How to Budget For Assisted Living Costs

As we grow old, the need for senior care approaches. While it is possible to stay home with family, relatives or close friends, most seniors and retirees choose to live by themselves either for independence or to avoid burdening their loved ones. However, what most people are not prepared for is the cost of senior care. If you desire to live your retirement years with peace of mind, budgeting for senior living must be taken into consideration as early as possible.

But first, what options do you have for senior care? There are many facilities that take in people with health care needs, from hospice care to visiting nurses to telephone call assurance services. Basically, every facility offers slightly different senior care services to accommodate specific needs and goals of clients and tenants. It is important to familiarize yourself with these senior care facilities in order to determine which option best suits you or your loved one.

Options and Considerations

If you desire a sense of independence and find the idea of being able to mingle with other seniors via shared facilities including dining areas and gardens great, then perhaps the best option for you would be an assisted living facility, also known as a congregated home. An assisted living facility enables its seniors to live independently while still being provided with medical care and monitored regularly. Meals and social activities are also offered by assisted living facilities.

Unfortunately, what is disadvantageous about assisted living is the fact that it can be very expensive, particularly if the senior doesn’t have insurance or coverage for this specific expense. The cost of assisted living varies immensely depending on location and how much care and attention the client needs. Here are some things you should know about assisted living prior using their services.

How Expenses are Structured

Assisted living can be charged either on a monthly or buy-in basis. The latter basically pertains to the tenant either buying an apartment or paying a considerable lump sum. Whichever billing method you choose, you will still incur a monthly charge. Some tenants prefer paying a onetime premium as this results to cheaper monthly expenses.

The average monthly expenses can fluctuate significantly depending on what utilities are provided to the resident. Basic services in an assisted living facility include laundry, meals, personal assistance, recreational activities, etc. Personal assistance may be scheduled or unscheduled. Furthermore, medical staff can be dispersed onsite or on-call round-the-clock everyday. In some cases, the assisted living firm will allow the resident to personalize their service plan to better suit needs and demands. This is commonly known as an A La Carte Package. Other assisted living facilities provide a basic room and board charge. Typically, level of care fees are also included. The level of care is commonly identified by a health care service provider after assessment is accomplished. As the tenant grows older, the level of care increases accordingly.

Preparing a Budget for Assisted Living

First, devise a list of your monthly revenue sources. These includes your SS, retirement premiums, alimony, employment if any, and investments. Sum it all up to know how much you can shell out for the service. You can also include financial support from your family or friends.

Next, assess your properties. Point and sum your household, car, bonds and shares, bank savings and long-term healthcare insurance policy if there is any. These may serve as your alternative income source if your main ones fail to provide.

Third, identify your monthly losses and expenses. It is a fact that seniors have higher expenses than younger individuals since they require more specialized services and products. Include costs of your rent, taxes, loans and mortgages, car premiums, insurance premiums, food, medical bills, etc.

Fourth, calculate regularly disposable revenue by deducting your overall expenses from your overall profit. The sum will be the value that you can shell out for an assisted living. Ideally, you should consult a finance expert and collaborate on the information you’ve come up with. A financial adviser may be able to suggest and advice other income sources, idea of how much your assisted living expenses would add up, possible costs that you were unable to identify, and more budgeting strategies for your assisted living facility.

Benefits for Veterans – Assisted Living Costs and Expenses for Veterans

According to the most recent census, there are approximately 21.8 million veterans in the United States, 9 million of which are over the age of 65. For elderly veterans, finding the resources to continue to live in their own home, or provide for veterans assisted living can be a challenge. It is important to realize that the U.S. Department of Veteran Affairs (VA) offers substantial benefits to qualified veterans over the age of 65 and their families. These benefits can help to provide for living expenses, access to health care, hospitalization, and long-term care.

The first step in determining your or a loved one’s eligibility for certain veteran benefits such as veterans assisted living aid is to enroll in the VA health system. Based on certain criteria, including length of military service, age, disability, and financial need, you will be given certain benefits. However, in order to be enroll, you have to have served on active duty and not have been dishonorably discharged. Special priority may be given to those who sustained service related injuries or disabilities.

In terms of health care, generally most coverage will provide for preventative care, diagnostic tests, hospitalization, and prescription medication. Long-term care is also available and includes home care, rehabilitation services, respite care, and hospice. Veterans who were injured or disabled during the course of their service are entitled to disability compensation. Veterans who are disabled, even if it was not during the course of their service, may be eligible for a disability pension.

Under the new Aid and Attendance Benefit, an additional monetary sum can be provided for individuals who need regular assistance in order to perform day to day activities, such as food preparation, bathing, dressing, or taking medications. Any veteran over the age of 65 is eligible for this veterans assisted living benefit, regardless of whether or not they sustained a service related injury, provided the need for regular assistance is demonstrated. This benefit can provide up to $2,000 toward veterans’ assisted living costs per month, and can also be applied toward a veterans’ assisted living facility or nursing home. If you do not qualify for the Aid and Attendance benefit, you may still qualify for the Basic Pension if your countable income is below a certain level. There is also the Housebound Pension, which provides for individuals who wish to remain in their own home, or living with a relative and need limited assistance. Spouses are also eligible to receive these pension benefits.

In terms of financial assistance for housing, the Military Homeowner’s Assistance Program works to help military personnel and veterans to pay their mortgage, and thus prevent foreclosure and homelessness. In order to qualify for benefits of this nature, you must demonstrate financial need. This program can also help you to recuperate loss after a sale of a home, and in some cases the government will purchase your home if you need to relocate for medical reasons. Assistance in finding an affordable new home or with paying rent is administered through the Housing and Urban Development Office (HUD). HUD works to find appropriate housing for veterans and authorizes rent assistance for those who demonstrate financial need.

Whether you require assistance with housing, health care, or other living expenses, you should first check for veteran benefits by contacting Veteran Affairs. They can provide resources and details based on your individual situation, in order to give you all necessary benefits that you are entitled to.

AARP Insurance – What Are the Benefits of AARP Insurance?

AARP is a privately owned group found in the United States. It was originally called the American Association of Retired Persons but is now simply called AARP. It was begun in 1958, and its general purpose through the years has been to serve those who are over the age of fifty and to provide benefits to better the quality of life of seniors.

Two similar organizations are operated under the name of AARP: The first is called AARP Services which is a for-profit company. The second is AARP Foundation, which offers free services to seniors; these services include tax preparation, job training for individuals with a low income and many others. AARP Services is the more well-known of the two.

AARP Insurance Benefits Overview

Perhaps the most popular benefit is that of insurance. AARP insurance options include life, home, health, long term care and automobile insurance. These policies are serviced in cooperation with other proven agencies including The Hartford, Genworth Financial, New York Life and more. As a member, AARP insurance rates may be offered at lower premiums and expeditious service is guaranteed. Similarly, the company offers a Visa credit card through Chase with premium reward points and a complimentary consultation for financial planning through Charles Schwab.

AARP Insurance Benefits: Beyond the Waiting Room

AARP insurance benefits go beyond the doctor’s office. AARP insurance plan members are pleased to find that they receive discounts on many products and services such as membership at fitness centers and exercise equipment purchases. Dental plans, prescription medication discounts, hearing aid discounts and vision center discounts can be included in the AARP insurance plans as well. Once again, these discounts and benefits come through other insurers or medical groups as they team with AARP.

AARP Insurance is Just One Piece of the AARP Benefit Package

Finally, AARP offers a wealth of extraneous information to its members. It publishes AARP: The Magazine which is full of helpful, informative and entertaining articles designed especially for individuals over fifty years of age. They also publish AARP Bulletin and AARP VIVA. Digital versions of these publications are available online and can be downloaded by members. In addition to these, the AARP website also offers a host of information for living a fuller and more fun and energized life even while aging. Topics include food, travel, home and garden, relationships, health and more.

AARP has offered fabulous member services and benefits, as well as discounts to many popular retailors or other events for over fifty years. Membership is open to those over fifty years of age and more than pays for itself with multiple discounts, publications and lifestyle information. In these ways, AARP does exactly what it promises to do, which is to serve the older adult population and give them the best quality of life that is possible.

Long Term Care Insurance Benefits and Advantages

The last thing anyone wants after years of saving for retirement is to see all that hard-earned money whittled away by medical costs for ongoing assistance, particular when personal help is required. Both nurses and medical assistant services are expensive, even if just part-time, and these costs can quickly eat away at bank accounts that took years to build up.

What is Long Term Care Insurance?

Long term care insurance is designed to avoid the financial hit medical costs can incur on your retirement, particularly when involving hospitals stays or assistance needs at home. Long term care insurance is designed to pick up those expenses not normally covered by traditional plans such as HMO policies or Medicare. These include normal living functions such as personal hygiene, movement assistance, special medical diet, and monitoring at home. Even when using basic living assistant labor, the aggregate monthly charge can be quite expensive, making the insurance a significant benefit once it is in place.

Long Term Care Insurance Costs and Price Determination

Determining factors for eligibility don’t depend so much on a policy-holder’s age; instead, the cost calculations focus on a person’s health. If one’s health is already poor, a new plan will likely be far more expensive than for someone who has already been paying in when healthy. Many policyholders originally start their plan through their employment as an added job benefit, and then continue to the policy into retirement via monthly premiums.

The Medicare Doughnut Hole Impact of Long Term Care Insurance

For seniors, long term care provides an additional safety net that may not be covered by Medicare. While Medicare Part A and B provide for in-hospital services as well as outpatient services, it doesn’t necessarily address all the expense of ongoing home care for ailing seniors. Particularly when a person’s health expenses for drugs reach enough to go into the doughnut hole ($2,840 in 2011), the financial window between what Medicare covers for basic drug needs and catastrophic coverage where Medicare picks the tab up again (after spending a total of $4,550 out of pocket in 2011). Many seniors can find themselves seriously pinched by required drug charges half of a year. This unexpected financial hit eats away at money that could be otherwise used for medical assistance at home. Long term care can provide a safety net and buffer, reducing the cost of in-home care and making funds leftover from Medicare’s drug coverage gap last longer.

Choosing a Long Term Care Insurance Plan

Choosing long term care insurance plan can be a bit tricky. As a result, it’s a good idea to work with a health insurance adviser who is skilled and knowledgeable particularly about the long term care offerings. While some plans may make great coverage promises, the numbers may not work out for a person’s particular situation. In other cases an advertised offering may not be long term care insurance at all. Using a skilled adviser can avoid some of these pitfalls when seeking an appropriate coverage plan.

Tax Ramifications of Long Term Care Insurance

Depending on your financial situation, the premiums associated with a long term care insurance plan may be tax deductible on your annual tax return. It qualifies as a medical insurance and health cost, so it could be added to your annual medical costs if you itemize deductions on your tax return (this benefit doesn’t apply if you claim the standard deduction instead). If your annual medical costs in total reach above 10% of your earnings, the difference can reduce your tax liability for the year. It’s best to check with a certified tax adviser to be sure for your particular case.

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What is a Revocable Living Trust?

A Revocable Living Trust is an estate planning tool, intended to avoid the time and expense of probate, and to ensure the property transfer wishes of the grantor are carried out as easily as possible. The trust also allows another individual to handle the financial affairs of the grantor in the event of incapacity. The trust may normally be amended, revoked, or changed at any time before the death of the grantor. The property of the grantor is transferred to the trust and while the person is living, the living expenses of the grantor are received from the trust.

Reasons to Use a Revocable Living Trust

For many years, people relied on a will transfer assets after their death, and to provide instructions for their last wishes. After the death of the individual, the Last Will and Testament would be presented to probate court, a fiduciary individual would be appointed, and the property transferred. The problem is that an estate can be very expensive, costing several thousand dollars to administer. Because court permission is needed for many actions, an estate can take six months to several years to completely administer. A living trust is used to avoid the time and cost involved. Property placed in a living trust can often be transferred in a matter of days or weeks. Usually, nothing is filed in court.

Important Living Trust Terms

NOTE: “person” can mean an individual, company or other organization in these definitions.

  • Grantor – also referred to as a Settlor, the grantor is the individual creating the trust and transferring property to the trustee.
  • Living Trust – the document prepared by the grantor, transferring property to the trustee, and providing the instructions on how the property is to be handled, both before and after the death of the grantor.
  • Trustee – the person placed in charge of the trust property as a fiduciary. The trustee will collect the income from the trust and distribute the income and principal to the beneficiaries.
  • Beneficiary – the person receiving income or property from the Trust.
  • Remainderman – a person receiving property or income after the beneficiaries receive their shares of the trust. This may be during the life of the beneficiaries, or after the death of the beneficiaries, depending on how the trust is written.

How Revocable Living Trusts Work

A grantor creates a document called at Living Trust. The document is prepared in accordance with the grantor’s wishes. A trustee is named, usually the grantor. The trust will make provisions for the beneficiary to receive income and principal of the trust. The grantor is also the first beneficiary. The property of the grantor is transferred to the trustee of the trust, through deed for real estate, title transfer for vehicles and change of ownership documents for financial accounts.

While the grantor is living, The grantor/beneficiary will have an unlimited right to income and principal of the trust. Like changing a will, the trust can be changed in writing by the grantor. It may also be revoked or cancelled at any time before the death of the grantor.  After the death or incapacity of the grantor, the trust will have provided specific instructions for the transfer of remaining principal and interest to the remaindermen. The trust will also name a successor trustee to act for the grantor The remaindermen are like heirs in a will. They will receive the income and principal of the trust. The trust can specify if the property is to be transferred as a lump sum or paid periodically.

Normally, the most difficult aspect of a Living Trust is creating it. After it is created and the property transferred to the trust, grantor will use the property as they would have otherwise. Trust terms may vary depending on the state in which the grantor resides. When considering creation of a Living Trust, it is best to speak with a qualified trust preparer.

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What is an Assurance Benefit Plan?

NOTE: The Following is a guest post from the Lifecare Funding Group, which offers funding solutions for seniors. They were interested in introducing one such solution to our audience, so we’ve invited them to offer you some more information on life care assurance benefits.

The Life Care Assurance Benefit allows the owner of an in-force life insurance policy to convert their death benefit into a long term care benefit plan to help cover the costs of Senior Living and Long Term Care.
The Assurance Benefit is not a long term care insurance policy, annuity, any form of hybrid life/LTCi policies, or an accelerated death benefit– it is actually the exchange of a life insurance policy for a long term care benefit plan at the time that care needs to be paid.  The Assurance Benefit is a unique financial option for seniors because there are no wait periods, no care limitations, no costs to apply, no requirement to be terminally ill, and there are no premium payments. Policy owners use their legal right to convert an in-force life insurance policy to enroll in the benefit plan and are able to immediately direct payments to cover their senior housing and long term care costs.


Applying for the Assurance Benefit Plan is a simple process with the first benefit payment being issued within thirty days.  Once enrolled, the benefit plan is administered on behalf of the family and the benefit payments are made directly to the facility on a monthly basis for the duration of the benefit period. If the insured should pass away before the benefit period is exhausted, then any remaining benefit amount is paid to the family or named beneficiary as a final expense payment.

The Assurance Benefit conversion option is considered a “qualified spend down” of a life insurance policy asset for Medicaid eligibility. According to a GAO study in 2007, 38% of Medicaid applicants owned a life insurance policy that needed to be liquidated to qualify.

There is almost $30 Trillion worth of life insurance policies owned by 153 Million Americans (NAIC, 2010). Of that amount, on an annual basis there is more than $100 Billion in the hands of seniors who could potentially qualify for the Assurance Benefit.

States have begun passing laws mandating that life insurance companies inform their policyholders that these types of options exist as an alternative to lapsing or surrendering a policy. In November 2010, the National Conference of Insurance Legislators (NCOIL) passed the Life Insurance Consumer Disclosure Model Act mandating consumer disclosure about options, such as the assurance benefit, to policy owners and it is being introduced in state legislatures around the country. As Medicaid budgets continue to be pressed, more efforts such as this to find private market solutions will be mandated as part of the landscape.

Providers of long term care services such as nursing homes, assisted living communities and home health agencies have been quick to embrace this alternative form of payment. State governments too are realizing that there is tremendous value to be found by converting life insurance policies to help pay for the costs of long term care. Legislative and market activities across the country clearly point to the growing realization that life insurance policies are an asset well suited to help pay for long term care. Too few seniors realize their policy could be used for purposes other than a death benefit.

Families with the need to pay for long term care that are unable or unwilling to keep their life insurance policy in-force by maintaining premium payments, or are planning to abandon as part of a Medicaid spend down regimen, the Assurance Benefit conversion option is a much better choice.

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Senior Life Settlement: Is it Right for You?

A difficult economy, growing unemployment and a volatile stock market have made the future even more uncertain for those who have retired or will retire soon. For those needing more money beyond pensions or other savings (especially seniors who may need to finance assisted living settings) life settlements can be an attractive option.

Life settlements work by turning life insurance policies into assets that policyholders sell for a given sum to a third party. This can create value for policies that seniors would otherwise have to surrender, allowing them instead to sell it for a greater value. After the transaction the buyer becomes responsible for paying the premiums and ultimately becomes the beneficiary, and in return pays the policyholder a sum greater than the cash surrender amount they would have received.

This type of asset can become a particularly attractive option for seniors because the premium payments are often greater than the benefit the policy would bring them. Life insurance is meant as a hedge against the difficult situations family members would face in the case of a policyholder’s unexpected death, but as seniors grow older there is less need to protect against this situation.

How have life settlements grown so popular?

The modern market for such a practice started as a byproduct of an unfortunate medical epidemic. As AIDS grew in prominence in the 1980s, many young victims of this disease needed money to pay for expensive medical expenses, leading them to sell whatever assets they could. Because they faced an early death, the risk-adjusted value of their policies could be much greater than the surrender value, making selling the policy an attractive option.

The option to sell life insurance policies has gained even more popularity in the past 10 years, after The National Association of Insurance Commissioners released a report establishing guidelines for business practices. This led a number of organizations to begin to purchase life insurance policies. Today the market for life settlement policies is growing, and with close to 20 percent of policies of those older than 65 having greater economic value than cash surrender value, one can see why this would be an attractive option for seniors

What is involved in a life settlement?

To complete a life settlement, paperwork is required by both policyholder and the insurance company and the entire process takes up to six weeks. The policy is reviewed and several investors can make offers, which the policyholder can then review and decide to accept or reject. The sale price for the policy goes into an escrow account until the process is completed.

How do life settlements help seniors face rising care costs?

With high of assisted living, some nursing home settings can cost seniors as much as $9,000 per month with more independent living generally ranging from $1,800 to $2,400 per month. The cost has led to more seniors looking for outside revenue to help pay. The situation is even more difficult given that long-term health care costs rose 5.6 percent and assisted-living expenses are driving much of this increase. And with only seven million seniors holding long-term health care insurance, life settlements should continue to grow in popularity as a way to help pay for assisted living.

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Reverse Mortgages for Seniors: Benefits of a Reverse Mortgage Loan

With the downturn in the economy and home sales at a halt, many seniors are having trouble surviving on their fixed income. Applications for reverse mortgages are on the rise because they offer seniors options that traditional home equity loans and lines of credit do not offer. To help defray the costs of living, many more seniors are applying for reverse mortgages now than ever before. Reverse mortgages are actually loans that homeowners can apply for from a bank to access the equity in their home. Reverse mortgages are only available to seniors age 62 and over. Reverse mortgages also known as a Home Equity Conversion Mortgages are made available by The U.S. Department of Housing and Development (HUD).

The Benefits of a Applying for a Reverse Mortgage

A reverse mortgage is the only loan option that allows seniors age 62 or older to tap into the equity of their home and receive a monthly cash payment while continuing to reside in their own home. In addition, it is the only loan option available to seniors that requires no monthly payments. To remain eligible, all seniors need to do is comply with the terms of the reverse mortgage and continue paying their property taxes, homeowners’ insurance and other out-of-pocket expenses such as gas, electric, water and sewer.

Qualifying For a Reverse Mortgage

Seniors who live in a either a single family or home with 1-4 units, a condominium approved by HUD or manufactured home that complies with FHA standards may be eligible to apply for a reverse mortgage. Other eligibility criteria include, but are not limited to the outstanding balance on the underlying mortgage, the age or ages of the applicants, the equity in the home and whether the applicant or applicants have any outstanding federal debt. Typically, to qualify for a reverse mortgage, seniors are required to be close to paying off their underlying mortgage or have paid their mortgage off.

Income is Not Considered When Applying for a Reverse Mortgage

Unlike a traditional equity loan, income is not a factor in the approval process when applying for a reverse mortgage. Unlike home equity loans and lines of credit that factor income into the approval process, income is not a deciding factor when applying for a reverse mortgage. Seniors that are struggling financially will find getting approved for a reverse mortgage is easier than a line of credit or home equity loan.

Amount of a Reverse Mortgage

The amount seniors are eligible to apply for and receive depends on a variety factors, including but not limited to how much equity the applicant has in the home, the appraisal value of the home, and the current interest rates. How the loan will be disbursed depends on what monthly schedule payout an applicant selects. There are several scheduled payout options applicants can choose from.

Reverse Mortgage Payoff

One of the other main benefits of applying for a reverse mortgage is that seniors who continue to reside in their home and comply with the terms of the reverse mortgage will not be required to repay any monies back on their reverse mortgage during their lifetime. Upon death, the home will be sold and monies recouped from the sale will be used to pay off the reverse mortgage. Any additional money recouped above and beyond the payoff will be distributed to the applicants’ heirs or as designated.

A reverse mortgage is an excellent option for seniors who are in need of additional income and would like to continue residing in their home, but are not interested in applying for a home equity loan or line of credit. Reverse mortgages are the only alternative to a loan that allows seniors to remain in their own home while collecting payment-free additional income. For seniors looking for a way to increase their monthly income, a reverse mortgage is an excellent option.

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