Paying for long-term care
By Sonya Stinson • Bankrate.com

If the time comes when you can no longer manage daily living in your own home or with family members, an apartment in an assisted living facility could be the next best thing.

But if you, like many, were thinking that Medicare will cover the cost of assisted living, think again. Medicare isn't designed to pay for long-term care.

"At the end of the day, your options for paying for long-term care in this country are two: You pay (completely) out of pocket or you pay out of pocket until you get to the point where you impoverish yourself and then go on Medicaid," says David Kyllo, executive director of the National Center for Assisted Living, or NCAL, in Washington, D.C.

Both options may sound equally bleak, but for the vast majority who pay for assisted living through their own means, coming up with a plan to finance the move will at least make it more feasible.

The national average median monthly rate for a one-bedroom assisted living apartment is $2,825, according to the 2009 Cost of Care Survey released in April by Genworth Financial Inc. of Richmond, Va. That's nearly $34,000 per year, an increase of 1.4 percent over 2008. The cost has been rising by an average of 4.7 percent annually over the past five years.

Now consider this factoid from Kyllo: The typical assisted living resident has an income of about $19,000 per year. Obviously, most residents must tap additional resources to cover the cost, and the funds often come from the sale of their biggest asset: their homes.

A bridge loan can help until home is sold
With "for sale" signs lingering longer in the depressed housing market, some would-be assisted living residents are finding they have to adjust their plans, says Kathleen Cameron, chair of the Consumer Consortium on Assisted Living in Falls Church, Va.

"They are postponing (the move to assisted living) and trying to use family caregivers or in-home care as much as they can while waiting to see what the market is doing," Cameron says.

On the other hand, Kyllo says the impact of the housing market on the demand for assisted living goes only so far.

"Assisted living is need-driven," says Kyllo. "It's not like (other) housing options that people weigh. They are going into assisted living because they need help with their daily lives. They need help with bathing, medication management, cooking and managing finances. While economies may have downturns and housing markets may slow down, one thing that doesn't slow down is the aging process."

Barbara Steinberg, founder and managing member of BLS Eldercare Financial Solutions in Lincoln Park, N.J., often recommends a loan if a client's need for assisted living care is too urgent to wait until the house sells.

"We work with a company that does bridge loans for exactly that situation, where somebody is waiting to sell a house so they can move into assisted living," says Steinberg, who is a Certified Financial Planner and Registered Financial Gerontologist. "It's an interest-only loan that pays the assisted living facility until the house sells."