How to Pay for Senior Living 101

As our loved ones age, we want to provide the best possible care for them; sometimes that means moving them into a senior living community. Between signing legal documents and figuring out the logistics of moving itself, there is a lot of stress that comes with relocating seniors.

Paying for senior living doesn’t have to be a stressor, though—if you know where to look for financial aid and how to pay for senior living services.

How Much Does Senior Living Cost in the United States?

There are many different kinds of senior living arrangements that can fit a wide range of budgets and personal care needs. Which kind of arrangement works best for your loved ones depends on several factors, including how much care they need.

Continuing Care Retirement Community (CCRC)

Average annual cost: One-time entrance fee (typically tens of thousands of dollars) + $6,000 – $36,000

CCRCs offer various personal care and senior living options, such as independent living, assisted living, and memory care programs. Since CCRCs offer all these services in one community, residents will not need to move to a new location when their needs change.

Adult Day Care

Average annual cost: $19,240*

Adult day care is a service where seniors’ care needs are provided by paid caregivers. Working families typically use this service as a form of respite care or to get peace of mind that their aging relative is well-cared for while everyone else is at work during the day.

Independent Living

Average annual cost: $33,000

Independent living refers to senior housing where residents require little to no help with activities of daily living (ADLs), or activities that need to be completed on a day-to-day basis, such as toileting.

Assisted Living

Average annual cost: $51,600*

Assisted living refers to senior living arrangements where residents require some help with ADLs but otherwise can maintain a higher degree of independence than memory care or SNF residents.

Memory Care

Average annual cost: $60,000

Memory care centers serve people with memory problems, such as Alzheimer’s disease or another form of dementia.

Skilled Nursing Facilities (SNFs)/Nursing Homes

Average annual cost for a semi-private room: $93,075*

Average annual cost for a private room: $105,850*

Skilled nursing facilities (SNFs) are nursing homes. They are for residents who require lots of assistance with ADLs and around-the-clock monitoring by trained professionals.

In-home Services

Average annual cost for homemaker services: $53,768*

Average annual cost for a home health aide: $54,912*

In-home services, as the name implies, are personal care services that paid professionals provide to people in the comfort of their own homes. These are often basic caregiving services, such as medication management, meal preparation, and laundry assistance.

Why is Senior Living So Expensive?

Senior living is expensive.

Why, though?

There are several reasons United States residents are spending more and more on senior housing. The largest reason, though, is that there are simply millions of seniors in the country. That means there is an extremely high demand for skilled nursing services. Add in the fact that most locations offer extra amenities, and it’s easy to see why senior care and housing costs continue to rise.

How to Pay for Senior Living

Blue graphic listing options for paying for senior living in the United States

You know that your loved one needs to move into a senior living facility. You might be wondering just how to pay for that, though.

Financing options for senior housing and elder care services include the following.

Long-term Care Insurance

Long-term care insurance (LTCI) is often the most reliable way to pay for a long-term care facility in this country. There are currently only a handful of insurance companies that offer LTCI, including:

  1. Bankers Life & Casualty
  2. MassMutual
  3. Mutual of Omaha
  4. New York Life
  5. Northwestern Mutual

Tax Credits

There is a federal nonrefundable tax credit (between $3,750 to $7,500) available for seniors 65 and older and disabled people. The money saved from these credits may go towards senior housing.

Being nonrefundable, this credit is only put toward owed taxes, meaning the IRS doesn’t issue payments to seniors who are eligible for this tax credit if the amount they are eligible for is greater than the amount of taxes they owe.

  • For example, say a 67-year-old woman owes $4,000 in taxes. However, she gets an elderly and disabled tax credit worth $3,500. This means she owes only $500 in taxes.
  • Let’s say the situation is reversed and she owes $3,500 in taxes but receives a $4,000 credit. She no longer has to pay any taxes for the year, but the IRS does not issue her a check for the remaining $500 credit.


Medicare is a government-sponsored health insurance program for senior citizens. There are roughly 44 million beneficiaries of the program, making it one of the largest federal public health programs in the country. That said, basic Medicare only covers short-term care costs.

Specifically, Original Medicare (Medicare Parts A and B) will only cover costs associated with skilled nursing facilities and the like if there is a demonstrated need, and only then for stays less than 100 days. Medicare will cover up to 100% of the costs for the first 20 days. After that, Medicare will cover 80% of the costs for the next 80 days. After 100 days, 100% of the costs are the responsibility of the patient.


Medicaid is a state and federal health insurance program for low-income disabled and older people who meet certain residency requirements. What those requirements are and what is covered by Medicaid programs will vary from state to state.

People who have been denied Medicaid in the past based on income should look at their eligibility again since the income cut offs are higher for nursing home care.


Some states offer Medicaid waivers to help cover long-term care costs that might otherwise might solely be the responsibility of the senior and their family members.

For example, usually Medicaid pays for SNFs, but not assisted living facilities. A waiver, such as is offered by the Texan STAR + PLUS program, may help cover costs associated with assisted living communities.

Program of All-inclusive Care for the Elderly (PACE)

PACE stands for Program of All-inclusive Care for Elderly; it is a Medicare program/Medicaid service that helps seniors access services they may need in most locations, including within their own homes.

Who is Eligible for PACE?

According to the official Medicaid website, people are eligible for PACE if they meet the following requirements:

  • “Age 55 or older
  • Live in the service area of a PACE organization
  • Eligible for nursing home care
  • Be able to live safely in the community”

What States Offer PACE Programs?

As of July 2020, the following 32 states offered some form of PACE services:

  1. Alabama
  2. Arkansas
  3. California
  4. Colorado
  5. Delaware
  6. Florida
  7. Indiana
  8. Iowa
  9. Kansas
  10. Louisiana
  11. Maryland
  12. Massachusetts
  13. Michigan
  14. Missouri
  15. Nebraska
  16. New Jersey
  17. New Mexico
  18. New York
  19. North Carolina
  20. North Dakota
  21. Ohio
  22. Oklahoma
  23. Oregon
  24. Pennsylvania
  25. Rhode Island
  26. South Carolina
  27. Tennessee
  28. Texas
  29. Virginia
  30. Washington
  31. Wisconsin
  32. Wyoming

Social Security

Administered by the Social Security Association (SSA), Social Security is a government program that provides benefits for retirees, the disabled, and survivors (e.g., surviving spouses). Most people are eligible for Social Security at age 62. Social Security, especially in the form of supplemental security income (SSI), may help cover long-term care costs.

How much the SSA pays out depends on several factors, including if the individual is also a Medicaid recipient.

Veteran’s Benefits

Veterans may be eligible for senior housing and financial assistance from the Department of Veterans Affairs (VA). VA benefits and financial assistance options include VA loans and grants for disabled veterans.

Aid and Attendance Benefits

VA Aid and Attendance or Housebound benefits, or A&A, gives eligible veterans and their survivors extra monthly payments on top of their regular VA pension. A&A is for those who are housebound and/or require assistance with daily activities.

Long-term Care Benefits

The VA states that sick or disabled veterans and their spouses may be entitled to help with the following long-term care services:

  • “24/7 nursing and medical care
  • Physical therapy
  • Help with daily tasks (like bathing, dressing, making meals, and taking medicine)
  • Comfort care and help with managing pain
  • Support for caregivers who may need skilled help or a break so they can work, travel, or run errands”

Individuals can receive these services in a VA-run facility, but that is not always a requirement to receive aid. The VA states that eligible individuals can receive these care services in the following settings:

  • “Nursing homes
  • Assisted-living centers
  • Private homes where a caregiver supports a small group of individuals
  • Adult day health centers
  • Veterans’ own homes”

Life Insurance

Those with a life insurance policy have another way to help pay for senior housing. Depending on what their policy allows, they can:

  1. Draw from the accumulated value of the policy. This option leaves the life insurance in place, but will decrease the payout amount to beneficiaries.
  2. Cash out the policy. This option leaves nothing behind for beneficiaries and the policyholder will have to pay income tax on the cashed out amount.
  3. Sell the policy.
  4. Convert their policy. Known as life insurance conversion, the individual converts a life insurance policy into a long-term payment plan.

Reverse Mortgages, Home Equity Loans, and Home Equity Lines of Credit (HELOCs)

Tapping into the value of real estate can be one way to help pay for senior housing and elder care services. Specifically, older adults who are homeowners may be able to use reverse mortgages, home equity loans, and home equity lines of credit (HELOCs) to get loans and payments that they can use to pay for a variety of senior services.

Reverse Mortgages

Reverse mortgages are essentially what the name implies: rather than you paying someone else, someone else pays you. Over time, your lender (the person in this scenario giving you money) buys more and more of your title, which means you increase debt and your property’s equity decreases.

It works like this: you hold the title to your property until you

  • Sell the title,
  • Have moved out of the home for 1+ years,
  • Pass away,
  • Fall behind on property taxes, or
  • Let the home fall into disrepair.

Once any of these events happens, the loan on your title is due. This means that the lender will sell your property to recover their losses. If there is any remaining equity in the property, it goes to you or your heirs (if you have passed away).

What’s important to know is that you risk losing your home, since it acts as collateral.

Home Equity Loans

Home equity loans are also known as second mortgages. With this option, you get a loan (single lump-sum payment) based on home equity and need to make regular payments on the loan.


HELOCs are another way to get loans based on your home’s equity. Specifically, you can borrow up to a certain pre-approved credit limit, which means you pay interest only on what you withdraw.

Final Thoughts

It’s no secret that the average cost of senior housing in the United States is on the rise. Knowing where to look for financial aid can make the process of moving your aging relatives into new senior housing complexes just a little less stressful.

When you’re ready to start finding senior housing, we’re here to help. Our directory will show you tens of thousands of top-notch senior living communities across the country, so you can find senior housing where you need it, when you need it.

*Prices according to Genworth’s 2020 “Cost of Care Survey”