If you haven't planned for senior living care, you aren't alone. Few people do - either because they don't think they'll need it or because they want to save their assets for their children and believe that government subsidies will cover any care they need. This doesn't mean they can't afford suitable care; it just means the choices may be more limited. Fortunately, just like the variety in settings, styles, and amenities, senior living residences are available at a variety of price points.
Costs vary with the residence, apartment size, and types of services needed. 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.
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 average cost for a private one-bedroom apartment in an assisted living residence is over $3,000 per month, according to research compiled by several nonprofit senior living organizations, including the Argentum. Assisted living is of often less expensive than home health or nursing home care in the same geographic area.
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.
Determining Your Budget for Senior Living Care
Senior living residents and their families generally pay the cost of service through private financial resources. Depending on the nature of your or 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.
Click here for the checklist for evaluating communities, which includes important questions to ask providers about contracts and finances.
Financial Assistance for Assisted Living and Senior Living Care
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.
Senior Living Care Insurance
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:
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.