How to Pay for Independent Living
Discover 3 Ideas to Help Afford Independent Living
The cost of independent living facilities varies widely, depending on what's offered and where. Options range from small rental units with few extra services, available for $500 to $1,500 per month, all the way to independent living communities that offer homes or townhouses to buy for hundreds of thousands of dollars. At any one particular place, the cost may also vary depending on the size of the living unit and the services provided.
Almost all independent living facilities are paid for out of pocket. But here are some options that might help you or your loved one pay those costs, or pay for additional care while living in the facility:
Pay for Independent Living with Public Benefits
Neither Medicaid nor VA benefits pay for any of the direct costs of an independent living facility. However, if your loved one lives in an independent living facility and has very low income and few assets other than the living unit, either Medicaid or the VA might be able to pay for additional in-home care. Also, a program called Cash and Counseling may be able to provide some payment to family members for in-home care provided to your loved one while living in an independent living facility.
Medicaid doesn't pay for independent living facilities, but if your loved one qualifies for Medicaid coverage of in-home care, it can be provided in an independent living facility. In order to qualify for Medicaid coverage of in-home care, your loved one has to have very low income, few assets (other than the independent living unit itself, if he or she owns it), and a need for regular in-home care as determined by the state's Medicaid agency.
If your loved one is a veteran or the surviving spouse of a veteran, there may be some help from the Department of Veterans Affairs (VA) for in-home care, which can be provided at an independent living facility. Also, if your loved one is a veteran or surviving spouse of a veteran and has low income and few assets other than the independent living facility unit he or she lives in, some monthly cash benefits may be available from the VA. And if your loved one is housebound, these benefits may be even higher.
Cash and Counseling (payment to family members)
Even if your loved one is able to live in an independent living facility, he or she may need regular assistance with some of the activities of daily living. And in some states, there's a program that pays an older adult directly to cover part of his or her in-home care costs. If your loved one qualifies for the program, he or she can then use the cash benefits to pay you or other family members, or independent home care workers, to provide care. To qualify, the person who needs care must have very low income and few assets, though the standards may be slightly easier to meet than for regular Medicaid coverage. The payments are not a lot, but they can help.
In some states this program is called Cash and Counseling; other states have similar programs under different names. To find out about a Cash and Counseling or similar program in your state, contact the state Medicaid agency online or contact your local Area Agency on Aging.
Tip: Help with Medicaid or Cash and Counseling -- If you need help with questions about Medicaid or Cash and Counseling program coverage of in-home care in your state, you can get free, expert counseling at a local office of the State Health Insurance Assistance Program (SHIP) or Health Insurance Counseling and Advocacy Program (HICAP).
Pay for Independent Living With Insurance
Long-term care insurance or life insurance might help pay for some of the cost of an independent living facility. But if neither of those is an option for your loved one, you and other family members may have to get together to help pay for independent living facility costs. Here are the basic options:
Long-term care insurance
Some long-term care insurance (LTC) policies include what's called in-home or home care coverage, which pays a set daily amount directly to an insured person who can't perform a certain number of the activities of daily living. If your loved one has this kind of LTC coverage, the policy's benefits may be paid to him or her while living in an independent living facility. Your loved one can then use the money to help pay for outside private caregiver assistance or to help pay for the cost of the facility itself.
Life insurance for cash
If your loved one has a life insurance policy, it may be possible for him or her to cash in the life insurance to provide a substantial amount of money toward the cost of an independent living facility. Some life insurance policies can be cashed in with the insurance company itself for 50 to 75 percent of the policy's face value. However, some policies permit these "accelerated benefits" or "living benefits," as they're called, only if the policyholder is terminally ill (usually meaning having less than six months to live, as certified by a doctor).
Another form of cashing out a life insurance policy is called a "life settlement" (or "senior settlement"). This involves your loved one selling the policy to a life settlement company (different from the insurance company that issued the policy) for 50 to 75 percent of the policy's face value; the amount depends on the policy benefit amounts, the policy's monthly premiums, and the policy holders' age and health. The settlement company would then pay the life insurance premiums until your loved one dies. The trade-off, however, is that the life insurance policy's own benefits are then paid to the settlement company rather than to you or other family members who were the policy's original beneficiaries.
Pay for Independent Living With Help From Family
Even if your loved one moves to an independent living facility, he or she is likely to need regular help with certain tasks and activities. In your family, one of several siblings (and/or spouse) might take on this primary caregiving role -- either because this primary caregiver is the only one who lives near your loved one or because this primary caregiver is the only one whose other family and work obligations allow the time to provide regular assistance.
In this situation, the family members who don't provide regular hands-on assistance may be able to regularly contribute to a family fund that helps pays for independent living. This pay would supplement, and be a fair balance for, the nonpaid care that the primary helper provides. The amount each family member contributes can be based on the amount of hours of direct assistance the primary caregiver provides without pay.