Page 15 - BusinessWest 2022 Senior Planning Guide
P. 15

 Estate & Financial Planning
Paying for Care
Many Options Are Available for Seniors and Their Families
MBy the National Institute on Aging
any older adults and caregiv- ers worry about the cost of medical care. These expenses
can use up a significant part of monthly income, even for families who thought they had saved enough.
How people pay for long-term care — whether delivered at home or in
a hospital, assisted-living facility, or skilled-nursing facility — depends on their financial situation and the kinds of services they use. Often, they rely on a variety of payment sources, including personal funds, government programs, and private financing options.
Out of Pocket
At first, many older adults pay for care in part with their own money. They may use personal savings, a pension or other retirement fund, income from stocks and bonds, or proceeds from the sale of a home.
Professional care given in assisted- living facilities and continuing-care retirement communities is almost always paid for out of pocket, though Medicaid may pay some costs for people who meet financial and health requirements.
Medicare is a federal government health-insurance program that pays some medical costs for people age
65 and older, and for all people with late-stage kidney failure. It also pays some medical costs for those who have gotten Social Security Disability Income (discussed later) for 24 months. It does not cover ongoing personal care at home, assisted living, or long-term care.
Some people may qualify for Medicaid, a combined federal and state program for low-income people and families. This program covers the costs of medical care and some types of long- term care for people who have limited income and meet other eligibility requirements.
Program of All-Inclusive
Care for the Elderly (PACE)
PACE is a Medicare program that provides care and services to people who otherwise would need care in a nursing home. PACE covers medical, social-service, and long-term-care costs for frail people. It may pay for some
or all of the long-term-care needs of
a person with Alzheimer’s disease. PACE permits most people who qualify to continue living at home instead of moving to a long-term care facility. There may be a monthly charge.
State Health Insurance
Assistance Program (SHIP)
SHIP, the State Health Insurance Assistance Program, is a national program offered in each state that provides counseling and assistance to people and their families on Medicare, Medicaid, and Medicare supplemental insurance (Medigap) matters.
Department of Veterans
The U.S. Department of Veterans Affairs (VA) may provide long-term care or at-home care for some veterans.
If your family member or relative is eligible for veterans’ benefits, check with the VA or get in touch with the VA medical center nearest you. There could be a waiting list for VA nursing homes.
Social Security Disability
Income (SSDI)
This type of Social Security is for people younger than age 65 who
are disabled according to the Social Security Administration’s definition. For a person to qualify for Social Security Disability Income, he or she must be able to show that the person is unable to work, the condition will last at least a year, and the condition is expected
to result in death. Social Security has ‘compassionate allowances’ to help people with Alzheimer’s disease, other dementias, and certain other serious medical conditions get disability benefits more quickly.
Private Financing Options
for Long-Term Care
In addition to personal and government funds, there are several private payment options, including long-term-care insurance (see story on this page), reverse mortgages, certain life-insurance policies, annuities, and trusts. Which option is best for a person depends on many factors, including the person’s age, health status, personal finances, and risk of needing care.
Reverse Mortgages for
A reverse mortgage is a special type of home loan that lets a homeowner convert part of the ownership value in his or her home into cash. Unlike a traditional home loan, no repayment is required until the borrower sells the home, no longer uses it as a main residence, or dies.
There are no income or medical requirements to get a reverse mortgage, but you must be age 62 or older. The loan amount is tax-free and can be used for any expense, including long-term care. However, if you have an existing mortgage or other debt against your home, you must use the funds to pay off those debts first.
A trust is a legal entity that allows
a person to transfer assets to another person, called the trustee. Once the trust is established, the trustee manages
and controls the assets for the person or another beneficiary. You may choose to use a trust to provide flexible control of assets for an older adult or a person with a disability, which could include yourself or your spouse. Two types of trusts can help pay for long-term-care services: charitable remainder trusts and Medicaid disability trusts.
Life-Insurance Policies for
Long-Term Care
Some life insurance policies can help pay for long-term care. Some policies offer a combination product of both life insurance and long-term-care insurance.
Policies with an ‘accelerated death benefit’ provide tax-free cash advances while you are still alive. The advance
is subtracted from the amount your beneficiaries will receive when you die.
You can get an accelerated death benefit if you live permanently in a
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