations like long-term care, sell their homes when they move out and use the proceeds to pay for their home,” says Nicolas Bunio, a certified financial planner. Downingtown, Pennsylvania.

Reverse mortgages have their drawbacks – similar to taking out a traditional mortgage, higher closing costs and fewer heirs – but if you plan to use home care or if your spouse is still at home This applies if you have It can be a solid choice. (If no one lives in it for more than a year, you will have to sell the apartment to pay off the loan.)

Price out insurance

If you don’t have major health problems, get a long-term care insurance quote. You can get insurance up to age 79, although experts recommend that you enroll by age 65. Premiums can be expensive, but keep in mind that a semi-private nursing home can cost over $94,000 a year, according to Genworth’s 2021 Cost of Care Study. Insurance company.

“Long-term care insurance is often much cheaper than the actual cost of care,” says Michelle Gessner, a certified financial planner in Houston.

Another option is whole life with long-term care insurance, often called hybrid insurance. maybe life insurance. Rules vary, but usually part or all of the death benefit can be used to fund long-term care while you’re alive, with the unused portion going to your estate upon death.

“People are complaining that it’s expensive,” says Gessner, but nursing home care can cost him $6,000 to $7,000 (or more) a month. point out that there is a “My message to people is, get what you can afford,” she says. “It’s not all or nothing.”

Look into facilities with benevolent funds

Some nursing homes and assisted living communities offer charitable care. In other words, we accept people who don’t have enough money to pay the full amount, or who can’t pay the full amount for a long period of time. If someone runs out of money, the provident fund will cover the difference as long as care is needed. (They typically collect social security and pension payments, which may help cover costs.)

“They are a good alternative for people who feel they do not have sufficient financial resources. could become,” says Diane Pearson, a certified financial planner in Wexford. , Pennsylvania.

Charitable foundations are often associated with faith communities. If you search for religious groups in your area, you may find some options.

Ask about a life settlement

If you have life insurance and are considering letting it expire or write off its cash value, life insurance may be a better option. With life insurance, a third party buys your policy and typically receives her 5% to 25% of the death benefit.

“Usually, we have an investor who will pay the premiums for you, but we have an investor who will hold the insurance money when you die,” says Christopher Lyman, a licensed financial planner in Newtown, Pennsylvania. . In the event of a financial crisis, such decisions may be made. “The only reason to do that is because it’s kind of a last resort,” he says.

This article was written by CashyMint and was originally published by The NerdWallet. 

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