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According to recent data, over 810,000 people in the United States rely on assisted living facilities for care. It’s estimated that 7 out of 10 US citizens will need this level of care at some point in their lives. Almost 30,000 assisted living facilities are run to support these individuals, but what happens when assisted living money runs out?
When assisted living money runs out, the assisted living facility will have to follow specific steps to discharge the resident for nonpayment. This process includes a notice of discharge and a discharge plan.
This article explains what the notice of discharge is and what it should include. It also describes the discharge plan requirements. Further, this article will detail other important information about resources and funding to pay for assisted living.
What Assisted Living Facilities Do When Money Runs Out
If the worst-case scenario happens, and assisted living money runs out, you’ll likely be very worried about what happens next. If you have exhausted all other funds and resources, the assisted living facility will be forced to discharge the resident.
A resident in an assisted living facility can be discharged for non-payment. However, residents must be given a 30-day written notice prior to discharge. Verbal notice is not allowable.
The notice of discharge must include two pieces of information: the reason for the discharge and any actions the assisted living facility took to resolve the discharge reason. Further, a discharge is not like other evictions, and additional steps must be taken prior to discharge.
The assisted living facility will have to create and implement a comprehensive discharge plan. The discharge plan must include several steps. These steps include:
- Locate another facility for the resident to move to.
- Ensure the new facility is willing to admit the resident.
- Provide the new facility with a summary of the resident’s current health, including both mental and physical.
- Forward all medication and medical equipment to the new facility. Any information related to therapies, services, and care should be forwarded as well.
- Arrange a safe and organized move of the resident and their belongings, including any personal funds.
However, the family does still have rights during this time and process. If the resident and family choose, they can be involved in the discharge planning.
Applying for Medicaid
Ideally, before the funds have completely diminished, the resident and the family should visit or revisit the possibility of Medicaid eligibility. However, the Medicaid process can be quite lengthy, and it’s recommended to begin the application process a year before funds would have run out.
Some assisted living facilities will work with residents who have begun the Medicaid process before nonpayment began. However, leniency will vary based on each unique situation. Some states will pay Medicaid benefits up to 3 months retroactively prior to the date of the application; assisted living facilities in these states may be more lenient than others.
Appealing a Discharge
If a resident receives a notice of discharge, all is not lost. When a notice of discharge is issued, it must also include information regarding the appeal process. Contact information for assistance from other resources should be included along with the notice of discharge.
An appeal can be filed, but please pay close attention to any deadlines to appeal the decision; the appeal must be filed before the discharge date. Sometimes, the discharge will give residents a little more time to gather funds to continue to reside in the current assisted living facility. The resident has the right to remain in the current assisted living facility until a determination on the appeal has been made.
What You Can Do When Assisted Living Money Gets Low
When people find that their resources to afford assisted living are dwindling, they may take other actions to prolong their time in the assisted living facility. Some of these options may not be available to everyone, while others may consider them.
Homeowners Can Take Funds From a Reverse Mortgage
Homeowners obviously have one major asset—the home. If no one is residing in the house, selling or renting is an option, unlike if there’s a spouse, adult children, or anyone else in the home. However, funds from a reverse mortgage, which taps into the home’s equity, can be used if the homeowners are qualified.
Take Out a Bridge Loan
Another option, which some may not be aware of, is a bridge loan. A bridge loan is best for short-term yet urgent situations, and because of this, it can typically be issued relatively quickly. A bridge loan is a loan to cover a gap of time before the sale of a home or the liquidation of assets.
Use a Life Insurance Policy
Perhaps surprisingly, some life insurance policies can be used to pay for assisted living costs. There are two ways that a life insurance policy can be used for this purpose; One method leaves some death benefits while the other method doesn’t.
Either the resident or another family member can sell their life insurance policy to a third party at a market value price. The funds from that sale can be used to pay for the cost of the assisted living facility while allowing the policyholder to retain some of the death benefits from the policy.
In the other scenario, the insurance policyholder relinquishes all death benefits associated with that life insurance policy. In this case, the policyholder sells their policy back to the life insurance company for cash value.
Consider Senior Benefit Programs
Senior benefit programs vary widely by state and even locality. It may be challenging to find some of these programs, but if you can, it’s something to consider. However, there is at least one nationwide resource that can assist, the National Council on Aging (NCOA), which assists seniors by providing various resources that improve their health and financial security.
What Are the Average Costs of Assisted Living Facilities?
Because assisted living facilities provide such thorough and individualized care, it comes with a hefty price tag. Contracts are commonplace as each resident has different levels of care and various services.
Some services are included as a basic level of care. These services include three meals a day, social and recreational activities, and housekeeping. Beyond that, additional fees may be added. Additionally, some services are offered a la carte.
The first cost families encounter is the move-in fee. This fee can be as much as $5000, and most are no less than $1000. The monthly rates average around $4500 per month or about $148 per day. Residents who suffer from dementia or Alzheimers can expect to pay even more, anywhere from $800 to $1200 more.
Cost of Assisted Living Facilities per Region
As the cost of living varies across the country, the same is true for the cost of assisted living facilities. States and regions that have lower costs of living tend to have lower costs for assisted living facilities in those areas.
Generally speaking, assisted living facilities are less expensive in the south and midwest versus the northeast and west coast. On average, Alabama assisted living facilities cost about $37,800 per year. On the other end of the spectrum, similar facilities cost about $80,280 annually in the state of Delaware.
However, different states have requirements that impact the cost of the assisted living facility. Nursing homes are federally regulated while assisted living facilities are not. This leads to nuanced variables. States have varying regulations regarding staffing numbers, safety, and even the size of living quarters per resident.
It’s imperative (if money may be an issue) that residents and their families research the cost of assisted living facilities. If possible, the resident may choose to reside at a facility in a neighboring state.
Although you can negotiate assisted living costs, some fees are fixed. Read my comprehensive guide to learn more about negotiable prices and tips for negotiating. Can You Negotiate Assisted Living Costs? 10 Tips
Options for Paying for Assisted Living Facilities
As your parents’ age, it’s essential to ensure they’re given the proper care, especially in assisted living facilities. Therefore, knowing all of your options to pay for the facility is essential, as many people might not know there are several ways to pay for assisted living.
I’ll discuss each option for paying for assisted living facilities in the following sections.
Self Pay
Some residents pay for assisted living facilities out of pocket. In fact, the majority of residents in assisted living facilities are self-pay or privately funded pay. They may use a variety of income sources to support the level of care they require, including:
- Personal savings
- Retirement funds
- Pensions
Further, other family members may assist with payment to offset the steep costs of assisted living. If a family member covers 50% or more to support the care of their elderly loved one, they may qualify for caregiver tax credits.
Medicaid
Medicaid provides federal and state-partnered healthcare coverage for low-income people, including:
- Adults
- Children
- Pregnant women
- Elderly adults
- People with disabilities
There are several programs within the Medicaid system that could help pay for the cost of assisted living facilities. There are also several different waivers available that Medicaid-eligible residents may be qualified for.
Elderly and disabled individuals account for about 25% of Medicaid enrollees, but Medicaid spends approximately 67% on this group of recipients. Part of this cost is attributed to long-term care.
Each Medicaid waiver program is explained more thoroughly below:
- 1915c Medicaid Home and Community Based Services Waivers. Each state can offer as many waivers within the HCBS program. Over 300 of these waivers exist nationwide. States have the power to waive specific Medicaid requirements under Section 1902 of the HCBS program.
- 1115 Demonstration Waiver. The 1115 Demonstration Waiver allows a broader range of services and coverage. Each approved waiver is valid for five years. Renewals are valid for up to three years.
- 1915(b) Managed Care Waiver. 1915(b) Waivers are typically decided in 90 days or the proposed change goes into effect. Each waiver is valid for two years, and renewals are only approved for two years at a time.
- State Plan Medicaid. State plan Medicaid generally has lower monthly income limits than the $2523 monthly income limits for most other waivers. Another benefit of state plan Medicaid is that there are no enrollment caps, as is the case with other Medicaid waivers.
Medicare
Unlike Medicaid, which is easily confusing, Medicare doesn’t pay for assisted living itself. However, Medicare may cover some parts of the health care that residents receive while in an assisted living facility.
In other words, Medicare will not cover:
- Personal care
- Housekeeping
- Social activities
- Meal service
- Or other similar services
However, Medicare may pay for the administration of medications received while in the assisted living facility.
Private Health Insurance
While private insurers will not cover assisted living care, there may be some that cover skilled nursing. Therefore, it’s a good idea to contact the insurer to determine what is or isn’t covered under the resident’s health care plan.
Long-Term Care Insurance
Long-term care insurance can be costly but may be advantageous for some. The policy must have begun and be paid before the individual has reached the age of 80. For most long-term care insurance policies, assisted living may be covered if an individual is no longer able to complete a minimum of two ADLs (activities of daily living).
Stipends
Depending on an individual’s prior occupations, they (and in some instances, their spouse) may be entitled to stipends that are eligible to be used for assisted living costs. Some of these occupations include the military, government workers, and railroad employees.
Wartime veterans and their spouses may be eligible for a pension program distributed by the VA or Department of Veterans Affairs. Federal employees, postal employees, and their qualified relatives might be eligible for Federal Long Term Care Insurance or TLTCI if they applied for the benefit before their retirement.
Conclusion
An assisted living facility may be forced to discharge a resident for nonpayment. The facility must follow specific steps, including providing written notice of discharge 30 days in advance and developing a comprehensive discharge plan. However, families can appeal the decision within a specific timeframe.
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