The Best-Kept Secrets of Senior Living Financing

best kept secrets of financingThink you know the ins and outs of paying for senior living? These financial facts may surprise you!

Here, with the help of Hyman Darling, chair of the estate planning and elder law department at Bacon Wilson, P.C., and president of the National Academy of Elder Law Attorneys (NAELA), we highlight 5 lesser-known financial realities in senior living.

1. A la carte pricing is on the rise.

In a nutshell, a la carte pricing means you pay for the senior living services you need, and not the ones you don’t. So if there’s an extra fee for transportation and meal delivery services, and you have no need for either, you can opt out of those services and their associated fees.

In general, the trend toward a la carte pricing is good news for seniors and their families. However, line-item fees can be problematic if you don’t review the contract carefully. If you discover any unwanted fees after you sign on the dotted line, those are nonrefundable, says Darling.

Takeaway: To ensure there are no surprises, ask the community about all fees—including projected price increases due to inflation or changing care needs—and contact an attorney before you sign a senior living contract.

2. There may be (a little) room for negotiation.

“In facilities with waiting lists, there’s no room for negotiation,” admits Darling. But if there are rooms available, you may have some flexibility.

He offers a few examples of circumstances in which you may have bargaining power:

  • If you’re moving in now and you know there’s a scheduled price increase in two months, you might be able to delay that increase and request six months at the current price.
  • If you move in on the 8th of the month (or somewhere in that vicinity), you may be able to pay for half a month instead of the full month.
  • If you’re considering two different facilities, you can compare the financials of both and try to negotiate between them.

Takeaway: Hire an elder law attorney to help you negotiate your senior living contract. It can’t hurt to try, whether for something as small as extra guest passes for meals or as big as a free trial stay. But, as Darling notes, “there’s not much you can do if the facility says no.”

3. You might qualify for a subsidy.

If your community is private-pay only and you run out of money, says Darling, there will be no negotiation. You may have to move out, possibly to a less desirable facility.

On the other hand, he says, some nonprofit communities have funds to subsidize residents who run out of money. There are only so many people they can subsidize, and you have to apply for the subsidy, but you may be eligible—particularly if you’ve been a private-pay resident for years.

Takeaway: Ask your community whether funds are available if you can no longer pay for care, and what the subsidy requirements may be. Just keep in mind that if you’ve been giving your money away, you won’t qualify, says Darling.

4. You could be on the hook for your parents’ senior living expenses.

Though some assisted living facilities require a guarantor—someone who will be responsible for payment—Darling recommends that adult children not sign those agreements.

Here’s why: If you sign as a guarantor and your parents run out of money, the facility can send the bill to collections, which could damage your credit. Your parents could even be evicted from the facility.

Takeaway: Consult an elder law attorney before signing anything, and if possible, have your parents sign the senior living contract themselves. If they are unable, make sure you sign as the power of attorney, not the guarantor, responsible party, or financial agent.

5. Senior living fees may be tax-deductible.

“Medical expenses in nursing homes are tax-deductible if you itemize your deductions,” explains Darling. “If it’s a long-term care facility, usually all the expenses are deductible. Even in assisted living, a portion of the fees is tax-deductible.”

He says the medical expense deduction is especially important for middle-income seniors and those with disabilities, providing assistance with the cost of long-term care. And, just last month, NAELA played a critical role in lobbying to protect this deduction. The final tax bill released by Congress retains the deduction and temporarily expands it for two years.

Takeaway: Though facilities should tell you about this provision—including what percentage of expenses you will be able to deduct—don’t be afraid to ask about it yourself, says Darling. If necessary, request an itemized bill that you can give your accountant to determine how much you can deduct.

LEARN MORE: Check out A Place for Mom’s free e-book for help financing senior care.

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