Paying for Assisted Living: How to Understand Your Options

When you or one of your loved ones starts thinking about assisted living care, your next thought might be about the cost of care. Senior care notoriously does not come cheap, but when you think about what you’re getting for the price, the costs make sense.

But that logic doesn’t help people who can’t see a way to afford quality senior care for their parents or themselves.

Keep reading to learn what you’re paying for, how much it costs, and what your options are.

What is assisted living?

Assisted living is just one form of eldercare. Others include nursing homes, independent living communities, memory care, home care, and skilled nursing care.

Each of these are different services with different levels of care, designed to meet the health and personal care needs of their residents and patients.

Assisted living facilities are designed for seniors who require assistance with the activities of daily living (ADLs), which include eating, bathing, dressing, hygiene, and mobility.

The staff at these facilities are trained to offer personal assistance with each of those activities in addition to meeting basic health care needs and providing a safe, supportive environment for socialization and community.

Assisted Living Amenities

Most assisted living facilities offer a monthly, all-inclusive pricing structure. This price typically includes the personal care services discussed above, three daily meals, a private or semi-private room, and a schedule of activities.

More rarely, some facilities operate on a per-service basis, where you only pay for the services or amenities you want. However, if you want most or all of the services, it’s typically most cost-effective to choose the all-inclusive option.

Assisted living residences can be extremely luxurious or fairly simple, so amenities will vary depending on your selection.

Assisted Living Costs

Just as amenities will vary, so will the costs. However, the average monthly cost of assisted living in the United States is $4,000 a month.

Keep in mind, though, that these prices are not regulated and the average cost varies from state to state, just like any other aspect of life.

Financing Options for Assisted Living

If that $4,000 number gave you shellshock, you’ll be happy to learn that there is financial assistance available.

While regular health insurance won’t cover senior care, there are many assistance programs that will help.

Learn what works and what doesn’t.

Long-Term Care Insurance

Long-term care insurance helps cover the cost of medical care in your home and in long-term care facilities, like assisted living homes.

You need to buy this insurance before you actually need it. Once you’re approved for the amount of coverage you want, you begin paying your premiums.

You can typically use the insurance once you need assistance with at least two of the ADLs or if you are diagnosed with Alzheimer’s, dementia, or another debilitating condition.

The average cost for a single individual is approximately $2,000 a year with a $164,000 payout. However, this depends on your choice of insurance policy.


Medicaid programs offer assistance to low-income older adults who have few assets. Almost every state program covers assisted living to some degree, but the amount and quality of coverage can vary depending on where you live.

The most common form of Medicaid assistance comes in the form of Medicaid Waivers (though some states are moving away from that model). Medicaid pays for nursing care, medication management, medical exams, assessments, and more.


Medicare, which is available to Americans over the age of 65, does not typically pay for any residential care homes, including assisted living (or independent living for that matter). It also won’t cover non-medical home care.

Medicare will, however, cover short-term stays in a skilled nursing facility following injury or illness as well as in-home care from a home health nurse.

Life Insurance

Did you know you can use life insurance while you’re still living?

You can accelerate the benefits, which is sometimes known as cashing out the policy. The insurance company will buy back your life insurance policy at 50%-75% of its value.

If your insurance company doesn’t offer this, you can opt for a life settlement, in which you sell your policy to a third-party company. They’ll give you that same 50%-75% but they’ll continue paying the premiums on the policy. Then, when the policyholder dies, that third party will receive the benefits.

Veterans’ Benefits

If you or your loved one is a veteran, you may be eligible for assistance from the Veterans Administration (VA).

If you have injuries or disabilities resulting from service, getting benefits is easier. If you don’t but you’re still disabled in some way and your income is below a certain limit, you (or if you’re the surviving spouse of a veteran) may still be eligible.

State Programs

Senior living facilities are often less costly than Medicaid-funded nursing home care,  so many states have non-Medicaid programs that provide financial assistance for seniors.

However, each state—if your state has such benefits—offers different levels of assistance. Be sure to look into whether or not your state offers such programs.

Selling Your House

If you are planning on moving to a senior care facility permanently, it could be wise to sell your home. While this can certainly be an emotional step, it can provide much-needed money for assisted living.

If you or your family is not ready to sell the house, consider renting it. The monthly income you’ll generate could be a major help.

Reverse Mortgage

If you or your spouse over the age of 62 needs assisted living services, a reverse mortgage may help you out. This lets you borrow money against the equity you’ve accrued without selling the house.

However, the other half of the married couple must live in the house. Additionally, once that person moves out, the money needs to be repaid (usually meaning you need to sell the residence), so if the house is going to stay in the family, you may want to look at another option…

Home Equity Line of Credit

…like a HELOC! A home equity line of credit, often referred to as a HELOC, is a line of credit effectively secured by the amount of equity you have in your home.

To find out if a HELOC is a good option for you, speak with your financial institution about eligibility requirements.

Private Pay

Finally, the most common (and simplest) option is paying out of pocket. Most families pay for senior care services on their own, using a combination of social security, pensions, 401k or IRA plans, and other investment accounts.

Are you overwhelmed by the idea of paying for assisted living? Contact the specialists at Caring Advisor who can help you understand all of your options today!