3 Ways to Pay for Assisted Living and Senior Care


Medicare sometimes covers nursing home stays for elderly residents if they meet certain requirements, including a need for skilled nursing care. But if you or a loved one opts for an Assisted Living Community or if you don’t qualify for Medicare to pay for your nursing home stay, you may have to pay out-of-pocket for all expenses.

There are a few ways to do this. Not all of these options will work for everyone, as some people may not have the resources available. No matter your age, the time to start planning for long-term care is now. Let’s look at a few options to pay for senior living care.

Private Insurance
Whether it’s cashing in a whole life insurance policy to using a long-term care insurance policy you’ve paid into, private insurance has become a popular option to pay for long-term care.

If you have a whole life insurance policy, you can cash it in at any time. There may be some tax penalties or early withdrawal penalties associated. The benefit is that, if your life insurance policy is large enough, you won’t have financial worries about how to pay for your long-term care, and you won’t have to dip into other accounts, like savings or retirement. But this means there won’t be any life insurance funds available for your heirs. Make sure you have enough in savings to cover the costs of funeral, burial or memorial services you desire when you pass, so that your loved ones won’t be burdened with these costs.

On the other hand, long-term care insurance, which is a separate from life insurance, can be cashed in to pay for assisted living costs at any time. Tax Qualified (TQ) long-term care policies count as a medical tax deduction when you file income tax, and the money you receive when you cash in the policy typically is not taxable, either, making this a desirable choice for many people.

Home Equity
If you still own your own home and your mortgage is paid off, a reverse mortgage could be an option to cover long-term care costs. First, make sure your home equity will cover assisted living costs for a reasonable length of time. It’s not worth it to take out a reverse mortgage if the money will only cover your stay for a few months.

Reverse mortgages have several drawbacks and are typically a last resort when few other options are available. If you outlive the reverse mortgage, you will have to pay it back, which could mean selling the home. You still own your home, so you’re responsibility for maintenance and income taxes. When you die, your estate pays back the reverse mortgage, leaving less money for your heirs.

If you’re looking into a reverse mortgage, consider, instead, selling your home and using that money to pay for long-term care, unless there’s a compelling reason to keep your home in the family, and you or your family has the means to pay back the mortgage at the end of the term.

Government Assistance
Some seniors choose to “spend down” their assets in order to qualify for Medicaid to pay for long-term care. If you do the research, you may find other forms of government assistance, as well. For instance, veterans can get long-term care in VA facilities. The drawback is that their may not be one near your home, or there could be a waiting list.

The Programs of All-inclusive Care for the Elderly (PACE) is a new program that combines Medicare and Medicaid benefits to pay for long-term care. However, the program only applies to in-home care, not care in assisted living communities.

Veterans Pension Benefit

The Aid and Attendance pension benefit can help both senior veterans and their spouses pay for senior care. There are some eligibility requirements. To best help you figure out if you may be eligible take this free Aid and Attendance eligibility quiz.

And for more information on the Aid and Attendance benefit visit

Preparing to Pay for Long-Term Care
The best scenario is to have money set aside in investments to pay for long-term care. Personal savings, retirement accounts, and other investment funds can be used to cover long-term care, and you may be able to deduct the cost of long-term care if you itemize medical expenses. With a little bit of early planning, you might be surprised to discover you can afford assisted living, especially if you choose an assisted living community that offers all the services and amenities you need included, so that all your living expenses are covered in one payment.


Medicare Part D Coverage Gap

By Gary Phillips

Most Medicare drug plans have a coverage gap (often called the “donut hole”). This is a temporary limit on what the drug plan will cover for drugs. Not everyone will enter the coverage gap. The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. (People who get Extra Help paying Part D costs won’t enter the gap.)

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Paying for Medicare Part D

By Gary Phillips

Medicare Part D is the prescription drug coverage of Medicare. Medicare Part D is outlined in Medicare Prescription Drug Coverage.

What You Pay for Medicare Drug Coverage

Typical costs throughout the year are:

  • Monthly premium
  • Annual deductible
  • Copayments/coinsurance
  • Costs if you get Extra Help
  • Costs during the coverage gap
  • Costs if you pay a Late Enrollment Penalty

Factors Affecting Part D Costs

Your actual drug plan costs will vary depending on:

  • The drugs you use
  • The plan you choose
  • Whether your drugs are on your plan’s formulary
  • Whether you go to a pharmacy in your plan’s network
  • Whether you get Extra Help paying your Part D costs

*NOTE: This data is believed to be accurate as of 06/2012, but not guaranteed. For specific, up to date information, contact Medicare or your State Health Insurance Assistance Program (SHIP), if applicable. This chart is just a “model” for Medicare Part D (PDP) coverage. Actual insurance plans can differ greatly so be sure to shop and compare closely and have any current prescriptions readily available.

Monthly Premium

Monthly fees vary by plan and could be higher based on income. You may have your premium deducted from your monthly Social Security payment.

Annual Deductible

This is the amount you must pay each year for your prescriptions before your Medicare drug plan kicks in. Deductibles vary between plans but can never be higher than $320 in 2012.


This is the amount you pay for each of your prescriptions after you have paid the deductible. Some plans have different levels or “tiers” of coinsurance or copayments, with different costs for different types of drugs.

This means you pay a percentage of the cost of the drug (for example, 25%). With a copayment, you pay a set amount for all drugs on a tier (for example, $10). You’ll typically pay a lower copayment for generic drugs than brand-names.

About the Author

Gary Phillips is a licensed insurance agent based in western North Carolina. He specializes in the senior market and is knowledgeable in multiple insurance lines including Medicare, Medigap, Long-Term Care, Part D Prescription Drugs, Part C Medicare Advantage, Health, Life and Final Expense insurance. He also enjoys writing and helping others.

SeniorLiving.Net is a FREE resource for families that are looking for senior care. To learn more about senior living communities in your area, call (877) 345-1706 to speak to a local Care Advisor.

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