As your parents get older, they may require long-term care from a professional. How can you pay for this care for your aging parent?
The elderly person’s resources, combined with smart planning, can help create a good outcome.
1. Life insurance
If your parent invested in a whole life insurance policy, he or she may be able to access or borrow against its cash value. When a policy includes a long-term care rider or accelerated benefit rider, it may be possible to use a percentage of the death benefit now instead of leaving it to the heirs.
2. Home loans
Parents who own their home may obtain a home equity loan for the amount the house value exceeds the balance on the mortgage.
If they are able to stay in their home despite needing long-term care, the Federal Housing Administration’s Home Equity Conversion Mortgage reverse mortgage program helps homeowners aged 62 or older access their equity, provided their mortgage is substantially paid off.
3. Long-term care insurance
The window of opportunity for buying long-term care insurance is open only when you are healthy and under 65 or so. The policy will typically pay for up to three years of care after a 90-day elimination period to establish the disability.
4. Savings plus Medicaid
Many elderly use their savings to pay for long-term care costs until they are asset-poor enough to qualify for Medicaid. Eligibility requirements are complex and vary from state to state. With careful planning, people in need of long-term care can receive the benefits they deserve without losing their prized assets.
Even if your aging parent did not plan for long-term care expenses, your planning can still positively influence everyone’s outcome.
Kevin Tharpe
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