How Can I Pay For Assisted Living With No Money?

How Can I Pay For Assisted Living With No Money

How can I pay for assisted living with no money?

In this article, you’ll learn about: 

  • how you can pay for assisted living with no money
  • how to apply for Medicaid and eligibility requirements
  • how to use long-term care insurance 
  • how to use Veteran’s benefits
  • how to use a reverse mortgage or bridge loan
  • what state and federal programs are available

Let’s dig in. 

Table of Contents

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How Can I Pay For Assisted Living With No Money?

Affording assisted living can be a challenge for many individuals and families, especially when resources are limited. 

However, several options may be available to you if you have little to no money to pay for assisted living:

  • Medicaid: Medicaid is a state and federal program that provides health coverage to people with low income, including some low-income adults, children, pregnant women, elderly adults, and people with disabilities. Some Medicaid programs pay for assisted living or other forms of long-term care.
  • Long-Term Care Insurance: While this isn’t helpful if you’re already at the point of needing care and haven’t bought a policy, it’s good to know about. Long-term care insurance is designed to cover long-term services and supports, including personal and custodial care in various settings such as your home, a community organization, or other facilities.
  • Life Insurance Policies: Some life insurance policies can be used to pay for long-term care. You can sell your policy for a lump sum of money or use a policy conversion program to convert it into a long-term care benefit plan.
  • Veteran’s Benefits: Veterans and their spouses may be eligible for Aid and Attendance benefits to help cover assisted living costs.
  • Reverse Mortgage: Homeowners who are 62 years of age or older may be eligible for a reverse mortgage – a loan that allows you to convert part of the equity in your home into cash. This might be an option if one spouse needs assisted living while the other remains in the home.
  • Charitable or Nonprofit Programs: Some charities, faith-based organizations, or non-profit organizations offer help to people in need of assisted living but can’t afford it.
  • Bridge Loans: Some companies offer bridge loans designed specifically for long-term care transitions. These loans can be used to pay for assisted living while other funding options, like the sale of a home, are still in process.
  • State and Local Programs: Some states and communities offer programs to help cover the cost of assisted living for people with low incomes.
  • Family Assistance: While this may not be an option for everyone, family members may be able to pool resources or provide care directly to help out.

Read More: How To Protect Parents’ Assets From Nursing Homes

Medicaid Assisted Living

Medicaid is a state and federal program that provides health coverage to:

  • individuals with low income
  • including some adults
  • children
  • pregnant women
  • elderly adults
  • people with disabilities 

Importantly, Medicaid can also help cover the costs of long-term care, such as assisted living, depending on the state’s policies.

Read More: What Happens When Medicare Stops Paying For Nursing Home Care?

Medicaid Eligibility

To be eligible for Medicaid, you must meet certain income and asset thresholds, which vary from state to state. 

Generally, to qualify, you must have limited income and less than $2,000 in assets.

This is excluding your primary residence, one vehicle, and personal belongings. 

However, these figures can vary, and some states allow for higher assets.

For elderly adults, Medicaid may take into consideration your need for long-term care.

And it’s based on your ability to perform Activities of Daily Living (ADLs), such as eating, bathing, and dressing.

Read More: Does Putting Your Home In A Trust Protect It From Medicaid?

How To Apply For Medicaid

To apply for Medicaid, you need to contact your state’s Medicaid office. 

The application process usually requires:

  • filling out an application form 
  • providing supporting documents to prove your income and assets 

This can include pay stubs, bank statements, tax returns, and information about any property you own.

In some states, you can also apply online or over the phone. 

Some states also offer face-to-face interviews for those who require assistance with the application process.

Read More: Medicaid Asset Protection Trust

Medicaid and Assisted Living

It’s crucial to understand that not all Medicaid programs cover assisted living. 

Medicaid coverage for assisted living is typically provided through Medicaid Waivers.

This is sometimes called Home and Community Based Services (HCBS) Waivers or 1915(c) Waivers.

Each state has different waivers, and eligibility requirements can vary. 

In general, to qualify for a waiver program, you must require a “nursing home level of care,” but wish to receive care in an assisted living community instead.

There may be waitlists for these waiver programs, so it’s important to apply as early as possible.

Read More: How To Avoid Nursing Home Taking Your House

Considerations For Paying For Assisted Living With Medicaid

While Medicaid can provide significant assistance, it’s important to understand that not all assisted living facilities accept Medicaid. 

When looking for facilities, be sure to ask about their Medicaid policies.

Additionally, it’s worth noting that even if a facility accepts Medicaid, there may be a limit on the number of Medicaid residents they can accept. 

You might also have to “spend down” your assets to qualify for Medicaid.

This requires careful planning to avoid potential pitfalls and penalties.

Read More: Can I Collect My Deceased Spouse’s Social Security And My Own At The Same Time?

Long-Term Care Insurance

Long-term care insurance is a specific type of health insurance designed to cover the costs of long-term care services. 

This can include personal and custodial care in various settings, whether at home, an assisted living facility, or a nursing home.

As we age or deal with chronic illnesses, the need for consistent care can skyrocket. 

Traditional health insurance and Medicare often do not cover these extensive services, which can be costly. 

That’s where long-term care insurance steps in.

Read More: How To Put A House In A Trust 

What Long-Term Care Insurance Covers

  • Personal Care: Activities of daily living (ADLs) such as bathing, dressing, and eating.
  • Custodial Care: Assistance with tasks like cooking, cleaning, or medication management.
  • Skilled Nursing Care: Care provided by trained medical professionals.
  • Therapy Services: Physical, occupational, or speech therapy.
  • Home Modification: Necessary alterations to your home to accommodate disabilities.

Purchasing A Long-Term Care Insurance Policy

  • Age Matters: It’s generally cheaper and easier to qualify for a policy when you’re younger and in good health.
  • Shop Around: Different insurance companies offer varying coverage details and rates.
  • Evaluate Policy Features: Look at benefits, coverage limits, waiting periods, and whether the policy accounts for inflation.
  • Financial Ratings: Choose an insurance company with a strong financial rating to ensure they’ll be around when you need them.

Things To Consider For Long-Term Care Insurance

  • Inflation Protection: Over time, the cost of care will likely increase. Ensure your policy has provisions to account for this.
  • Waiting Period: Some policies have a waiting period before benefits kick in. Know how long this is and plan accordingly.
  • Policy Limits: Determine the maximum daily benefit and how long the benefits last. For example, a policy might offer $150 per day for three years.
  • Nonforfeiture Benefits: If you ever cancel your policy or can’t pay premiums, some policies will still provide a reduced benefit.
  • Shared Care Rider: If both you and a spouse have a policy, some insurance plans let you share the total benefit pool.
  • Potential Rate Increases: Be aware that premiums might increase over time. Ensure you can manage any potential hikes in the future.

Read More: Does Your House Have To Be Paid Off To Put It In A Trust

Veteran's Nursing Home Benefits

Veteran’s benefits, provided by the U.S. Department of Veterans Affairs (VA), offer a range of support services for those who have served in the military. 

One of these benefits is the Aid and Attendance (A&A) program

This program can help cover the costs of assisted living for veterans and their surviving spouses who require assistance performing everyday tasks.

Here are the eligibility requirements for Veteran’s nursing home benefits:

  • Service Requirement: The veteran must have served at least 90 days of active military service, with at least one of those days during a wartime period.
  • Disability Requirement: The veteran or spouse must require assistance with activities of daily living (like bathing, feeding, or dressing) or be bedridden or a patient in a nursing home.
  • Financial Requirement: The VA will assess the applicant’s income and assets to determine financial need.

Read More: Can I Set Up A Trust Without My Spouse?

How To Apply For Veteran’s Nursing Home Benefits

  • Gather Documentation: Before starting, ensure you have discharge papers, medical evidence proving the need for aid and attendance, and financial documentation.
  • Form Completion: Fill out VA Form 21-2680 (Examination for Housebound Status or Permanent Need for Regular Aid and Attendance) and, if necessary, VA Form 21P-534EZ (Application for DIC, Death Pension, and/or Accrued Benefits).
  • Submission: Submit the completed forms and all necessary documentation to the pension management center (PMC) that serves your state or apply in person at a regional VA office.
  • Assistance with Application: Veterans service organizations (VSOs) can help with the application process. They’re trained to assist veterans in navigating the VA system.

Reverse Mortgage For Nursing Homes

A reverse mortgage is a specialized loan tailored for homeowners 62 years of age or older. 

It allows you to tap into your home’s equity, converting it into cash which can be used for various needs, including covering the costs of assisted living.

Eligibility Requirements For A Reverse Mortgage

  • Age: At least one homeowner must be 62 years old or older.
  • Equity: You must have significant equity in your home.
  • Primary Residence: The home used to secure a reverse mortgage must be your primary residence.

How To Get A Reverse Mortgage

  • Counseling: Before applying, you must undergo counseling from a HUD-approved counselor. This ensures you understand the loan implications.
  • Choose a Lender: It’s important to research and choose a reputable lender. They’ll provide specific details about the loan terms.
  • Undergo Financial Assessment: The lender will assess your financial situation to ensure you can cover property taxes, insurance, and other obligations.
  • Home Appraisal: An appraiser will determine your home’s current market value, which will influence the loan amount.
  • Closing: Once approved, you’ll close the deal and decide how to receive the funds (e.g., lump sum, monthly payments, or line of credit).

Things To Consider About Using A Reverse Mortgage

  • Fees: Reverse mortgages often come with various fees, including origination fees, service fees, and mortgage insurance premiums.
  • Interest: The loan accumulates interest over time, which means the amount you owe will grow as time passes.
  • Loan Repayment: The loan becomes due when the last borrower leaves the home, sells the home, or passes away. It’s crucial to have a plan in place for repayment.
  • Possible Impact on Benefits: If you’re receiving government benefits like Medicaid, the funds from a reverse mortgage might affect your eligibility.
  • Remaining Equity: The more you borrow, and the longer the loan is in place, the less equity will remain in your home. This could impact the amount left to heirs.
  • Non-Borrowing Spouse: If a spouse is under 62 and not part of the loan, considerations should be made for what happens if the borrowing spouse passes away first.

Read More: What Are The Disadvantages Of Putting Your House In A Trust?

Bridge Loans For Assisted Living

Bridge loans are temporary loans that bridge the gap between the sale of your existing residence and the purchase of a new residence, or in this context, transitioning into assisted living. 

They can be especially useful for covering the costs of assisted living when waiting for more permanent financial arrangements to be set in place.

What Are Bridge Loans?

  • They are short-term loans, typically lasting for 6 to 12 months.
  • These loans can provide immediate cash flow to pay for assisted living expenses.
  • The money borrowed is typically paid back once the more permanent source of funds, like proceeds from a home sale, becomes available.

How To Get A Bridge Loan To Pay For Assisted Living With No Money

  • Determine Your Need: Assess your financial needs. How much will you require for assisted living before your other funds become available?
  • Research Lenders: Not all lenders offer bridge loans. Look for those specializing in elder care or assisted living transitions.
  • Review Terms: Be aware of interest rates, fees, and the repayment timeline. Some bridge loans have higher interest rates than standard loans due to their short-term nature.
  • Apply: Like any loan, you’ll need to apply. This often requires proof of your upcoming source of funds (like a home sale contract) and credit checks.
  • Hire a Financial Advisor: If unsure, consider hiring a financial advisor to guide you through the process, ensuring it’s the right step for you.

Things To Consider With Bridge Loans

  • Interest Rates: Given the short-term nature, bridge loans can have higher-than-average interest rates.
  • Fees: Some lenders may charge processing or origination fees.
  • Repayment: Make sure you understand when and how the loan needs to be repaid. Once the primary funding source (like a home sale) comes through, you’ll be expected to pay off the bridge loan in a lump sum.
  • Risk: If your expected source of funds doesn’t materialize (for instance, if a home sale falls through), you’ll still be responsible for repaying the loan.
  • Alternatives: Always explore other financing options before committing. There might be more cost-effective ways to finance assisted living in your situation.

Read More: What Happens To A House When The Owner Dies And There Is No Will?

Using State And Local Programs To Pay For Assisted Living

Here’s an overview on how to find state and local programs to pay for assisted living with no money:

  • Find Programs: Start by checking your state’s Department of Aging or Elder Care Services.
  • Ask Local Agencies: Local Area Agencies on Aging can provide a list of available financial aids.
  • Check Eligibility: Programs often set income and asset limits. You’ll need to show proof of your finances.
  • Know the Requirements: Some programs require you to have lived in the state or area for a set time.
  • Apply Early: Popular programs might have waiting lists. Apply as soon as possible.
  • Understand the Aid: Assistance might be direct financial help, services like meals, or tax breaks.
  • Stay Updated: Benefits might be temporary. Be ready to provide updated information or reapply if needed.

FAQs About How You Can Pay For Assisted Living With No Money

Here are other questions that estate planning clients ask us about paying for assisted living without any money.

Does Medicare Pay For Assisted Living For Dementia?

No, Medicare does not cover the cost of assisted living for dementia. 

However, Medicare can cover certain medical services within the facility, like doctor visits or therapy. 

For long-term assisted living expenses, one must explore other funding options.

Does Medicare Part B Pay For Assisted Living?

No, Medicare Part B does not pay for assisted living. 

Medicare Part B covers outpatient medical services like doctor’s visits and preventive care. 

Assisted living, which provides housing and daily care, is not covered by Medicare Part B or other Medicare parts.

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