How to Budget For Assisted Living

Assisting living provides independence and safety.

Budgeting for assisted living can be difficult because there are so many variables, and the time line for everyone considering this option is different. Assisted living is usually the least expensive option when compared to home health services or nursing home care, but it still could potentially cost you thousands of dollars per month. Facility unit features, atmosphere, food service, medication and health care services, social and recreational activities as well as your needs assessment, are just as important as contracts, costs and finances.

Instructions

Private Financial Resources

1. Obtain a list of assisted living communities in your desired geographical area by contacting the Assisted Living Federation of America or the U.S. Department of Health and Human Services. Choose at least three that you consider as viable options based on the location and available printed information.

2. Visit the three facilities you selected. Ask the community manager to take you on a tour so that you can view the facility's unit features, food service area and social and recreational activity areas. Request a copy of the community's resident agreement and any current brochures that you can take with you to review the services offered, move-in and move-out criteria, staffing and house rules.

3. Review the current "typical" costs and projected increases that are printed in the community's resident agreement to determine your budget.

4. Review your current and retirement financial plans with a financial advisor to verify that you are funding your plan properly and will have the available resources to pay for assisted living if the need arises. The resources may include such things as the sale of your home, (which is often an individual's largest holding when the need for assisted living is considered), a reverse mortgage annuity, your investment portfolio, retirement income and savings.

Insurance Policy

1. Follow Steps 1 and 2 in the Private Financial Resources section. Review the current "typical" costs and projected increases that are printed in the community's resident agreement to determine what is covered by a long-term care policy and what your out-of-pocket expenses will be, to set up your budget.

2. Obtain quotes and policy outlines from at least three long-term care insurance providers. Read the fine print on the policy outline and ask the agent if the facilities you visited accept the insurance offered. Investigate the insurance company's financial strength and rate history through an independent rating systems such as AM Best (see Resources). Verify that the policies you are reviewing are tax-qualified so that you can deduct the premiums if you itemize your deductions and that the policies are inflation-protected to ensure that sufficient coverage will be available when you file your first claim.

3. Select and purchase the policy that most closely meets your needs and budget by considering the policy premiums and the flexibility of the available options that cover assisted living as well as in-home care and nursing home facilities, depending on your eventual needs assessment.

4. Establish a separate interest-bearing savings account or certificate of deposit that is earmarked for out-of-pocket assisted living expenses, and fund it with current income.

Financial Assistance Programs

1. Obtain a list of assisted living communities in your desired geographical area that have facility offering financial assisted programs and/or accept public payments that include but are not limited to Medicaid or Housing and Veterans Subsidies by contacting the Assisted Living Federation of America or the U.S. Department of Health and Human Services. Choose at least three that you consider as viable options based on the location and available printed information.

2. Visit the three facilities you selected. Ask the community manager to take you on a tour so that you can view the facility unit features, food service area, social and recreational activity areas. Discuss which services are covered by financial assistance programs. Request a copy of the community's resident agreement and any current brochures that you can take with you to review the services offered, move-in and move-out criteria, staffing and house rules.

3. Review the current "typical" out-of-pocket costs and projected increases that are printed in the community's resident agreement to determine your budget.

4. Review your projected financial ability to pay and your possible qualification for assistance with paying for assisted living by reviewing the current eligibility requirements for any of the available options by contacting the financial services director at each facility.

5. Follow Step 4 in the Insurance Policy section.

Tips & Warnings

• Keep yours and your immediate family's health history in mind when reviewing the available medication and health care service options available and charged at an additional fee.

• Ask about waiting lists for each facility you visit.

• Visit each facility you are considering during different times of the day to assess the staffing after hours.

• Consider setting aside additional money to pay for a dedicated aide that will be available to you or your family member within the unit.

• Keep current on the facilities available within your budgeting plan at least once per year.

References

• National Association of Insurance Commissioners: Long Term Care
• Assisted Living Federation of America: Cost of Assisted Living
• U.S. Department of Health and Human Services, Long Term Care.Gov: Long Term Care Insurance

Resources

• A.M. Best Company