What You Should Know About Insurance for Senior Living to Help Offset the Cost

If you or a loved one are interested in senior living but worry about the cost, you're not alone! In fact, it's one of the most common hesitations we hear from families. And one of the most common questions we hear is, "Is there insurance for senior living?" In some respect, yes. There are two options that can help with the cost of senior living: long-term care insurance and life insurance conversion. Here's what you should know about each of them. 

Long-term care insurance for senior living 

Long-term care (LTC) insurance can help you or your loved one pay for the cost of home care, adult day care, or senior living, such as assisted living, memory care, skilled nursing, respite care, and hospice by covering services typically not covered by health insurance, Medicare or Medicaid.  

LTC policies may even cover some homemaker services, such as meal preparation or housekeeping, as long as it is in conjunction with the personal care services you receive. 

How LTC works 

Many LTC policies begin to pay benefits once an assessment has determined that you or your loved one needs help with two or more Activities of Daily Living (ADLs) or has cognitive impairments, otherwise known as a benefit trigger. First, the insurance company will approve a Plan of Care. Then there will be an elimination period, typically 30, 60, or 90 days after the benefit trigger occurs before you start receiving payment for service. You must cover the cost of services out of pocket during this time. Once the benefits begin, many policies pay costs up to a pre-set daily limit until the lifetime maximum is reached. 

What to keep in mind 

It's typically necessary to be in good health to qualify for long-term care insurance for senior living. For example, insurance companies may suggest purchasing the policy as young as 40, although Consumer Reports recommends waiting until age 60. However, the later you purchase the policy, the more expensive the premium might be.  

Download our free guide, Should You Stay or Should You Go: How to Decide Between Home and Senior Living to learn more!

Life insurance conversion for senior living 

When it comes to insurance for senior living, families often don't realize that converting a life insurance policy into a Long-Term Care Benefit Plan is an option. However, anyone with an in-force life insurance policy can transform it into a pre-funded financial account that disburses a monthly benefit to help pay for needs such as home care or senior living such as assisted living, skilled nursing, and hospice. Unlike life insurance, this account is a Medicaid-qualified asset. 

How it works 

The conversion process transfers ownership of a life insurance policy from the original holder to an entity that acts as a benefits administrator. Because the original owner no longer holds the policy, it won't count against you or your loved one in the Medicaid spend-down process. The benefits administrator assumes all responsibility for paying the monthly premiums on the policy to the insurance company and agrees to pay the previous policyholder a series of monthly payments based on the policy's value.  

There are no application fees or obligations to apply for a life insurance conversion, and the typical enrollment time is 30-45 days. Once the owner converts a policy, the Long-Term Care Benefit payments begin immediately, and the enrollee is relieved of any responsibility to pay additional premiums. 

What to keep in mind 

Any type of life insurance plan can be converted: whole, term, or universal, and the monthly payout amounts are adjustable based on how many months you want to receive payments as insurance for senior living. However, you or your loved one must have an immediate need for an acceptable form of long-term care because monthly payments are made directly to the senior living provider, not the previous holder of the life insurance policy. 

Download our free guide, Should You Stay or Should You Go: How to Decide Between Home and Senior Living to learn more! Contact us to schedule a tour today.