7 Ideas For Paying For a Nursing Home When the Money Runs Out

Certified Senior Advisor (CSA)®
Assistive Technology Professional

Nobody wants to run out of money to pay for a nursing home, but it can and does happen. If you are looking for ways on how to pay for a nursing home before your money runs out, keep reading.

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You might have planned to leave something for your children only to find it impossible. Often, the assumption is that Medicare can pay for long-term nursing home care. Unfortunately, it doesn’t since it only pays for short-term rehabilitation.

It is possible that you may be able to pay for nursing home care before you deplete your estate if you access other financial resources besides Medicare.

Here are the top 7 ways to pay for a nursing home when the money runs out.

1. Medicaid

Medicaid is perhaps the most common way of paying for nursing home care. However, the only way for you to use it is by proving that you have depleted your assets to qualify. You might have also set up an asset protection trust to help you qualify for Medicaid. Fortunately, if you actually qualify for Medicaid, there’s no limit on paying for nursing home care.

The States determine Medicaid eligibility, which is why the asset and income limits may differ depending on where you live. You should first try finding out what the eligibility requirements in your State are to be certain that you qualify. The income level for you to qualify for Medicaid in most states is about $2,000 a month.

It is important to note that nursing homes sometimes designate a particular number of beds for those covered by Medicaid while the rest are allocated to those covered by Medicare. Nursing home facilities are increasingly turning to Medicare-covered rehabilitation stays since the amount of money that’s typically reimbursed is often better than Medicaid.

2. Veterans’ Affairs (VA) Benefits

The Department of Veterans’ Affairs (VA) can also help in funding long-term nursing home care along with providing other support services. The VA actually owns nursing homes that can be contracted out to other state and community organizations. The VA may even manage its own nursing homes in some areas.

Still, there’s another program that’s sponsored by the VA which includes “medical foster homes” that contract with the VA to care for veterans. Medical foster homes are essentially VA-approved residential homes housing one or more veterans. The same medical foster homes are also under the responsibility and care of a VA medical team that provides services on-site.

To be eligible for such programs, veterans need to meet the criteria of mental or physical ailments requiring nursing home care. The VA itself determines this when you apply to a VA nursing home. The VA pays for either a portion of care or for all care in a VA contracted nursing home.

3. Reverse Mortgages

A reverse mortgage is a loan that’s accessible to persons over the age of 62 years. It allows you to borrow or convert part of your equity in your home for cash. If you have limited income, a reverse mortgage can help you pay for a nursing home, pay for health care, cover various essential living expenses, or even pay off debts.

A reverse mortgage works in the opposite or in reverse of a traditional mortgage payback stream. Instead of being required to make payments every month to a lender as is the case with a traditional mortgage, here it is the lender who makes regular payments to the borrower.

There are some serious pros and cons to consider though with a reverse mortgage.

The advantage with a reverse mortgage is that your credit is not relevant since you aren’t required to make any payments. Your home serves as collateral. If you pass away, your heirs can repay the mortgage without having to sell the house. Still, you can expect to pay hefty origination costs and fees, which become part of your initial loan and accrue interest.

RELATED: How to Become a Nursing Home Volunteer

4. Life Insurance Conversion

Did you know that you can use your life insurance policy to pay for assisted living? The specifics of it are somewhat complex, so before you change your coverage, it can be a good idea to first consult your life insurance provider, a financial planning expert, or a tax planning professional.

You can find the type of policy that you have in the insurance certificate document. The document will contain a description of the options available to you when you want to convert your life insurance policy into income that can be used to pay for a nursing home.

Selling your life insurance policy to a purchaser can be a viable option when it comes to life insurance conversion. There are two types of settlements:

  • Viatical settlement: If a person has a shortened life expectancy, he/she can sell his/her life insurance policy at a lower price than the death benefit in the policy but higher than the cash surrender value. The purchaser then keeps paying the premiums and becomes the policy’s new owner.
  • Life Settlements: The individual selling the policy doesn’t have a limited life expectancy. Life settlements are common for older persons that have some life-threatening health conditions.

5. Senior Living Line of Credit

A senior living line of credit is specifically tailored for persons looking to move to a senior living or assisted living facility. Today, this form of financing is offered throughout the country to help families pay for their loved ones’ senior housing and care.

It is a payment option that’s particularly helpful if seniors and/or their families need time to sell a home or any other asset with which to pay for care, or when a senior is waiting for federal benefits to start.

A senior living line of credit is structured as a personal line of credit of up to $50,000 and it allows families to borrow only what they need on a monthly basis to finance their loved ones’ senior housing and care needs.

Just as is the case with any other type of loan, a senior living line of credit is subject to credit approval. While thousands of senior living facilities throughout the United States accept this form of financing, not all offer such an option.

RELATED: How to Decorate a Nursing Home Room

6. Renting Your Home

If you are the only one that’s currently living or both you and your spouse need assistance with daily living, your family home can be an important resource. You can always sell, but since you most likely cherish your home, that simply isn’t an option to pay for a nursing home.

A better idea instead would be to rent out the family home and use the rental income to pay for a nursing home. While the idea of being a landlord might seem or sound scary, you can always hire a professional to manage the property for you for a fee while still generating enough income to pay for assisted living.

7. Selling Your Home

The equity built up in your home is probably one of your largest assets, which means that proceeds from selling can be extremely helpful when you want to transition to a senior living community. Selling a home in a timely manner, however, can be both time-consuming and challenging.

To expedite and simplify the process of selling your family home, you should consider working with a real estate professional who is experienced in assisting with all aspects of selling a home.

Final Thoughts

If you run out of money, it is still possible to pay for nursing home care as clearly explained here. All the options provided here are good and it is up to you to decide which one best suits your unique situation.

Do you know of other ways to pay for nursing home or long term care we haven’t covered here? Please let me know in the comments below!

Certified Senior Advisor (CSA)®
Assistive Technology Professional

Scott Grant has spent more than 20 years serving seniors and the elderly in the home medical equipment industry. He has worked as a manufacturer's rep for the top medical equipment companies and a custom wheelchair specialist at a durable medical equipment (DME) provider in WV. He is father to 4 beautiful daughters and has three terrific grandkids. When not promoting better living for older adults, he enjoys outdoor activities including hiking and kayaking and early morning runs.

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