Seven out of every 10 Americans will eventually need access to assisted living services, but at an average of $4,300 a month, assisted living isn’t cheap.
It’s crucial to prepare yourself financially as soon as possible for the care you could need later in life.
Here are 13 essential tips that can help you afford assisted living no matter how many years away you are from that stage of life.
Eliminate your late tax debt
Each year, the IRS forgives millions in unpaid taxes. If you have more than $10,000 in tax debt, or have 3+ years of unfiled taxes, you could get forgiveness too. You might be eligible to lower the amount you owe, or eliminate your tax debt completely.
Easy Tax Relief could help you lower or get out of your tax debt for good. They’re well respected in the industry and have been recognized for their ethical standards when dealing with tax debt. While most tax companies just put you on a payment plan and file your taxes for you, Easy Tax Relief talks to the IRS directly. They can help you pay off your tax debt faster while potentially reducing what you owe.
Important: Not everyone will qualify. To take advantage of this special program you must owe more than $10,000 in past-due taxes.
Consider long-term care insurance
Generally speaking, Medicare doesn’t cover assisted living costs. (Specifically, it doesn’t pay for custodial care, which is care related to carrying out basic daily tasks.).
If you want help paying for long-term assisted living, consider taking out a long-term care insurance policy that covers custodial care.
Long-term care insurance is available from private insurers, so meet with your insurance broker to find the right policy for you.
Check the maximum lifetime amount your insurance provider will pay and any limits imposed on the number of years your insurance will help cover assisted living costs. Some policies help you pay for just two or three years of assisted living at most.
Sign up in your 60s if you want long-term care insurance
The older you are, the pricier your long-term care insurance policy is likely to be. If you’ve been diagnosed with a condition that will require long-term assistance (such as dementia or Alzheimer’s), you might not be eligible for a long-term insurance policy.
As soon as you’re considering retiring (say, around age 60 to 65), start reviewing long-term care insurance options. Otherwise, you might not be able to access the health insurance coverage you need right when you need it.
Consider relocating to a state with a lower cost of living
Living in an expensive state like California or New York might have been possible when you were bringing in a full salary. But once you’re living on retirement savings and Social Security, that cost of living could put a huge strain on your budget.
Moving from a high-cost state to a low-cost state can help you stretch your retirement savings further, leaving you with more money to spend on assisted living.
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Apply for VA health care
If you’re a veteran or the surviving spouse of a veteran, you might qualify for assisted living benefits through the Department of Veterans Affairs.
You’ll want to reach out to your VA caseworker or apply for care online to see if you qualify if you don’t currently have VA health care benefits.
Find out if you’re eligible for Medicaid
You might qualify for Medicaid benefits if you’re over age 65 and/or living below a certain income level. Unlike Medicare, Medicaid contributes to the costs of assisted living care.
While you can qualify for both Medicaid and Medicare simultaneously, note that Medicaid assistance and qualification can vary from state to state. Visit your state government’s Medicaid site to learn more about how to qualify.
Budget for long-term care as early as possible
Unfortunately, waiting until you need long-term care to start figuring out how to afford it is a near guarantee you won’t be able to.
While there are strategies you can follow to make assisted living as affordable as possible — including those we listed above — the best way to pay for assisted living is to start saving for retirement as early as you can.
Look into cashing in on your life insurance policy
If you don’t have any other payment options, getting the cash value of your life insurance policy could be worth considering. Taking this step will impact the amount of money you can leave as an inheritance, so it can be a painful choice to make.
However, your health care needs have to come first, and going into debt to pay for assisted living won’t do you or your beneficiaries any good.
Consider your home equity options
If you own a home, selling it or taking out a reverse mortgage could also get you the cash you need to fund assisted living care.
Reverse mortgages can be dangerous and tip you into living with more debt, so you’ll want to discuss your options with a financial counselor and carefully weigh the pros and cons before going this route.
Get a shared room rather than a private room
Depending on the care facility you’re considering, you might be able to choose between having your own room and sharing with a roommate.
The latter choice definitely decreases your privacy, but it can make the overall cost of care more affordable, so don’t rule it out as an option.
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Ask about move-in discounts or other specials
As you tour assisted living facilities, go out of your way to ask about any discounts the facility provides to new residents. You could learn that some of the facility’s costs are less fixed than they seem.
Carefully compare care facility costs before moving in
Assisted living costs can vary widely between facilities. Don't just sign up for the first assisted living service you find or choose the one closest to your current home.
Instead, tour various facilities and keep a detailed list of all their costs so you can make an accurate, informed decision.
Make sure your kids know about caregiving tax breaks
Instead of moving into an expensive assisted living facility, some seniors move in with children or grandchildren who are willing and able to provide a certain amount of care.
If you and your family decide this is the right choice for your budget and health, the family members caring for you might qualify for a caregiving tax break. Talk to your tax professional to learn more about the specifics of qualifying.
Find ways to supplement your income post-retirement
If you’ve already retired and are worried your savings won’t be enough to carry you through assisted living care, picking up a side gig could give you much-needed peace of mind.
Driving for a ride-share service, selling crafts on Etsy, or working as an online tutor can help you add money to your savings to help pay for assisted living care.
While you might beat the odds and end up among the 33% of Americans who don’t need assisted living care, the risk isn’t worth taking.
If you haven’t yet retired, start saving now to eliminate some money stress and prepare yourself ahead of time.
And if you’re looking for affordable care while worrying about your budget, don’t give up hope. These strategies can help you find cost-effective care that maintains your quality of life without draining your savings.
FinanceBuzz is not an investment advisor. This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice.