As the number of seniors who choose in-home care over expensive nursing homes continues to grow, this kind of care still comes at a price. This is often a question that many families face as they cannot be with their loved one all the time. So where does the money come from to pay for this kind of care?
This is often the most common and best way to pay for home care services. Not all long-term insurance policies will cover in-home care and some include a waiting period, such as 30 to 120 days after receiving assistance, before you are able to access the funds. There are also coverage and limits as to a dollar amount to which the policy holder is entitled. The best way to determine how useful the policy will be to you is to compare the amount of the policy’s daily benefits with the average cost of home care in your area.
The factors that will most highly affect your long-term insurance policy include: your age and health, premiums, income, support system, savings and investments, and taxes. Long-term care policies also come from a number of different sources, including individual plans, employer-sponsored plans, state partnership programs, plans by organizations, and joint policies.
2. Line of Credit
A line of credit is an extended source of funds provided to an individual from a bank or financial institution. Many seniors opt for a line of credit before selling their home, while waiting for Veteran Aid, or waiting for long-term care insurance to kick in.
When signing a line of credit, the borrower must pay an unused line fee, which is an annualized percentage on the money not withdrawn. If you have a bank account from the same financial institution as the line of credit, the line of credit may be a form of overdraft protection, home equity, personal line of credit, revolving credit cards, and demand loans.
Just beware that lines of credit require a collateral, or that it be tied to a house, car, annuity, or savings account. So if the borrower fails to pay back the loan, the lender has the right to seize the collateral.
3. Reverse Mortgage
Reverse mortgages involve the elderly individual to rent or sell their home in order to pay for home care. But before doing so, it’s important to be aware of how they work and their restrictions before using it to pay for home care.
Many people think of reverse mortgages as a loan never needs to be re-paid because they are using their home equity as their source of funding. But the reality is that the reverse mortgages are due when the individual passes away, moves out, or moves away from their home for a period of over one year.
Good candidates for reverse mortgages include individuals or couples who are in good health and plan to stay in their home long-term.
More Ways to Pay for Care
If you are interested in additional ways of paying for care, be sure to download our guide on How to Pay for Care.
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