The choice to place a loved one into assisted living or memory care comes with an array of questions: How does one pay for assisted living? Does Medicare or Medicaid cover assisted living? Which senior living community will be the best fit? Will my loved one be well cared for? What will their quality of life be like? Thankfully, there are options when it comes to paying for assisted living.
The fact is, assisted living isn’t inexpensive. According to the Genworth Financial Cost of Care 2019 Survey, the cost for community care services has risen on average from 1.71%-3.64% per year. That’s an increase of up to $1,321 annually for an assisted living facility. Some care costs are even outpacing the U.S. inflation rate of 2.1% by almost double. With questions about how to pay for assisted living on the rise, it’s more important than ever to understand the payment options available to you and your loved ones.
Resources like this can help you navigate the costs associated with assisted living and memory care. Other online tools like a Cost of Care Calculator provide invaluable context when comparing your options. To help you get started, we’ve outlined some of the ways to pay for assisted living:
Private Pay with Personal Funds
The first inclination for many people is to pay for care using their own personal income or savings. Perhaps you or your loved one has a pension or other retirement fund, additional income from stocks, or proceeds from selling a home. All these are viable options, but the rising costs of care in 2019 mean a month’s worth of services could quickly use up what’s saved. Personal investment portfolios, like 401(k) plans or IRAs, can also be cashed in to help pay for care. However, paying out of pocket is often beyond what many people can afford over time.
Long-Term Care Insurance
This option can help preserve savings and assets for you or your loved ones. A long-term care insurance policy removes the burden of having to pay for 100% of care from personal funds by helping to supplement monthly payments to an assisted living provider. Depending on the policy, recipients can choose where they receive care — in a nursing home, in their own home, or in another setting like assisted living — and the range of services they’re eligible to receive is expanded. However, not all policies are created equal. It’s best to call your long term care insurance company to gain a clear understanding of what benefits your policy offers. Most importantly, the policy is handled by an experienced and reputable agent or financial planner who can help evaluate all the options and find a plan that best fits each unique situation.
A reverse mortgage on a home you or your loved one owns lets you borrow money on the equity that’s been built up over time. After the last resident moves out, the money would then need to be repaid. This often means selling the home. While a viable option for married seniors who only need assisted living for one person — or if assisted living is needed immediately and funds from a home sale are not available — this type of payment is not ideal if you’d prefer the home to stay in the family.
For those who have served our country, the Veterans Administration (VA) offers benefits that can be used to pay for assisted living, known as Non-Service Connected Improved Pension Benefit with Aid and Attendance (or simply, Aid and Attendance). As of 2019, the program offers assistance up to $1,881 per month for a single veteran and up to $2,230 per month for a married veteran. Unfortunately, eligibility is complicated, and there can be extensive wait times for approval. Details and tips for expediting the approval process are available here.
Medicare and Medicaid
Does Medicare cover assisted living costs? How much does Medicaid pay for assisted living? They’re fair questions with a variety of answers. Medicare does not pay for residential services or personal care in an assisted living community. Medicaid, however, is available to those who have exhausted their own personal resources or have an income low enough to qualify for government aid. This complicated federal program is administered by each individual state. Additionally, assisted living providers must participate – not all assisted living providers participate in the state funded programs due to low reimbursement rates and high regulations which can impact the quality of care that residents and families have come to expect of the provider. While still limited, the number of state Medicaid programs paying for assisted living is increasing. A complete list of states whose Medicaid programs help with the cost of assisted living and their eligibility requirements is available here.