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This article provides an overview of the various options available to pay for senior living, including insurance strategies, tapping into home equity, and taking advantage of government assistance programs.

Long-term care insurance, hybrid insurance policies, life insurance with an LTC rider, and annuities are all options to pay for senior care.

Reverse mortgages and liquidating assets are other ways to pay for senior living.

Veterans have access to a range of benefits and programs, and Medicaid covers long-term care for those with very little income and assets.

Article Summary

Aside from using personal savings, other ways to pay for 

 include various insurance strategies, tapping into home equity, or taking advantage of government assistance programs.

Life insurance, long-term care insurance, and annuities are often used to pay for senior care.

 can offset the costs of long-term care but it generally must be purchased quite a bit before it’s needed – it gets very expensive as people age or develop serious health conditions. Policies don’t always cover care in every type of senior living setting, so look closely at the terms of each specific policy.

combine life insurance and long-term care insurance so you can pass a death benefit on to a beneficiary if you don’t end up needing long-term care. Most hybrid policies are more limited than traditional LTC insurance, covering only five years of long-term care.

Life Insurance with an LTC Rider or Accelerated Benefits 

allows you to access life insurance benefits early if needed to cover long-term care expenses.

are special contracts with insurance companies. They provide a reliable stream of income over time in exchange for an upfront lump-sum payment. Different types of annuities exist for different circumstances, such as paying for long-term care or planning for 

Many seniors sell or rent out their homes in order to pay for senior care. In some cases, they get creative – for example, by selling to a family member who, in turn, rents it back to them.

are loans for older homeowners who owe little or nothing on their primary residence. A reverse mortgage provides a lump sum or monthly income that can be used to pay for needs like long-term care. Instead of making payments on the loan, it gets larger over time. You pay back the entire amount borrowed, plus any upfront and ongoing fees when you die, sell the home or move out.

Selling artwork, jewelry, collectibles, extra vehicles, or other assets can sometimes provide enough cash to cover long-term care needs.

have access to a range of benefits and programs. Some offset the costs of long-term care and others provide board and care in nursing homes, assisted living facilities, group homes, or other senior living settings.

covers long-term care for individuals who have very little income and very few assets – provided they haven’t compromised their eligibility by giving away assets, for example. Many seniors plan ahead for Medicaid eligibility or engage in complicated Medicaid planning strategies in order to keep their spouse out of poverty or protect certain assets to pass on to their loved ones.

What Are My Options to Pay for Senior Living?

The national average cost of care per month (Genworth Cost of Care Survey, 2021):

Period (hourly, daily, monthly, or annually)

A different number of weekly home care hours

How Much Does Senior Living Cost?

Depending on your situation, different professionals may be most helpful in helping you pay for senior living.

A CFP will look over your entire financial picture, analyze your options and help you develop a plan to pay for senior living and meet any other financial goals. Read more about finding and selecting the right CFP here.

Look for an agent specializing in the type of insurance you’re interested in exploring – long-term care insurance, life insurance with an LTC rider, annuities, etc. Learn about finding and selecting the right insurance agent here.

Find a reverse mortgage counselor at the U.S. Department of Housing and Urban Development (HUD) 

. A HUD-approved counselor can help you determine whether a reverse mortgage would be a sound move in your situation and guide you to finding a reputable lender.

The veterans' benefits available to you vary based on a number of factors such as your need, service history, and location. Learn more at the 

U.S. Department of Veterans Affairs website

If you have less than $2000 in monthly income and less than $2000 in assets, you can 


If you’re interested in planning ahead for Medicaid eligibility, there are a number of different types of professionals who can assist. The 

American Council on Aging’s Medicaid Planner Finding Tool

 can help you find the best planner for your situation.

Who Can Help me Take the Next Step?

Annual Report on Long-Term Care Insurance: 2021

Is Hybrid Long-Term Care Insurance Right for You?

Should I Get Hybrid Long-Term Care Insurance? | Policygenius

Health Savings Account (HSA) - HealthCare.gov Glossary

HSA savings can be used for long-term care in retirement | Employee Benefit News

How HSAs (Health Savings Accounts) work with HDHPs | HealthCare.gov

Sources

Explore available finance options and assistance programs to help afford senior living for your loved one. Our concise guide provides insights and resources to simplify the process, ensuring a comfortable and secure future for your loved one.

Financing Senior Living: Uncovering Options & Assistance Programs for Care - Olera

Paying for Senior Living: Exploring Finance Options & Assistance Programs

This article provides an overview of how to create a Medicaid-friendly personal care agreement for family caregivers.

A personal care agreement is a written agreement between a caregiver and the person for whom they’re caring.

Payments to family caregivers without a valid personal care agreement in place may result in a penalty period of ineligibility for Medicaid.

Documentation is needed to prove services provided and payments received in order to protect Medicaid eligibility.

Long-term care is expensive. It can drain an elder’s assets at a shocking rate. Thankfully, Medicaid is available to cover costs for those who can’t afford it – as long as you follow their rules.

One common mistake people make is to give away gifts, which affects Medicaid eligibility for years to come. Payments to a family caregiver are considered gifts unless they’re done according to Medicaid’s requirements.

Fortunately, it’s not hard to set up payments properly if you know what to do. In this article, we’ll take a look at how to create a Medicaid-friendly personal care agreement.

Introduction

A personal care agreement (sometimes called a caregiver contract or personal service contract) is a written agreement between a caregiver and the person for whom they’re caring. It defines the relationship with the caregiver as an employee and describes the specifics of the arrangement, such as duties to be performed, frequency of work, and rate of pay.


A personal care agreement (PCA) can prevent problems stemming from assumptions or misunderstandings among family members. It’s also a vital tool in protecting your loved one’s 

What is a Personal Care Agreement?

If your loved one pays for caregiver services without a valid personal care agreement in place, then later applies for Medicaid for long-term care, they may face a penalty period of ineligibility.

 of five years in most states, meaning that they examine all financial transactions from the date of application going back five years. They’re very interested in transfers of cash or assets.

If they find cash gifts – or assets sold for less than fair market value – the applicant is ineligible for Medicaid coverage for a period of time (unless the assets are returned). The more money transferred, the longer the period of ineligibility. The reasoning is that the assets could have been used to cover long-term care costs had they not been given away.

Without a written contract, payments to family caregivers are likely to be classified as gifts instead of service payments.

Transferring property (or selling it at less than fair market value) will likewise be looked at as a gift. If your loved one wants to trade their home for your care, it must be handled with a personal care agreement. Note that there may be special requirements for transferring property for care, so if you’re interested in this option, consult with an elder law attorney or Medicaid planner.

Many individuals aren’t initially eligible for Medicaid and must plan ahead in order to qualify for long-term care coverage. A popular part of the planning process is called 

By carefully spending one’s assets on allowable expenses, an individual can work toward Medicaid eligibility. If your loved one needs care from a family member, paying for it can be an allowable expense, as long as it's done properly with a personal care agreement and related documentation.

In addition to the personal care agreement, you should keep documentation to prove you’ve been providing the services described in the PCA. This can keep Medicaid from challenging the validity of the agreement, and help the process run as smoothly as possible.

Documentation for privately paid family caregivers includes:

 listing dates, times, and services provided for your loved one

recording dates payments were received, amounts, and reason 

(payment for services provided, reimbursement for expenses, etc)

The caregiver must report their income on their income tax return

Your loved one must report the caregiver’s compensation on a W-2 form

Your loved one may be required to pay employment taxes on the caregiver’s compensation, although if the caregiver is a family member they may be exempt from this requirement 

(you may not need one if your PCA thoroughly covers this information)

What Information Does a Caregiver Contract Include?

The personal care contract can be specified to your needs and liking, but it’s important to include some key information. Missing one of these could potentially invalidate the whole thing.


Essential key information to include in a PCA:

this date can’t be set in the past and payments can not be made for services before this date

the length can be defined as the rest of the elder’s life. There’s often a clause describing how either party can terminate the contract if desired.

How Does a Personal Care Agreement Affect Medicaid Eligibility?

Explore the structure and benefits of Medicaid-friendly personal care agreements for compensating family caregivers. Our concise guide ensures a smooth process, allowing you to support your loved one while understanding the ins and outs of compensation.

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