What Are Your Options to Pay for Assisted Living?

How do seniors pay for assisted living? What are your best options? Here’s how to build your plan to pay for assisted living costs.

Coming to terms with the need for assisted living is one thing. Paying for assisted living becomes the next question to tackle. Assisted living costs vary throughout the country — roughly from $3,000 to $6,690 a month. Will Medicare cover the cost of assisted living? No, although Medicaid might. How do seniors pay for assisted living? What are your best options? Here’s how to build your plan to pay for assisted living costs.

The median costs of assisted living

Genworth Financial is a Fortune 500 insurance holding company that tracks the cost of assisted living and long-term care in the United States. For 2020, the firm found the median yearly cost for care in an assisted living facility was $51,600. That’s a median monthly cost of $4,300.


Paying for assisted living entirely out of pocket is often referred to as “private pay,” meaning the assisted living resident will use their own savings, personal finances or assets, and the help of family or friends to pay for assisted living care and services.

Long-Term Care Insurance

This type of policy is designed to defray the costs and expense of long-term care for people who don’t qualify for Medicaid. Unfortunately, people who already have disabilities or illnesses won’t qualify for long-term care insurance, since they already require care and services (like having a pre-existing condition). Upper age limits may also exclude individuals from qualifying. In these cases, the individual will need to pay for care through other means, such as Medicaid or private pay.  Most long-term care insurance policies pay a fixed dollar amount toward each level of care, with higher levels of care being reimbursed at an increased rate.

Be careful purchasing a long-term care insurance policy. One may be vastly different from another in terms of benefits and coverage, qualifications, rules, and flexibility, exclusions, and waiting periods. The cost of long-term care insurance can vary widely as well — sometimes by more than $500 a month — a cost that can increase over time. You should research several long-term care insurance policies with the help of a qualified financial advisor. 

Medicare and Medicaid

This can be a complex subject as it relates to overall care and prescription drug coverage, but the main thing to remember is that Medicare does not pay for the cost of living, room and board, or personal care in an assisted living facility. Almost all state Medicaid programs will cover at least some assisted living costs for eligible residents, such as a short-term stay in assisted living or a rehabilitation center while you recover from an illness, injury, or surgery, but assistance from Medicare is very limited. Medicaid will not cover room and board, which usually accounts for approximately half the cost of assisted living. Eligibility criteria will vary by state, and a needs assessment is usually required to calculate the number of hours that Medicaid will cover. Find more details here.

Veterans Retirement Benefits

If you’re a retired veteran of the armed services, you qualify for medical care through a Veterans Affairs medical facility (often referred to as a VA Facility). You may also qualify for the Veterans Aid & Attendance benefit. The A&A benefit, as it’s known, includes both the VA’s Basic Pension for veterans and surviving spouses, as well as an additional monetary payment to help reduce the financial burden of long-term care. The money, which is tax-free, covers some expenses for in-home care, nursing homes, and assisted living for honorably discharged wartime veterans over 65 and their widowed spouses. You’ll need to apply and qualify on the basis of wartime service, medical requirements and financial need, but this lifetime benefit is well worth the effort. For more detailed information, visit the Veterans Administration website.

Reverse Mortgages

A home equity line of credit (HELOC) or reverse mortgage are two options homeowners have for using their homes to help pay for assisted living. But these options aren’t necessarily appropriate for or available to all homeowners. They might not be the best financial decision for you. To use a reverse mortgage, for example, an individual must be married, and their spouse must continue to live in the home, as reverse mortgage rules state that a home must be owner-occupied. Home equity credit lines don’t have this limitation. They also have lower associated costs and can be a good option for couples of mixed ages who wouldn’t be eligible for a reverse mortgage.


Life Insurance Benefits and Conversions

There are five different ways life insurance policies can be used to pay for care while the policyholder is still alive. However, not all five options are available to all policyholders, nor do they necessarily make economic sense for everyone. That said, life insurance is one of the most underutilized of the self-payment options for assisted living.

  1. Life settlements are an option in which a policyholder sells their right to collect the death benefit from their policy, and they stop making monthly premium payments in exchange for an immediate lump sum of cash.
  1. Viatical settlements are like life settlements ,but are designed for terminally ill individuals. Typically, viatical settlements fetch a higher buyout for the policy than a life settlement.
  1. Accelerated death benefits are an option that enables terminally ill individuals to receive a portion of their death benefits in advance of their death.
  1. Death benefits loans are loans taken against the cash value of the policy, not the death benefit. These must be repaid, or the death benefit will be reduced.
  1. Life insurance conversions directly convert the value of a policy in exchange for care. For example, an individual with a $100,000 policy may exchange that for time in an assisted living or senior living community. Of these five options, it’s likely life insurance policyholders will receive the greatest value for their policy using this approach.

Life insurance is one of the most underutilized of the self-payment options for assisted living.

Assisted Living Loans

When used appropriately, an assisted living loan provides families with great flexibility. They’re designed for short-term financial gaps typically for periods of less than 2 years. They’re ideal when families have unexpected assisted living costs and are waiting for other resources to become available. For example, if an individual is moving into assisted living and is waiting for a home to sell, and they’re uncertain how long that process will take, a loan is a very good option. Another example is when a veteran has applied for the Aid & Attendance benefit. The approval process can be lengthy, but once approved, the benefits are paid retroactively to their application date in a lump sum. The lump sum is then used to pay off the assisted living loan.


Plan now to pay for assisted living costs

You’ll have to consider various health scenarios, but creating a financial plan for assisted living is a good idea. There are a variety of resources available to help families with financial planning for assisted living. They include public benefits counselors, geriatric care managers, elder care resource planners, and elderlaw attorneys. Your local Area Agencies on Aging (AAA) and Aging and Disability Resource Centers (ADRC) often have benefits counselors on staff that help families understand their financial options for assisted living.

Discover assisted living at Oaks Senior Living

The right assisted living residence can give an individual as much independence as they want, as well as the knowledge that personal care and support services are available if they need them. Oaks Senior Living is family-owned with a commitment to being personally available to residents and family members. Assisted living residents can enjoy all-day dining, bird aviaries, aquariums, community pets, on-site physical and occupational therapies, a putting green, a children’s playground, and many other benefits. This approach creates a family environment where people are valued and appreciated, honoring personal choice, and providing a sense of purpose while enabling meaningful relationships. We have options and strategies to help keep the costs of assisted living within reach, and we’d love to help you and your family find all the financial resources at your disposal.

For more information on assisted living, or details on direct admittance with no entrance fee, please contact us through our website or call 770- 796-5871.

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