Compare financing options to pay for senior care

What you need to know about covering the cost of long-term care for seniors.


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If you have an elderly parent or relative that needs extra care, payment for these expenses falls on your shoulders. Fortunately, you don’t necessarily have to drain your savings when it comes time to pay for home health care or assisted living.

We look into how you can pay for long-term senior care and what costs you might expect.

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8 options to pay long-term senior care

You can pay for long-term senior care with several different financing options, which we discuss in detail below. The one that works best for you depends on your specific situation, including short-and long-term needs. You might even combine several different options to make sure you can meet your own needs as well as those of the person you’re caring for.

1. Cash out refinancing or home equity loan

If you own a private property, you may consider unlocking the monetary value of your home through cash out refinancing. Also known as a reverse mortgage, you can borrow up to 60% to 80% of your property’s market value instead of taking out expensive personal loans.

This option also allows you to borrow a much higher amount compared to unsecured loans, which are typically restricted to four times your monthly income (borrowing limit is capped at 12 times of your monthly income across all unsecured credit facilities).

However, this is not a decision you should take lightly as you could risk losing your home if you can’t make payments.

2. Personal line of credit

Unlike a personal loan, a line of credit is a loan which you can use utilise like a credit card. The bank approves an entire “loan” amount which you can withdraw any time. Interest will only be imposed on the amount you’ve actually borrowed and not for any unused amount. A line of credit can be very useful to temporarily cover large, unforeseen costs, but do watch out for high interests.

3. Personal loan

You can use a personal loan to cover any legitimate expense, including senior care. You’ll get access to a lump sum, which you pay off in monthly repayments plus interest and fees over time.

Personal loans work well for covering one-time expenses and aren’t typically a great long-term solution since future costs can be difficult to predict. You might want to consider a personal loan to cover the initial cost of hiring domestic help or nursing home fees, while working on other viable ways to fund these recurring costs.

4. Bridge loans

If your family has an unexpected cost that needs to be taken care of immediately and you’re looking to downgrade your property, this might be the option for you. A bridging loan works by helping you pay for the down payment of your property purchase while waiting for the sale proceeds from your current home. These loans are a short-term financing solution that is meant to be fully repaid within 6 to 12 months.

5. Life insurance policy conversion

If the senior citizen who needs care has a life insurance policy, they have several options to use that to cover senior care costs. For example, if the insured has opted for a life insurance policy rider (also known as an accelerated death benefit), they may be able to access the pay-out in the event of terminal illness or critical illness to pay for healthcare costs.

6. Long-term care insurance

If the person needing care already has long-term care insurance, then they can use that to cover their senior care costs. Long-term care insurance pays a fixed amount of benefit each month. This money can be used to pay for expenses such as nursing treatment, cost of hiring a domestic maid, medical appliance etc.

7. ElderShield

Introduced in 2002, ElderShield is a government initiative to help ensure that the ageing population has sufficient protection in the event of severe disability. CPF members with a MediSave Account are automatically enrolled in the ElderShield Basic Plan at the age of 40, which will provide cash payouts of $300 or $400 per month, for up to 5 or 6 years. However, the insured can always choose to opt-out of the scheme, or consider upgrading the plan to enjoy higher and longer duration of benefit payouts.

Check with your loved ones on their ElderShield coverage and if they meet the eligibility criteria for a claim. You can learn more about ElderShield by visiting the CPF website.

8. Other government benefits

Seniors can also use their Medisave funds to cover medical expenses, and immediate family members may also access their accounts to cover these costs.

Under the Foreign Domestic Worker (FDW) Levy Concession, households are entitled to reduced levy rate of $60/month if they hire a foreign domestic worker to care for a senior above 65 years old and living with them.

How much does senior care cost?

Senior care costs are difficult to predict — you never know when you’re going to have a medical emergency and things can happen suddenly. Here are some of the top costs you might come across when taking care of an elderly parent or family member.

Foreign domestic workers (FDW)

Hiring an aide to help with household tasks — like doing laundry or washing dishes — can take a load off the shoulders of you and your family. Although domestic helpers tend to lack the medical expertise compared to a trained caregiver, many of them have experience caring for seniors and can also be available around the clock in the event of emergencies.

There are several government assistance schemes that you can tap on to save on some of the FDW costs if you’re eligible: FDW Grant and FDW Levy Concession. There’s also a Caregivers Training Grant of $200 per annum, which you can use to send your helper for courses on elder care.

For more independent seniors who don’t require round-the-clock care or supervision, consider hiring a part-time caregiver instead.

A live-in helper typically cost around $600 to $850 per month before subsidies and grants. For seniors who don’t require round-the-clock care or supervision, you may consider hiring a part-time caregiver instead. You can expect to pay around $20 to $25 per hour for part-time caregivers.

Live-in nurse

If your elderly relative requires a greater level of care, you might want to consider trained caregiver or nurse. The core duties of these trained personnel are to provide 24/7 personal care, meals and medication, which differs from that of a regular domestic helper. Low income households may also be eligible for long-term care subsidies.

The costs for live-in nurse hire typically range from $600 to $1,000/month before subsidies.

Home nursing service

An aide to help your elderly parent or relative with healthcare — such as maintaining medical equipment, taking their blood pressure and helping them with pills — is slightly more than non-medical home care. According to the Agency for Integrated Care, the cost of a home nursing service is between $65 to $102 per visit.

Adult day health care

Rather than hiring a home health aide, you can take your elderly parent or relative to a senior day care center. These often offer seniors an opportunity to socialize while also providing health care services you might get from a home aide. In 2017, the average cost of adult day health care was $70 per day, $1,517 per month and $18,200 per year.

Paying For Senior Care found that adult day health care costs typically ranged from around $38 to $125 per day.

Assisted living facility (ALF)

Sometimes it makes more sense for your elderly parent or relative to move to an assisted living home if they do not require intensive medical and nursing care. These facilities offer social activities, have medical assistance on the ready and prepare meals for residents while allowing them to maintain a sense of independence. Residents can expect to pay around $1,200 to $3,500 per month for ALF – more if you opt for a high-end facility or require extra care.

Nursing home

When your parent or relative needs more all-around care than an assisted living home can provide, you might want to consider a nursing home instead. Depending on the type of care required, nursing home fees typically range from $1,200 to $3,500 per month.

6 tips for senior care financial planning

  1. Talk to your parents about their finances. Talking about money is taboo in some families, but the sooner you know what state your parent’s or relative’s finances are in, the easier it will be for you to make a plan to pay for their care in the future. Ask about their assets, income, life insurance policies, government benefits and if they’ve done any planning for themselves.
  2. Find out what are the various schemes, grants and subsidies available. The government has several schemes such as ElderShield and Medifund to help lower the cost of elder care. Learn about the different types of financial assistance and if your loved ones qualify for them.
  3. Have the important documents on hand. You’ll want to at least know where your parent’s insurance policies, banking, investment and any legal documents are before you make a plan. That way you can access them easily when necessary.
  4. Get professional financial advice. Talking to an expert financial planner can pay for itself in the savings you make. Look for a planner who charges a fee, which makes them legally obligated to give objective advice. They’ll help you understand what you might want to sell and when, as well as other financing options that can help you pay for senior care.
  5. Talk to a lawyer. Senior care involves lots of legal work as well. Your parent or elderly relative might need to update their will, sign a power of attorney document or handle health care details. Make sure your lawyer and financial planner are in touch so that they can work together to help you come up with a financial plan.
  6. Know what’s important. Make sure you know what the person you’re taking care of wants. Do they want to stay at home or would they want to move into an assisted living facility? Are they concerned about being a burden to their children or do they expect younger family members to take care of them?
  7. Think about how it’ll affect your personal finances. Factor in costs like travel, time off work and other expenses that you and your siblings might have to pay out of pocket. Make sure you budget for regular unexpected costs associated with senior care when planning your personal finances.

Bottom line

Long-term senior care can be expensive, but it doesn’t have to leave you bankrupt if you plan wisely. Be sure to look into the benefits you and your parent might qualify for, in addition to other financing options to ease the cost on your family. Consider checking out our guide to personal loans to learn more about how they work and find even more options that might work for you and your loved ones.

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