The basic rate may cover all services or there may be additional charges for special services. Most assisted living residences charge on a month-to-month lease arrangement, but a few require long-term arrangements. Assisted living is often less expensive than home health or nursing home care in the same geographical area. Base rates may fluctuate depending on unit size: for example, studio, one, or two-bedroom apartment. Note also that base rates typically only cover room and board and two to three meals. Additional charges may include entrance fees up to one month’s rent, deposits, and fees for other services such as housekeeping and laundry, though many providers include those services as well.
The median rate for a private one-bedroom apartment in an assisted living residence is $2,575 per month, according to research compiled by several nonprofit senior living organizations, including the Assisted Living Federation of America. The median is the midpoint, which means half of residences participating in the research have lower fees and half have higher fees. More than half of assisted living communities use a tiered pricing model with bundled services, according to research. For instance, a resident needing very little assistance would be at the lowest tier. Other pricing models include all-inclusive, a la carte, or fee-for-service basis. Providers regularly review service and care plans to ensure residents’ needs are being met. Billing is typically done monthly.
Senior living residents and their families generally pay the cost of service through private financial resources. Depending on the nature of your loved one’s health insurance program or senior living care insurance policy, some costs may be reimbursable. Some residences also have their own financial assistance programs. For most seniors, the home is the biggest asset. One option is to sell or rent the home and use the proceeds or rental payments to fund senior living.
A less-known and less-understood alternative is the reverse annuity mortgage, which allows seniors to use the value of the home without giving it up. With this option, instead of the resident paying a mortgage, the financial institution pays the homeowner a lump sum or monthly payment, which the homeowner can then use for senior housing. Most experts suggest the reverse mortgage be considered only for the last five years or so of senior housing.
AARP and HUD both have additional information on reverse mortgages. When meeting with senior living providers, ask for written material, including copies of the community’s resident agreement that outlines, at a minimum, services, prices, extra charges, move-in and move-out criteria, staffing, and house rules. Ask important questions about the contracts and finances for the services they provide.
Several government subsidies are available to fund senior housing. However, the reality is that these amounts are limited and will impose restrictions on what care you receive and where you receive it.
Neither Medicare Parts A nor B offers coverage for comprehensive ongoing long-term care.
Medicare A (hospital insurance) may cover costs for a semiprivate room, meals, nursing and rehab services, medications, and medical supplies in a skilled nursing facility for the first 100 days after being released from hospitalization for an acute illness or injury. The first 20 days are covered at 80 percent, with the rest of that time period covered at decreasing rates. It never covers a private room or services in an assisted living residence.
Medicare B only offers reimbursement for covered services you receive from a doctor.
Medicaid, which provides federal health-care assistance to low-income Americans, is the biggest payer for room, board, nursing care, and social activities in nursing homes. Many, but not all, states now cover some assisted living services under their Medicaid programs; however, these fluctuate widely in terms of eligibility requirements, and dollar amounts of coverage.
The Senior Assisted Housing Waiver provides eligible low-income adults a choice of receiving senior living care services in a community-based setting rather than in a nursing facility. Bear in mind that faced with budget deficits for years to come, states are more likely to cut, rather than expand, these programs.
Seniors with annual incomes under $12,000 may qualify for U.S. Department of Housing and Urban Development 202 and Section 8 senior housing, which provide rent subsidies that can help pay for the room-and-board portion of both independent living and assisted living environments. The Department of Veterans Affairs also provides some skilled and intermediate-level care to veterans in its own residences, depending on space availability.
For more information on benefits, visit Federal Benefits for Veterans and Dependents or; download the ALFA guide on eligibility requirements and applications.(see reference links below).
Long-term care insurance is perhaps the best way to ensure you can afford to pay privately to receive the most choice in housing environment possible from your provider of choice, whether it’s independent living, assisted living, or another housing option. Experts suggest consumers should be looking at long-term care insurance at 40 and own it by age 50.
When choosing an insurance provider, consider the following tips:
- As with any insurance, read the fine print on the policy and ask questions
- Compare at least three different insurers
- Verify each company’s financial strength through independent rating systems such as A.M. Best(see reference links Below)
- Review the company’s rate history for stability
- Check to see if the policy is tax-qualified, in which case premiums may be deducted under medical expenses if you itemize your deductions
- Select an inflation-protected policy to ensure sufficient coverage when you file your first claim years from now Of course, if you’re reading this after you or your loved one has experienced an insurable health-care event if you’re over 85 (the usual age limit for insurers), then it’s too late to purchase long-term care insurance.
Insurance is also more expensive as you get older, although adult children may find it cheaper to help a parent pay for a policy than pay for care later. For more advice refer to the National Association of Insurance Commissioners (see reference Links below).
A.M. Best – http://www3.ambest.com/health/default.asp.
National Association of Insurance commissioners – http://www.naic.org/.
Federal Benefits for Veterans and Dependants – http://www.va.gov/opa/publications/benefits_book.asp.