You may have recently heard about the option of life settlements, where you sell your life insurance policy to a third party, and be considering this option in order to fund assisted living. The buyer of the policy takes responsibility for the premiums, and then receives the benefit when you pass away.
These offers are certainly tempting, but make sure you’re considering all the possibilities open to you first. For example, you may be able to take out a loan on the cash value of the policy. You may also be able to reduce the death benefit in exchange for lowered premiums, which will allow you to hold on to the policy and some of its value. Finally, if you are terminally or chronically ill, you may be able to receive an accelerated death benefit while you’re still alive. Don’t make the decision to give up your life insurance lightly: if your policy has value to investors, it also has value to your heirs. Remember why you bought the policy in the first place.
On the other hand, if it’s likely you will lapse on your policy anyway, a life settlement can make a lot of sense. If you have decided that a life settlement is the best choice for your situation, make sure you do your research. Different life settlement providers may make you different offers, so be sure to shop around. You may want to consider using a life settlement broker, who will act in your best interest. Also know that you do not need to sell your whole policy: you may be able to arrange to keep a portion of the benefits.
How much you can get for our policy will depend on your life expectancy, how much needs to be paid in premiums to keep the policy in force, and the policy’s cash value. Think through the various implications of receiving such a large sum of money. Some of the settlement may be taxable, and any creditors you have may be able to claim the money. Also consider whether your social security or any other public benefits you receive will be affected.
Beware of schemes where you buy life insurance with an agreement to sell it later. This is called Stranger-Originated Life Insurance (or STOLI) and it’s illegal in most states. Insurers may refuse to pay benefits on these arrangements.
To learn more and to find out how life settlements apply to your specific situation, consult with your insurance agent, a financial advisor, or lawyer.
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When they first see the cost of assisted living, many people are taken aback. Their first reaction is that it’s “too expensive,” especially compared to having the senior just live at home. While this initial response is understandable, it’s not quite accurate. You need to take into account all the benefits that assisted living provides, and compare it to total monthly expenses incurred outside of assisted living, before you make a judgment.
To get an accurate sense of the relative cost, you need to start with an accurate budget. Look at your financial records closely and see what you really spent over the last few months. It’s easy to underestimate what you spent on food, for example, and forget about small impulse purchases.
Once you do that, you are more prepared to evaluate the price tag of a given assisted living facility. The monthly fee will cover all basic needs: food, housing, and utilities. In addition, that fee also provides housekeeping, health monitoring, repairs and maintenance of your living space and yard, security, entertainment, and trash removal.
You should especially consider the value of the social activities that assisted living facilities provide. Many seniors are isolated living on their own, or skimping on entertainment in order to save money. But in assisted living these things are part of the whole package. Many seniors value these living arrangements precisely because of the chance to have a good time with people their own age. Activities and socialization also help seniors maintain their physical and mental well-being.
Senior couples may receive additional value from assisted living that aren’t immediately revealed by the numbers. Many wives see their workloads increase when their husbands retire, as they now have to care for someone full-time. Assisted living can finally allow both partners to take a break because someone else is worrying about the chores. Husband and wife can simply enjoy each other’s company instead.
Don’t let the price of assisted living deter you from taking a closer look. People forget to take into account all the things that assisted living provides which inflate the cost of the senior living on their own. And it’s impossible to put a price on enjoying those last years without worry about the lawn or the leaky roof, and also knowing that you or your loved one has someone immediately available to help them, at any time of the day or night. You’ll likely find, as many have, that assisted living is actually a better value than your other options.
/by Moti GamburdMaking the mistake of choosing a bad assisted living facility is a nightmare scenario for seniors and their families. Imagine living in a place where there are all sorts of hidden dangers to your safety that make it more likely you will have an accident, where the people around you are indifferent or even hostile, where you have no control or say in how to live. Your calls for help go unanswered, and when your family tries to advocate for you they get mired in arguments with the management. No one wants to make such a large commitment and then realize that they are stuck, even temporarily, in horrible living conditions.
Some bad facilities can be spotted right away due to their deteriorating physical conditions and clearly depressed residents. But in facilities that on the surface seem just fine, there are other smaller signs you should look for that could be clues to larger problems. Many of them are listed below. Any facility that takes pride in providing excellent senior care should have these items covered.
/by Moti Gamburd- Is the facility’s state license and a Resident Bill of Rights displayed in the lobby?
- Where are smoke detectors located? They should be in rooms, hallways, and community areas.
- Do the windows have safety locks?
- Is there an emergency generator or some other way to provide electricity if the power goes out?
- Does the facility have fire drills and are emergency plans easy to find?
- What is the crime rate in the neighborhood where the facility is located?
- Will the carpeting in the rooms prevent residents from moving easily with walkers or canes?
- Handrails should also be plentiful throughout the facility.
- Does the bottom step on stairs have recessed lighting or colored tape to make it more easily seen?
- Have area rugs wandered so that they’re sticking out over the top step of the stairs?
- Is the light in the facility adequately bright?
- Is there a way to call for help in the bathrooms? Are there non-slip mats and handrails near the toilet and inside and outside of the shower? There should be a shower and not a tub, and the shower should have a seat where residents can sit if they need to.
- Are there strong smells? A heavy cleaning chemical smell could indicate that the facility is trying to cover something up.
- Ask to see an occupied room. Is it clean?
- Is there a big difference between the atmosphere of the lobby and common areas and the rooms?
- Try to listen to how the staff addresses and talks about the residents. Are they using the residents’ names?
- How does the staff treat you? Are you acknowledged or ignored?
- How does the staff speak to residents or to one another? If they are polite to you and to residents when in your presence, but rude to each other, that may be a sign of how they treat the residents on a daily basis. People can only be on their best behavior for so long, and if you don’t like how they act with people they are comfortable with you probably won’t like how they act once you’ve signed a contract and paid the entrance fee.
- Do calls for help seem to be answered quickly?
- Are there residents sitting alone in wheelchairs with no one to help them?
- Are residents eating all their food at mealtimes?
- Do residents seem happy, active, and social?
- Is their appearance clean and well-groomed?
- Are common areas being used?
- Does the facility seem chaotic or crowded?
- Does the facility seem open to visitors during your tour? Are you able to speak with residents?
- If a parent and adult child are visiting the home together, does the tour guide make an effort to include the senior in conversations as well?
- If you stop by unannounced, will the staff let you in?
- What do you find when you research the facility through the Better Business Bureau, local agencies, or online? How does the agency respond when you ask them about negative feedback? Have they responded to negative feedback left online?
- Look over the contract carefully. When can residents be evicted? What happens when they run out of money?
The biggest fear many have when making senior living decisions is what it will cost. The fees for assisted living facilities at first glance may seem quite high. Keep in mind though all that assisted living covers: housing, at least some meals, and help with your daily needs. Beyond assisted living and your medical expenses, you will likely need to spend very little, if anything. Assisted living is usually paid for using long-term care insurance, personal funding, or veterans benefits. These funds may be supplemented by social security.
Long-Term Care Insurance
Long-term care insurance covers services that help people who need medical or non-medical care over a long period of time. It will cover assisted living if you cannot perform two or more “activities of daily living” (ADL), such as walking, using the bathroom, or getting dressed. You may have to have an examination by a doctor chosen by the insurance company to be sure that you qualify.
The benefit is often structured so that the policy has a daily limit, usually $100-$150, and a lifetime maximum, for example $250,000. Some policies have an elimination period, an amount of time during which you must pay for your own care (similar to a deductible).
As you grow older, your premium is likely to rise since the older you get the more likely you are to require long-term care. If the premium rises beyond your ability to pay, the insurance company will likely offer a lower premium in exchange for reduced benefits. In some but not all plans, you no longer have to pay your premium once you begin using the benefit.
Personal Funding
Money to pay for assisted living may come from retirement funds like Individual Retirement Accounts (IRAs), pensions, or 401k plans.
People also use the funds from the sale of their home. A home purchased 40 or 50 years ago will yield quite a bit of equity that can go towards senior care. If you are unable to find a buyer by the time you need to move, you may be able to get a bridge loan to help pay for your care. This loan provides immediate funding, which you then pay back when your house does sell. You can usually gain at least a few extra months to sell your home before you need to start making payments on the loan.
If you don’t want to sell your home, there are other options available. You may be able to rent it out, thus giving you a monthly income. You may also be able to take out a reverse mortgage, where you receive money drawn against the equity you have in your home. You can receive this money as a lump sum, monthly payment, or revolving line of credit. Keep in mind that your spouse (or someone who owns the home with you) must still be living in your home for you to qualify. Also, the starting costs associated with these loans can make them quite expensive.
With any of these financing options, if you have relatives who are in a position to lend you money in exchange for equity in your home, you may be able to come up with a similar arrangement privately, rather than borrow from a bank or other company. Consult with a lawyer to learn more about this option.
Veterans Benefits
Veterans benefits may be able to help you finance care in an assisted living facility, if you or your spouse served in the military. This is the Aid and Attendance tier of the Improved Pension offered by the Veteran’s Administration. You do not need to have any sort of injury related to your service, though you must have been on active duty at least 90 days and one day during wartime. You also must have less than $80,000 in assets. You’ll need to file the Veteran’s Application for Compensation and/or Pension (VA Form 21-526, Parts A, B, C, and D).
A Note on Medicare and Medicaid
First, you should know that some assisted living facilities, including Raya’s Paradise, only accept long-term care insurance or private funding. Also be aware that Medicare does not pay for assisted living as assisted living is not medical care but rather assistance with your daily needs (Medicare will pay for medical expenses incurred during the time you are in the assisted living facility, such as your prescriptions or visits to the doctor). Medicaid might pay for a limited stay (often 90 days or fewer), but even then, coverage is limited. In some states Medicaid pays for the personal care services you receive, and in others it pays for room and board as well. Medicaid does not currently pay for assisted living in the following states: Pennsylvania, South Carolina, Alabama, Kentucky, and Louisiana, though it is likely that there will be national coverage in the coming years.
Finally, you may be eligible for tax deductions that can also help pay for senior living expenses by reducing your tax liability. You can learn more by doing research at www.irs.gov on the Elderly and Disabled Tax Credit and Medical Expense Tax Deductions, and on your state’s elderly care tax credits. You may also find it helpful to talk to an accountant.
/by Moti GamburdCorporate Office / General Information
Raya’s Paradise, Inc.
1156 N Gardner St.
West Hollywood, CA 90046
Tel: (310) 289-8834
Fax: (323) 851-0375
E-mail:Info@RayasParadise.com
Featured by Assisted Living Magazine as one of the best communities in Orange County