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Aging isn’t just hard on your health — it can be hard on your wallet too. Genworth Financial’s 2024 Cost of Care Survey reports that the median cost of assisted living facilities is $5,900 per month. Meanwhile, the American Health Care Association and the National Center for Assisted Living report that the median stay lasts about 22 months. Put together, that means you’d need more than $129,800 to afford the median stay. If your loved one gets to enjoy life a little longer or you live in a more expensive part of the country, you could be looking at an exponentially higher bill.
“It can be more challenging without decades of advance planning, but it’s still possible to find workable solutions by getting creative and consulting professionals who understand the range of available programs and strategies,” says Lily Vittayarukskul, CEO of Waterlily, a website that uses AI to predict long-term care needs, based out of San Francisco.
“Some families combine resources, sometimes renting out a parent’s home for monthly income that helps with assisted living bills,” she says.
Here, we’ll unpack how much assisted living can cost and ways families can manage this big expense later in life.
[READ: Independent Living vs. Assisted Living: What’s the Difference?]
How Much Does Assisted Living Cost?
It’s true that assisted living is expensive, with that median cost of $5,900 per month. However, compare that to the average monthly fee for nursing homes:
— Semi-private nursing home room: $8,669
— Private nursing home room: $9,733
Assisted living, when medically appropriate, can be a more economical option than a nursing home.
Aging in place at home may also save you some money over assisted living. In-home care costs typically start at about $33 per hour, depending on the requested services and your geographic location. That amount may be more affordable if you need only a few hours of care at a time, but full-time care can add up quickly and may be difficult to staff appropriately.
Doesn’t Medicare Pay for Assisted Living?
Medicare is the federal health insurance program for Americans age 65 and older (and some younger people with specific disabilities, such as brain injuries). Medicare doesn’t cover most assisted living costs. Specifically, it doesn’t cover what’s known as custodial care, which can include bathing, dressing and other activities of daily living. Medicare Advantage, offered through private insurers, may help cover some custodial care costs. Check your plan details to see if it covers any costs associated with assisted living.
[Read: Does Medicare Pay for Assisted Living?]
Medicaid and the Waiver Program
Medicaid, a joint federal and state program, offers health care coverage to some beneficiaries, such as low-income adults, children, pregnant women, the elderly and people with disabilities. Medicaid may pay for some costs associated with assisted living in specific states. However, even in those cases, you have to spend down your assets several years in advance.
In some states, certain assisted living communities do take Medicaid waivers as a source of payment. This provision of federal law enables states to offer some benefits and services to subgroups of Medicaid beneficiaries.
If you live in a state with Medicaid waivers and find an assisted living community that accepts Medicaid, be prepared to provide significant information documenting your eligibility. This includes verification of income and other financial resources, birth certificate, Social Security card, marriage certification or divorce decree and Medicare or other health insurance cards.
[READ: When’s the Right Time to Move Into a Continuing Care Retirement Community?]
Planning for Care
Whether you have money saved for the future or are still getting organized, help is available. For instance, the Area Agency on Aging is a nonprofit organization dedicated to addressing the needs and concerns of older adults. They can help you answer questions such as:
— Which facility type is right for me?
— How will we pay for care? What will insurance cover?
— How should we plan for long-term care?
You might also consider working with an eldercare attorney.
[Read: Having the Conversation With a Loved One About Senior Living.]
How to Pay for Assisted Living
If you determine that assisted living is necessary, there are some possible sources of help:
— Long-term care insurance
— Life insurance
— Private health insurance
— Pensions, annuities and investments
— Veteran benefits
— Financing
— State and social assistance
Long-term care insurance
are designed to cover long-term care needs. These insurance plans can help pay for services such as occupational therapy and rehab, and help with activities of daily living. However, this coverage comes with a hefty price tag.
Premiums for a 55-year-old single man are currently about $950 a year, according to the American Association for Long-Term Care Insurance. That will cover $165,000 worth of benefits at the time of the policy’s purchase. If benefits increase by 3% annually, that would mean getting about $400,500 at age 85. While such coverage can be helpful, this should be just one part of your strategy to pay for assisted living or other long-term care.
Life insurance
You may be able to cash out your life insurance policy and use this money to pay for assisted living. If you have whole life insurance, you can surrender it for its cash value tax-free. Talk to your insurance agent to calculate the value of your policy.
While this option can be a valuable source of cash if you need it, it may not be an optimal move for individuals who are counting on this life insurance to provide a nest egg for loved ones.
Private health insurance
While Medicare doesn’t cover the cost of assisted living, some private health insurers do, and some may offer some funds to cover at least part of the services you need in assisted living. You’ll have to check with your benefits provider for details about what’s included in your policy.
You may want to explore hybrid policies, such as a life insurance policy with a long-term care rider. A benefit of these plans is that you can access the money you put in or leave it to your heirs if you never end up needing long-term care.
Pensions, annuities and investments
A pension from your employer can be a valuable source of money to pay for assisted living.
For those who don’t have a pension, a fixed annuity can be helpful. This financial product can be set up to pay you a regular sum now or in the future. You can purchase an annuity with a single payment or contribute to it over time. The main advantage of an annuity is that it provides a source of retirement income. On the downside, annuities, at best, have a low rate of earned interest, and you must wait until you’re 59.5 to make penalty-free withdrawals.
Investments, such as stock market accounts, can grow considerably over time and provide a good source of income when you head to assisted living. However, the economy and the market can be volatile, and you must be prepared for ups and downs. If you count on these to pay for assisted living and need the money when the market is down, you could get less than if you waited for a strong market.
Veteran benefits
Veterans and their spouses may benefit from Veterans Aid & Attendance benefits and Housebound allowance. Such benefits can range from about $2,000 per month for assistance with long-term care, including assisted living. Covered services include 24/7 nursing and medical care; physical therapy; help with daily activities, such as bathing or medication management; comfort care and pain management; and support for caregivers.
If you’re able to get a $2,000 a month VA benefit coupled with your Social Security, it will probably allow you to stay in an assisted-living facility that costs $4,000 to $5,000 a month, says H. Frances Reaves, an elder law attorney in Key Biscayne, Florida.
Typically, “these places have a dining room with a menu, many more activities, and a van that allows residents to be driven to a grocery store nearby,” Reaves says.
Financing
Financing for assisted living can be complicated, particularly if you don’t have much money saved to cover this expense. Because assisted living facilities are nearly always set up as rental units, a mortgage is unlikely to be an option to finance your fees; instead, you’ll need cash on hand to cover your expenses month to month. If you don’t have a big nest egg, you can explore some other financing options, including:
— Selling your home and using the proceeds to pay your rent and other fees at an assisted living facility
— Setting up a bridge loan, a potentially risky, short-term loan option that uses the family home as collateral. This option can offer seniors in an urgent situation the means to pay for care quickly, as this loan product “bridges” the time between when you need the money and when the home can sell, freeing up the cash equity you have in the property.
— Getting a reverse mortgage, in which you sell your home back to the bank and they pay you in monthly installments, creating working capital for paying for care
State assistance
“Some states have formal programs that will help pay the assisted living bill,” says Evan H. Farr, a certified elder law attorney
in Fairfax, Virginia.
“For example, in Virginia, there’s a program called the Auxiliary Grant that will help pay for an ALF, but not every ALF participates in this program, and those that do typically only have one or two AG Beds available, which tend to not get frequent turnover because they’re occupied for lengthy periods by relatively healthy individuals.”
In other words, many of these state programs have lengthy waitlists.
Social programs that provide free support and resources that may be able to help you finance assisted living include:
— PACE. The Program of All-Inclusive Care for the Elderly provides comprehensive medical and social services to some older adults.
— SHIP. The State Health Insurance Program offers personalized health insurance counseling to Medicare-eligible adults to help them find services and resources for care in their communities.
— Social Security Disability Insurance. If you have a disability that requires assistance with activities of daily living, you may be eligible to receive Social Security disability benefits from the federal government. These benefits can be used to offset some of the costs of assisted living.
[READ: Affordable Housing Options for Seniors]
Assisted Living Costs Factors
The four main factors that determine the cost of assisted living are:
— How much assistance you require
— The types of amenities or luxury experiences you want
— The location of the assisted living community
— Single or couple
How much assistance you require
“What’s important to distinguish is the word ‘assisted,’ which means you are moving to a place where you can feed yourself, walk or wheelchair yourself, and are not randomly incontinent,” Reaves says. “If any of these things are missing, you will either be asked to hire an aide or go to a skilled nursing facility, or SNF, also known as a nursing home.”
Reaves says that ALFs (assisted living facilities) evaluate your capabilities before allowing you to join. She says that the prices depend on the level of care necessary and that services are priced a la carte. It may be possible to reduce costs by working with the assisted living community to limit optional services, such as continence services.
“If you need medications administered, the rules dictate a nurse must do it, hence an extra charge. If you need help in the shower, that is another extra charge,” Reaves says. “If you need an escort to take you to meals, [that’s] an extra charge.”
She says that a $3,500 monthly room rent can suddenly be $5,500 a month due to the level of care costs. But Reaves says, “One thing to know about any ALF is that prices are negotiable. Most places have more rooms than people, so don’t be afraid to ask for a discount. I do it for all my clients, and I’ve always received one.”
Types of amenities
If money is no object, luxury boutique-style facilities, which can run several thousand dollars a month, offer a variety of amenities, such as multiple dining venues, upscale housing accommodations, luxurious common spaces and a wide array of activities. However, if you’re on a budget, consider more modest communities that include the basics and what you’ll need to live and enjoy day-to-day life.
Those more modest communities do exist, Reaves says. But they’re often smaller assisted living centers, which means fewer openings.
“ALFs come in all shapes, sizes and costs,” Reaves says. “I have seen several in the $3,000 range that are older homes which have been remodeled to handle up to five or seven people. Usually the bathrooms are shared but there are rooms with private bathrooms.”
She says the best way to find the affordable ALFs, the gems everyone wants, is to go to a search engine and type in a phrase like “ALFs for $3,000 a month” and see what pops up. She also says that working with an online placement company can be one way to go, but she has been unimpressed with what some of the most prominent names out there can offer.
Reaves recommends finding a local broker, which she says you can often do through a search engine like Google or Bing. She usually types something like “Local ALF assisted living center brokers.”
“Local brokers know these home-based ALFs. The ones I have visited have been professional, clean and usually run by nurses or PAs (physician assistants),” Reaves says.
Location
Of course, as with most forms of housing, costs for assisted living vary from state to state. If you are looking to cut costs, and if a move is realistic, you may want to consider a location with lower fees. At the same time, if you are on a budget, you will want a community that offers modest accommodations.
Assisted living costs for couples
Costs for assisted living for couples are often based on individual living situations. For instance, if one spouse resides in assisted living and pays $5,350 per month while the other maintains the family home, costs add up fast. In that scenario, it may be more cost-effective for both spouses to live in assisted living or for both to remain at home and pay for in-home care for the spouse who needs it.
If a couple is living together in assisted living, they may be able to share the rent cost. However, depending on the services each requires, additional fees may vary widely.
[READ: A Checklist For Finding the Best Assisted Living Facility]
What Assisted Living Costs Include and Exclude
Assisted living costs typically include:
— Room and board
— Housekeeping services
— Social, educational and physical activities at the facility
— Depending on the community, costs may also include assistance with activities of daily living
— Transportation (to doctor appointments, grocery stores and other destinations)
— Laundry services
— Meals
Assisted living costs often do not include:
— Phone and internet services
— Personal supplies, such as incontinence care and toiletries
— Some personal grooming, such as hairstyling or salon-like services, including nail care
Questions to Ask
When evaluating an assisted living community and its cost, some questions to ask about pricing include:
— How much does pricing vary by room type or floor plan?
— Are there pricing tiers structured around the level of care?
— Are there annual pricing increases, and how much are the increases?
— Which services and activities are included, and which are additional?
— Are there upfront fees, such as deposits or community or move-in fees?
— What notice do I need to provide if I choose to move out?
— Can my loved ones stay indefinitely, or would they ever be asked to move to a community that offers a higher level of care?
Plan Ahead
The high cost of assisted living emphasizes the need to start saving as early and as much as possible. This requires an honest assessment of how much you can afford to put away on a monthly basis. Then consider what you will need for assisted living care. Start with some simple steps:
— List your net income and current expenses.
— Identify all your saving sources.
— Write down goals, including the quality of life you want.
— Assess what’s realistic based on your financial capabilities.
“Assisted living doesn’t have to wipe out your savings if you plan wisely,” Vittayarukskul says. “Don’t wait until a crisis forces your hand. Get a road map in place now, so your family’s finances and relationship dynamics aren’t derailed later.”
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How to Pay for Assisted Living originally appeared on usnews.com
Update 04/09/25: This story was previously published at an earlier date and had been updated with new information.
