Making the move to a senior living community is a difficult one for you and your loved ones. Unfortunately, this decision isn’t made any easier by the additional questions that arise about who should pay for senior living, and how much it will cost. You want to have the best care for yourself or your loved ones, but it needs to be something your family can afford, as well.
If you’re wondering how to pay for a senior living community, you’re not alone. See this Dear Donna letter we received a few years ago:
Dear Donna,
My older parents are considering moving to a senior living community, and I am confused about the different options for paying. I thought our only option was to pay for it ourselves, but a friend just told me that her parents used other methods as well.
Can you tell me more about what kinds of funding senior living communities accept?
Sincerely,
Mary from Holland, MI
How to Pay for a Senior Living Community
Here’s what Donna had to say:
Mary,
Thanks for asking this question. How to pay for senior living is an important topic, and we appreciate the opportunity to address it. Considering the national average cost for assisted living is just below $4,000 a month, it’s good to know all the options you and your family have on your side.
To begin, assess the level of care your parents will want and need. Consider if your parents are searching for independent or assisted living, or if they would need to move into a memory care community. Based on their needs, you’ll find different ways to fund this next chapter in their lives. Then, you can use the information below to determine the best way to pay for senior living, based on the type of care your parents need.
I hope this helps, Mary!
Kind regards,
Donna
Who Pays for Assisted Living and Senior Living Communities?
In general, most assisted living and senior living costs are paid out of the family’s pocket. The person in care may have a pension or retirement fund, or perhaps additional funds from selling a home. Often, this income is then supplemented by family members who can provide for that person’s senior living care.
As mentioned, this is not ideal for most families. Senior living care can be costly, and many families can’t afford such large expenses out of pocket.
If this is something your family is struggling with, you may be wondering if there are other options. Here’s a look at some of the most common questions people ask when considering how to pay for a senior living community.
Does Medicare Pay for Assisted Living?
Medicare does not pay for assisted living costs.
Housing and daily care, like bathing and dressing, are not covered by Medicare. That said, Medicare may cover the costs of some specific services within your loved one’s assisted living care. For example, it may cover injection fees, prescription fees, or medical equipment required by your loved one’s condition while they are at an assisted living facility.
Does Medicaid Pay for Assisted Living?
In some cases, Medicaid may cover a portion of some assisted living fees. That said, Medicaid is only available to those who have an income low enough to qualify for government aid. What’s more, the assisted living facility where your loved one will live must participate in the state-funded programs supported by Medicaid.
Unfortunately, Medicaid is a very confusing program, and because it is a federal program that is administered individually by each state, the rules and coverages vary significantly based on your location, and even the facility you’re working with.
In general, Medicaid is not a good option when it comes to paying for a senior living community.
Does Private Insurance Pay for Assisted Living?
Private insurance (Blue Cross, Aetna, Priority Health, etc), typically functions similarly to Medicare. They may cover some costs for skilled nursing or health care costs related to a specific condition, but they rarely cover personal care in senior care facilities or assisted living.
How to Pay for A Senior Living Community, Based on the Type of Care Your Loved One Needs
So, if Medicare, Medicaid, and private insurance are unlikely to support your loved one in assisted living or a senior living community, then how can your family pay for these services and care?
As mentioned above, the type of care will largely dictate how you and your family are able to pay for a senior living community. Assisted living and memory care payment options may look different from a senior living community. Let’s look at a few of the best options for each type of care.
How to Pay for Assisted Living
If your senior loved one was in the military, he or she (and spouse) may be entitled to VA benefits to help pay for assisted living.
Called Non-Service Connected Improved Pension Benefit with Aid and Attendance (or Aid and Attendance, for short), these benefits can be used to cover the costs of assisted living. In 2022, those monthly benefits were up to:
- $2,051 monthly for an eligible veteran
- $1,218 monthly for a surviving spouse with no dependents
- $2,431 for a veteran with a non-veteran spouse
These benefits do change regularly, so it’s best to check with your loved one’s current policy, but these monthly benefits can go a long way to help pay for assisted living.
Long-Term Care Insurance may be another way to help pay for assisted living. It’s similar to health insurance but can provide some added benefits that will help cover the costs of assisted living.
Typically, your loved one would have to have purchased this type of insurance policy before they turned 80, but it’s important to look out for all kinds of policy options. If one company denies an application or offers benefits that aren’t right for you, it’s worth it to keep applying. You may just find the right coverage for your family’s situation.
How to Pay for Memory Care
Memory care communities are specially designed for those seniors with dementia or Alzheimer’s. Just like assisted living, memory care offered in these communities can be paid for using a family’s private funds, veterans’ benefits, long-term care insurance, or, depending on the state, Medicaid.
How to Pay for Senior Independent Living
Because senior independent living communities aren’t directly related to healthcare, they typically cannot be paid for using any kind of health insurance or health benefit. That said, some senior independent living communities may participate in state or federal programs that subsidize housing, meaning they are able to offer fees on a sliding scale based on the senior’s income.
There are organizations that can point you to a list of subsidized senior housing options in your area and their entrance fees. Outside of subsidized options, independent living is most often financed using the senior’s private resources, often with help from family.
Financing Senior Living: Other Options to Consider
Traditional financing options for senior living don’t go very far. Because insurance doesn’t cover the cost of most types of senior living care, many families look for other ways to subsidize that cost. While every family should evaluate their own finances individually to make the best decision for their situation, here are a few additional options that some consider:
Long-Term Care Insurance
This was mentioned earlier, but the information bears repeating. If your family is able to find a policy that provides favorable terms, long-term care insurance can provide some financial support for both assisted living and memory care.
Annuity Income
Annuity income is another way that many families and seniors use to pay for senior living communities. While there are a few types of annuities, the general principle is that you or your loved one makes a lump-sum payment to an insurance company. In return, the insurer promises to pay out monthly or yearly sums for the rest of the insured’s life.
Again, this isn’t the best option for everyone, and there are a number of different types of annuities, but it is one method that some families use to afford the costs of senior living.
Real Estate Income
Finally, real estate is another great way to finance senior living. If your loved ones are moving out of a home to start their life in a senior community, they may be able to sell the home and use the proceeds to supplement the cost of assisted living.
Some families also consider the option of a reverse mortgage, which taps into a home’s equity to provide money to support the costs of assisted living. This is another option that’s best for each family to determine for themselves, but it’s worth checking to see if it may be right for you.
There may be other options available to help you and your family finance a move to a senior living community. We encourage you to call us with questions and to schedule a tour of the Heritage Senior Community in your hometown.
