Financial Assistance and Funding Options for Assisted Living

Page Reviewed / Updated - Dec. 2013

Assisted living residences primarily provide non-medical, personal care and in support offer housekeeping, laundry, transportation, medication supervision, exercise and social programs.

Assisted Living Fee Structures and Costs

Most assisted living communities offer residents the choice of all-inclusive or fee-for-service pricing. All-inclusive means that a single monthly fee covers rent, meals and any additional services a resident chooses such as housekeeping or transportation. Fee-for-service means a resident pays only for those services they use. Typically, if a resident intends to use the full suite of services an assisted living residence offers, it is less expensive to choose the all-inclusive model. If a resident will only require certain services, then the fee-for-service approach offers a better cost savings. A more detailed review of assisted living pricing models is available here.

In 2013, the average amount paid per month for assisted living was $3,450. Alzheimer's and dementia patients paid an additional $1,150, or approximately $4,600 / month. These averages vary dramatically in different states from approximately $2,700 in the South to $5,000 in the Northeast. See a table of the average cost of assisted living by state.

Self-Payment Sources for Senior Living

Medicare does not pay for assisted living, room and board, or personal care.

For average Americans, assisted living fees are most frequently paid out-of-pocket using funds from a combination of resources. Follows is a brief examination of each possible source with links to more detailed information. Prior to this discussion, it is important to clear up a common misperception regarding Medicare's coverage of assisted living costs. Medicare does not pay for assisted living, room and board, or personal care. However, medical expenses incurred at an assisted living residence may be covered by Medicare just as they would if the medical procedures occurred in a doctor's office, hospital or at one's home.

Did You Know?
93% of assisted living residents are satisfied with their overall quality of life, their level of independence and the level of personal attention they receive from staff.


Reverse Mortgages / HELOCs / EquityKey

Reverse mortgages, Home Equity Lines of Credit and Equity Key Agreements are three options homeowners have for using their homes to help pay for assisted living. However, these options are not available to all homeowners unilaterally, nor are they necessarily appropriate for every family or a sound economic decision. To use a reverse mortgage, for example, the individual must be married and their spouse must continue to live in the home. The same applies with EquityKey Agreements and EquityKey is also limited to certain geographic areas. Home equity lines of credits do not have this limitation. They also have lower associated costs and can be good options for couples of mixed ages who would not be eligible for a reverse mortgage. Eligibility requirements and a detailed discussion of the pros and cons of each option is available at the following links: Reverse Mortgages, Home Equity Lines of Credit, Equity Key Agreements.

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 probably the most under-utilized of the self-payment options for assisted living.

Life settlements and viatical settlements are two options in which policyholders sell their right to collect the death benefit from their policy and they stop making monthly payments in exchange for an immediate lump sum of cash. Accelerated death benefits are an option that enables terminally ill individuals to receive a portion of their death benefits in advance of their death. Death benefits loans are loans taken against cash value of policy not the death benefit. These must be re-paid or the death benefit will be reduced. Finally, life insurance conversions directly convert the value of a policy in exchange for care. For example, an individual with $100,000 policy may exchange that for several years of all expenses in an assisted living or senior living community.

A detailed discussion of the pros, cons, costs and benefits of each of these options are available at the following links: Life Settlements, Viatical Settlements, Accelerated Death Benefits, Death Benefit Loans, Life Insurance Conversions.

Assisted Living Loans

Assisted living specific loans are a relatively new option which, when used appropriately, provide families with great flexibility. These loans are designed for short term financial gaps typically for periods of less than 2 years. They are ideal when families have unexpected assisted living costs and are waiting for other resources. For example, if they are waiting for a home to sell or to be approved for a veteran's pension. Read a detailed analysis of the costs and benefits of assisted living loans here.

Long Term Care Insurance

A small number of families are fortunate enough to have long term care insurance, perhaps 5% of American seniors. However for those who do not have long term care insurance and have a need for care, it is no longer possible to purchase these policies. A more detailed discussion of long term care insurance is available here.

Financial Assistance Programs for Assisted Living

Medicaid and Assisted Living

As of 2013, Medicaid pays for some of the cost of assisted living in 42 states.
Medicaid pays for assisted living through Home and Community Based Services (HCBS Medicaid Waivers). The number of states offering these Waivers has increased rapidly in recent years and assistance will likely be available nationwide in the coming years. From the states' perspective, assisted living is less expensive than skilled nursing homes and therefore legislation is being written to cover assisted living as it will save the states money.

Having said that, coverage is inconsistent across the 42 states which offer benefits through their HCBS Waivers. For example, in some states, Medicaid pays for only personal care services provided in assisted living and in other states, they also pay for room and board. A complete list of states, the waivers which cover assisted living and their eligibility requirements is available here. One can also learn more about qualifying for Medicaid assistance here.

Veterans' Pensions for Assisted Living

There is financial assistance for assisted living for veterans in the form of a pension called the Aid and Attendance Benefit. This program can provide up to approximately $2,000 per month in assistance however eligibility is complicated and there can be extensive wait times for approval. Details of the program, eligibility requirements and tips for expediting the approval process are available here. Veterans who may be eligible for both Medicaid and Aid and Attendance might want to review this comparison of the two programs.

State Non-Medicaid Programs


Many states have recognized that providing financial assistance to frail, elderly individuals for assisted living is less costly to the state then having them go into a Medicaid funded nursing home. This is usually preferable to the individual and their family members as well. Unfortunately not every state has yet developed these programs. Follows is a list of state-based financial or other assistance programs that provide help for or can be used to cover the cost of assisted living or adult foster care. To be clear, some of these programs provide aid that is not specifically designated for assisted living but can be used for that purpose.

Alaska Senior Benefits
Colorado Adult Foster Care
Colorado Old Age Pension
Connecticut Congregate Housing Services Program
Connecticut Home Care Program for Elders
Florida OSS for Seniors
Maryland Assisted Living Subsidy
Maryland Congregate Housing Services Program
Minnesota Group Residential Housing Program
Nebraska Assistance to the Aged, Blind, or Disabled
North Carolina Adult Care Home Assistance
North Dakota SPED and Ex-SPED Programs
Ohio Residential State Supplement
Pennsylvania Domiciliary Care Program
Rhode Island Enhanced Assisted Living Program
Texas Community Care for Aged/Disabled
Virginia Auxiliary Grants for Assisted Living
Wisconsin SSI-E

Other Assistance Options

Assisted living costs can vary by 50% even in the same city or town. Finding affordable assisted living is the easiest way to reduce costs. Use our free service to find affordable care in your area.


If one thinks more broadly about assistance for assisted living, several other options exist. There are government housing programs for seniors from HUD that function much like assisted living communities. Read more here. There are also a variety of tax credits and deductions related to assisted living. While these do not provide assistance directly, they can reduce a family's overall tax burden thereby freeing up additional financial resources to be put towards the cost of assisted living. Most relevant are the Elderly and Disabled Tax Credit and the Federal and State Dependent Care Credits. Finally, we offer a series of tips for lowering assisted living costs.

Assisted Living Financial Resource Locator Tool
On this website we offer an interactive tool that consists of a series of questions which are used to narrow down the many options in our financial assistance program database to only those that are relevant to one's specific situation. The options and resources for which one is not eligible are also included in a separate column so that a comprehensive view is provided. Start searching for assistance here.

Developing a Financial Plan for Assisted Living

Since many families pay for assisted living from their savings, they are in a state of continuously diminishing resources. Most assistance programs determine eligibility based on an individual's resources. Therefore, the assistance available to an individual is constantly changing. In other words, the longer a person resides (or is projected to reside) in assisted living, the more assistance options that become available to them.

For this reason (and others), it is advantageous to develop a long term financial plan when considering assisted living. Doing so has the dual benefit of ensuring a comfortable and consistent aging process for your loved one while at the same time maximizing your family's assets and resources.

The creation of financial plan for assisted living is a complicated process and one that must accommodate various health scenarios. Fortunately, there are a variety of different resources available to help families with financial planning for assisted living and each of the resources has its pros and cons.

Public Benefits Counselors – local agencies such as Area Agencies on Aging (AAA) and Aging and Disability Resource Centers (ADRC) have benefits counselors on staff that often help with financial planning. While they typically do not charge for their assistance, they are often under-staffed and unable to provide adequate long term planning. They tend to be very well-versed in local programs but may not have larger financial planning experience. Find your local AAA or ADRC.

Geriatric Care Managers – GCMs help families create and implement long term care plans and as part of that service, many will help with the financial planning side. As GCMs are typically paid for out-of-pocket, one can expect a higher level of attention than they might receive from a public benefits counselor. Families tend to contact GCMs only after the need for care has become apparent and therefore GCMs may not be in the best position to do long term planning. Often GCMs come from nursing or public health backgrounds and do not have extension financial experience. Find a Geriatric Care Manager.

Eldercare Financial Planners – Financial planners have the highest level of professional experience and are the most expensive option. They are very knowledgeable with long term planning but may be less aware of local programs and short term options. Find an Eldercare Financial Planner.

State-by-State Assisted Living Costs and Affordability Index

The cost of assisted living care can be high and there exists a significant range in the cost in different states. As an approach to finding lower cost, senior living residences, some families relocate to residences outside of their primary geographic areas.

This table contains the average cost of assisted living for all 50 states and D.C. for 2013. In addition, it contains an assisted living affordability index* which considers the cost of assisted living in a state relative to that state's median income. This is an experimental index created to illustrate the variability of assisted living costs relative to the cost of living. The state's rank out of 51 (includes Washington D.C.) is in the 4th column.

Alzheimer's care in senior living residences in 2013 costs, on average, an additional $1,150 per month.

 

2013 State-by-State Assisted Living Costs

State

Avg. Monthly Assisted Living Cost

Assisted Living Affordability Index (lower #s are more affordable)

Assisted Living Affordability Index Rank

United States

$3,450

0.83

 

Alabama

$2,600

0.73

14

Alaska

$6,000

1.25

51

Arizona

$3,350

0.83

26

Arkansas

$2,865

0.83

27

California

$3,710

0.83

28

Colorado

$3,520

0.72

9

Connecticut

$5,000

0.92

35

Delaware

$5,533

1.21

50

District of Columbia

$3,500

0.76

17

Florida

$3,000

0.80

21

Georgia

$2,703

0.71

8

Hawaii

$4,200

0.85

29

Idaho

$3,198

0.81

22

Illinois

$4,050

0.96

41

Indiana

$3,705

1.00

42

Iowa

$3,150

0.75

16

Kansas

$3,490

0.91

34

Kentucky

$2,720

0.82

25

Louisiana

$3,150

0.93

36

Maine

$4,500

1.09

48

Maryland

$3,400

0.59

1

Massachusetts

$4,950

0.94

40

Michigan

$2,850

0.70

7

Minnesota

$3,350

0.70

6

Mississippi

$3,000

0.88

31

Missouri

$2,288

0.60

2

Montana

$3,600

1.07

47

Nebraska

$3,360

0.72

11

Nevada

$2,850

0.73

13

New Hampshire

$3,589

0.65

5

New Jersey

$5,994

1.15

49

New Mexico

$3,518

1.01

44

New York

$3,950

0.94

38

North Carolina

$2,900

0.77

19

North Dakota

$2,852

0.61

3

Ohio

$3,920

1.05

46

Oklahoma

$2,967

0.73

15

Oregon

$4,023

0.94

39

Pennsylvania

$3,175

0.76

18

Rhode Island

$4,148

1.02

45

South Carolina

$3,000

0.90

33

South Dakota

$3,036

0.77

20

Tennessee

$3,525

1.00

43

Texas

$3,336

0.82

24

Utah

$2,888

0.62

4

Vermont

$3,750

0.87

30

Virginia

$3,775

0.72

10

Washington

$4,250

0.90

32

West Virginia

$3,250

0.93

37

Wisconsin

$3,538

0.82

23

Wyoming

$3,300

0.73

12

*Data provided by Genworth Financial, Inc. (NYSE:GNW) and the US Census Bureau.