Paying for assisted living can feel overwhelming, especially when you’re trying to balance quality care with real-world budgets. Trying to figure out how to afford assisted living costs can quickly become one of the most stressful financial challenges your family faces. Don’t worry, if those numbers are making your head spin, you aren’t alone.
The good news is that there are more options than most families realize, and with the right guidance, you can build a plan that works for your situation.
We’ll cover what assisted living actually costs, which payment sources most families rely on, and how Legacy Navigation can help you build a plan that can adapt as care needs change.
Table of Contents
- How Is Most Assisted Living Care Usually Paid For?
- Key Factors That Affect the Cost of Assisted Living
- How To Pay for Assisted Living Facilities: 5 Options All Families Should Know
- Making Assisted Living More Affordable: Tips and Strategies
- Frequently Asked Questions About Assisted Living Coverage Through Medicaid
- Legacy Navigation: Helping Seniors Find the Right Payment Option for Assisted Living
How Is Most Assisted Living Care Usually Paid For?
Most assisted living care is typically paid for with private funds, such as savings, retirement income, or the sale of a home. Some families also use long-term care insurance, veterans’ benefits, or Medicaid programs, depending on eligibility. Coverage options vary by state, so planning ahead is essential.
How Do People Afford To Live in Assisted Living?
Often, people can’t afford the cost of assisted living with just one source. Most people need to combine multiple financial resources to cover the costs of assisted living facilities.
Working with Legacy Navigation can help you understand your options and eligibility and allow you to plan with confidence.
Key Factors That Affect the Cost of Assisted Living
Costs of assisted living communities vary greatly across the United States. Several factors impact these cost variations, including:
- Location: Areas with a higher cost of living will have more expensive assisted living facilities.
- Level of care needed: The more areas in which a person needs assistance with activities of daily living, the higher the cost of assisted living services. The six categories defined as activities of daily living (ADL) are:
- Washing
- Dressing
- Feeding
- Toileting
- Moving around
- Transferring
Most assisted living facilities require individuals to be able to perform one or more activities of daily living independently to qualify for space in the facility. When someone cannot do any ADLs without assistance, they require full nursing care, which is a different level of service than what is provided at most assisted living facilities.
- Size of the living space: Larger private apartment spaces come with a higher price tag. Every assisted living facility offers different options, ranging from shared living spaces and small studios to larger 1- or 2-bedroom apartments or townhome-style units.
- Level of luxury or exclusivity of the facility: The higher the level of luxury and exclusivity, the higher the monthly cost.
- Demand: Typically, when demand exceeds availability, prices rise in assisted living facilities. If you are interested in a facility that has a long waiting list for yourself or your loved one, it will likely have higher costs than one that regularly has availability.
How To Pay for Assisted Living Facilities: 5 Options All Families Should Know
Fortunately, there are many options to explore and professionals to guide you as you explore how to pay for assisted living facilities. Let’s look at 5 options for paying for assisted living care, and even how to pay for assisted living with low income.
#1: Traditional Methods
Traditional methods to pay for senior care include the following options:
- Personal savings: This can include 401(k)s, IRAs, and other retirement savings accounts. Personal savings is a good option for individuals who have planned and saved well throughout their lives and careers. However, not everyone has the savings to afford this, and that’s okay.
- Retirement income: Many people who earned high incomes during their careers have enough monthly retirement income to cover some or all of assisted living costs. Other people’s retirement incomes barely put a dent into the monthly costs, but every little bit adds up.
- Family member support: Sometimes, family members are in a financial position to close the gap between what is covered by other sources and the total cost of the necessary care. This is a good option if it is financially feasible.
Instead of jumping to the decision to fully fund senior care with traditional methods, it is wise to consult a senior care professional advisor to explore what other options are available to subsidize the amount you have to pay every month.
#2: Long-Term Care Insurance
Long-term care insurance is a wonderful option for those who plan ahead, since purchasing it when needed isn’t possible. Virtually all policies have a set period during which an individual must pay in before benefits can be drawn.
Long-term care insurance typically covers a certain dollar amount per day for long-term care once it is needed. It likely will not cover the full cost of assisted living care, but it can pay for a significant portion, minimizing the strain on other sources of savings and income.
Every policy is different, so consult with your insurance broker or senior care professional advisor to understand the terms of the policy you or your loved one has.
#3: Medicaid HCBS Waiver Programs
Medicaid provides essential healthcare services, including financial assistance for long-term senior care for individuals ages 65 and older based on financial need, through the Home and Community-Based Services (HCBS) waiver program.
There are strict requirements to qualify for this assistance, which vary by state. Services available depend heavily on individual need and state guidelines. These services can include in-home skilled nursing, therapy, and ADL assistance care.
It can also include coverage for a senior living or skilled nursing facility for people who need more intensive levels of care and supervision. It’s possible that a Medicaid waiver can cover many expenses of an assisted facility, but you must apply for the waiver and be approved for it.
It is strongly advised that you consult a Certified Medicaid Planner™ to assist in the complicated process of obtaining a Medicaid waiver. There are a lot of steps, requirements, documentation, and time involved to get approval and ensure continued services if you or your loved one qualifies.
Legacy Navigation offers the expertise, experience, and support needed to help you learn how to get Medicaid to pay for assisted living.
#4: Veterans’ Benefits
There are a variety of benefits available for veterans, and specific eligibility for different benefits and services depends on income and other factors. VeteranAid is a great website where you can access information about benefits available to you or your loved one through the VA.
One program you’ll want to look into is the Aid and Attendance Benefit, which veterans and their spouses can use toward assisted living costs. Exact benefits are based on individual income needs. It’s an extra chunk of income each month used to assist with activities of daily living, either in-home or in a care facility.
#5: Financing Options
When other options do not provide enough to cover the necessary or preferred levels of care and comfort, alternative financial tools, such as reverse mortgages, home equity loans, and personal loans, can be used to access additional funds to close the gap.
Reverse Mortgage
A reverse mortgage allows you to borrow money against the equity (the difference between the appraised value of your home and your outstanding mortgage balance) in your home. Your home equity increases as the size of your mortgage shrinks and/or your property value grows.
The Loan-to-Value ratio (LVR) increases by 1% for each year after age 60. As a general guide, if you’re 60, the maximum amount you can borrow is 20% of the value of your home, and if you’re 75, the maximum amount you can borrow is 35%.
Reverse mortgages are typically available in monthly payments issued to the property owner. It is a solid option for people with significant home equity and without other sources of income or insurance coverage.
Home Equity Loans
Home equity loans (HELOC loans) are another possible source of funds to cover long-term care costs. Home equity is an amount calculated by assessing the home’s fair market value and subtracting all liens on the property, such as any mortgages and any other outstanding loans.
HELOC loans can have high interest rates, so they should only be considered when there is a need to get one.
Personal Loans
Personal loans are any other loan obtained to access and secure funds to support long-term assisted living care.
These could include:
- Unsecured personal loans
- Secured personal loans
- Bridge loans
- Credit union personal loans
- Peer-to-Peer (P2P) loans
Again, interest rates on these loans can be extremely high, so they should be used as a last resort to cover any gaps in coverage.
Making Assisted Living More Affordable: Tips and Strategies
There are different ways to decrease the overall cost of assisted living, including the following:
- Shared living: Opting for a shared room, suite, or apartment in an assisted living facility will substantially decrease the cost.
- State-specific programs and discounts: You want to consult a specialist in your state and region to learn about specific incentives, programs, and discounts available based on your state of residence.
- Negotiating costs with the facility: It is always possible to negotiate a package that provides the care you or your loved ones need while eliminating fees for services you do not need. Many facilities offer move-in specials, seasonal promotions, and discounts for signing or paying for an extended lease up front. It never hurts to ask what is available.
Frequently Asked Questions About Assisted Living Coverage Through Medicaid
What Are Medicaid Waivers for Assisted Living?
Medicaid waivers are offered at the state level. They allow states to expand coverage and tailor services for specific situations, thus providing care in the community rather than solely in institutional settings, such as nursing homes.
Legacy Navigation will pair you with a Certified Medicaid Planner™ who specializes in Medicaid waivers in your particular state and region.
Who Qualifies for Medicaid Assistance for Assisted Living?
The Medicaid website is a good place to start, as it outlines many details about what is included in nursing care and other long-term care facilities, and who qualifies for what. Because there are many subtleties and steps involved in applying for services and accessing benefits, it is advised to speak with a Certified Medicaid Planner™ to navigate the process.
What Services Does Medicaid Cover in Assisted Living?
Medicaid does not cover all costs of assisted living, such as room and board.
What Medicaid does cover are services, including:
- Personal care
- Medication management
- Therapy
- Nursing care
- Administration
- Activities
- Housekeeping
- Primary care doctors
Medicaid cannot cover the RUF (rent, utilities, food) expense, which is a federal amount determined by the IRS Collection Financial Standards that applies to all states.
Do You Need To Sell Your Home To Qualify for Medicaid?
Married couples do not need to sell their home to pay for Medicaid, and there are five ways to transfer the deed of a home without penalty. The best course of action is to consult a Certified Medicaid Planner™ who can explain and support every step of this process, taking the stress off of you and your family.
Legacy Navigation: Helping Seniors Find the Right Payment Option for Assisted Living
This is a lot to take in and navigate. It can be overwhelming and feel daunting to figure out on your own. Fortunately, you don’t have to go through this process by yourself.
Legacy Navigation operates in 44 states and is here to help you find the right combination of payment options, as well as how to get Medicaid to pay for assisted living and apply for the Medicaid waiver if you qualify.
We specialize in elder care financial planning, and our Certified Medicaid Planners™ would be delighted to walk you and your family through what we offer and how we can support you on this journey with dignity and compassion.
