How To Pay For Assisted Living

Assisted living is a common next step for seniors who need help with daily tasks but wish to maintain a sense of independence. More than 800,000 Americans currently live in assisted living, according to the American Health Care Association and the National Center for Assisted Living. 

However, assisted living can be a significant expense, with a median estimated cost of $6,077/month, based on 2024 CareScout data. Knowing how to pay for assisted living can help you plan for your loved one before moving.

Before moving to assisted living, recognize that this option is often more expensive than independent living. However, those costs contribute to supportive services you might need, like help with meal preparation and transportation. You could lower the cost of assisted living in several ways, which we discuss below.

Health insurance and long-term care coverage can help offset some of the costs of assisted living. Most health insurance plans focus coverage on medical services you might need in assisted living. Still, coverage varies among insurance carriers and plans. 

Explore details about paying for assisted living with Medicare, private health insurance, and long-term care insurance in the section below.

Medicare benefits are generally for seniors 65 and older. This service doesn't cover room and board, but learning how to pay for assisted living with Medicare can help you reduce costs.

Original Medicare (Parts A and B) does not cover nonmedical services in assisted living communities, nursing homes, or memory care facilities, such as delivered meals or help with dressing or toileting. Still, it can pay for certain medical services you may need in assisted living, such as doctor visits or physical therapy, if they are medically necessary and meet Medicare's criteria. 

Some Medicare Part C plans (also known as Medicare Advantage) may have limited coverage for everyday support services, including grocery shopping or transportation to appointments. 

Private insurance is coverage you buy from a private carrier. Like Medicare, private health insurance typically does not cover assisted living costs. However, it may cover medical services like screenings and checkups for chronic conditions. Depending on the plan, it could also help with short-term care after surgery, specialist visits, or services like occupational or physical therapy.

Long-term care insurance pays for services in long-term care facilities, including assisted living and nursing homes. People usually get this insurance before they need it, often in their 50s, when premiums are lower. 

These policies typically provide a daily amount for long-term care services, although plans vary in the amount and duration of coverage they offer. For example, some plans may only cover long-term care costs for two years.

The costs of caregiving for a loved one can quickly add up. Some families might find it more practical to apply those resources toward their assisted living costs, especially when several family members share the responsibility. SupportPay can make the process easier by allowing multiple people to split and track expenses. 

When deciding how to pay for assisted living, don't overlook the equity you've built if you own your home. 

Reverse mortgages are loans available to homeowners aged 62 and older. Rather than paying monthly, as you would with a traditional mortgage, a reverse mortgage provides you with money, sometimes in monthly installments or as a lump sum. 

Some people use funds from reverse mortgages to pay for assisted living. Doing so usually only works if a co-borrower, like your spouse, continues living in the home. If it is no longer your primary house, you may need to sell it to repay the loan plus interest.

Bridge loans can give you money during the transition period between selling your home and moving into assisted living. If you want to move into assisted living before your home sells, you can borrow a bridge loan to finance the move. Once the home sells, you repay the loan, often with interest, and use the remaining proceeds for assisted living costs. 

Selling a house to pay for senior care is another option. If you've paid off most or all your mortgage, you could sell your home to free up funds for assisted living and related expenses. Downsizing your home may also help you lower housing costs, making room in your budget each month. 

If you're not ready to sell, consider renting it to someone instead. The rental income could cover some or all your assisted living expenses, and you can keep your home as a long-term asset. Factor in taxes and ongoing fees related to property maintenance and management to make sure renting is worthwhile.

Public assistance programs are government-funded resources that may help you cover assisted living-related costs. You may qualify for help through Medicaid or state-specific programs, depending on your income, health needs, and location.

The Medicaid program helps people with limited resources and/or low income pay for medical care. According to the National Council on Aging, Medicaid won't pay for your assisted living housing costs. However, it may cover medical services you receive in assisted living that aren't covered by Medicare, like hearing checkups and extended stays in a nursing facility, if you require transfer to a nursing facility from the assisted living and meet Medicaid eligibility criteria. 

Most states also offer waivers through Medicaid's Home and Community-Based Services (HCBS). These HCBS Waivers let states forgo some Medicaid requirements to expand eligibility. Some states also use the waivers to offer more covered services, like medication management or help with dressing and bathing. 

Many assisted living facilities accept Medicaid, but not all do. Contact your state's Medicaid agency to find approved facilities or to apply for Medicaid.

Several states maintain programs to help seniors pay for care. Although program details vary, they're usually available to low-income seniors. Here are a few examples:

• Colorado's Old Age Pension: This tax-funded program provides eligible seniors with a monthly benefit of up to $1,005, depending on their income and resources, effective Jan. 1, 2025. They can use the funds toward assisted living and other expenses.
• Massachusetts' Supportive Senior Housing Initiative: Seniors living in eligible Massachusetts supportive housing communities can receive free services, like case management and laundry cleaning.
• Rhode Island's SSI Enhanced Assisted Living Program: Seniors who require assisted living and qualify for SSI may get financial help from this program to help cover housing costs.

Your state's social services department can help you find programs you may qualify for.

VA health benefits do not cover assisted living room and board, but they can pay for associated long-term care services, like physical therapy or medication reminders. 

A new law may expand veterans' benefits to include room and board. The Senator Elizabeth Dole 21st Century Veterans Healthcare and Benefits Improvement Act includes a pilot program that runs through Sept. 2028. The program will cover assisted living costs for 60 eligible veterans to test its effectiveness and veteran satisfaction. Based on the pilot program's outcomes, this funding may be available to all eligible veterans in the future.

Most programs and insurance won't cover all your assisted living costs, but these other options could help reduce what you pay.

You may deduct some of your assisted living expenses on your taxes as medical expenses, but only the amount above 7.5% of your adjusted gross income. To deduct related expenses, the IRS requires you to be "chronically ill." 

The IRS defines a chronically ill individual as a person who is unable to perform at least two activities of daily living for at least 90 consecutive days or requires supervision due to cognitive impairment. If you don't meet this definition and don't mainly live in assisted living to get medical care, you can still deduct what you pay for medical services. 

Seniors with low income may qualify for Section 202 housing help through the U.S. Department of Housing and Urban Development, or HUD. This program provides affordable and accessible housing for seniors, connecting them to supportive services like transportation and housekeeping. Residents often pay up to just 30% of their adjusted income.

Some localities also have assisted living communities for lower-income seniors. Check with your local Area Agency on Aging to learn about available options in your community. 

Some communities offer shared rooms for a lower price than single-occupancy rooms. Having a roommate could help you save enough money to set aside or put toward personal expenses. Plus, you'll have someone to socialize with and be present in case of an emergency. Ask about roommate policies when comparing communities, though, as some may not offer discounts on shared spaces.

If you only need minimal assistance, a facility with tiered levels of care may help lower your costs. Higher levels of care offer increased support, which is why they often cost more. If you require additional services in the future, you can transition to a higher level of care within your community. Still, starting at a lower level lets you pay only for the services you need.

Plan ahead by understanding your options for paying for assisted living. Comparing home care vs. assisted living and other eldercare options can be a helpful first step in finding the right level of support. If you're sure assisted living is the best choice, explore your financial options, like using your home equity or applying for local housing assistance to help cover your costs. For moe resources, please check out our assisted living resource hub or our financial and legal resource hub.

 

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