Calculating the Cost of Assisted Living vs. Home Care

Page Reviewed / Updated - Feb. 2016

Assisted Living or Home Care?

Is the cost of long term care at home more or less expensive than assisted living? Prior to answering this question, it is important to acknowledge that there are other factors which go into making the decision on whether to care for a loved one at home or in assisted living; it is not strictly an economic decision. However, the intent of this article is to enable one to evaluate this question from a financial perspective.

Is Assisted Living or Home Care Less Expensive (The Short Answer) - The general rule of thumb is that if 40 hours or less per week of paid home care is required, then home care is a less expensive option than assisted living. However, there are many factors that can easily change this equation such as one’s state, whether they rent or own their home or if they require additional services in assisted living such as Alzheimer’s care.  


Estimating Assisted Living Costs

Estimating one’s projected assisted living costs is easier than projecting one’s home care costs. One simply needs to determine their assisted living needs and the average costs of care for their geographic area. Nationwide, the average monthly cost of assisted living is approximately $3,600. State by state averages range dramatically from as low as $2,500 to as much as $6,000.

Alzheimer’s and dementia care cost approximately $1,150 additional per month. Therefore, average assisted living costs range from $2,500 / month for basic care service in the least expensive states to just over $7,150 / month for higher level care in the most expensive states.

To calculate your monthly cost estimate, use our cost calculator or look at the average cost of assisted living by state and add $1,150 if higher level care such as for Alzheimer’s is required.

Note that there are tax credits and deductions that might be applied to lower assisted living costs, but for the most part, these same tax advantages can be applied to the cost of home care and therefore do not make a substantial difference when comparing costs.


Estimating Home Care Costs (the Quick Way)

Calculating the cost of home care for an accurate comparison to assisted living is a much harder process. We provide both a simple method and a more thorough and accurate approach.

For the simple method, estimate the number of hours per month that home care is required and multiply that by the average costs of home care in your state. The average hourly cost of home care ranges from approximately $13 / hour in the least expensive states, mostly in the southeastern area of the country to $30 / hour in Alaska. Alternatively, for regional averages within a state, use our calculator.


Estimating Home Care Costs (the Accurate Way)

This approach consists of 5 Steps in a worksheet format to assist families in projecting their true cost of home care. Print This Page.


1) Determine the Types of Care Required

Look at a typical week for the individual needing care and break it into the types and amount of care required without thinking about who will provide the care. There are 168 hours in a week and the 4 Types of Care should add up to 168 hours.

Step 1 - Breakdown Care Requirements for a Typical WeekHours/Week
Line #Type of CareDescriptionSampleYour Data
1.1Medical / Home Health CareFrom a health professional to give shots, tube feedings, change dressings or other medical care12 hrs 
1.2Personal CareAssistance with activities of daily living such as bathing, toileting and getting dressed100 hrs 
1.3MonitoringSomeone is on-call in case of emergency but not in home, for example during sleeping hours56 hrs 
1.4IndependentRequires no assistance or monitoring0 hrs 
Total Hours7 Days x 24 hours / day = 168 hrs168 hrs168 hrs


2) Determine Providers for Each Type of Care

Personal care is often provided by friends, family and unpaid respite care providers from national organizations and non-profits. Additionally personal care can be provided in an Adult Day Care center at a lower cost than at home. Break the personal care hours into the different providers.

Step 2 - Determine Personal Care ProvidersHours/Week
Line #Type of CareDescriptionSampleYour Data
2.1Medical Care - Home Health Provider# of care hours from health care professionals per week12 hrs 
2.2Personal Care - Friends and Family# of care hours you, your friends and family can provide per week20 hrs 
2.3Personal Care - Respite CareAdd 1 hour for each true statement about the person who needs care
1) They are a US Veteran
2) Their income is less than $18,000 year
3) Family & friends give 40+ hrs of care / wk
2 hrs 
2.4Personal Care - Adult Day Care# of care hours in adult day care per week24 hrs 
2.5Personal Care - Home Care Aide# of care hours using an in-home care aide per week54 hrs 
2.6Monitoring Service# of hours someone’s is on-call in case of emergency per week56 hrs 
2.7Independent# of hours with no assistance or monitoring0 hrs 
2.8Total Hours7 Days x 24 hours / day = 168 hrs168 hrs168 hrs



3) Determine Cost for Each Type of Care

The cost of care varies from state to state. Use the national averages or look up the specific costs for your state by following the links in the table below.

Step 3 - Determine Cost of Each Care TypeCost Per Hour x Hours Per Week
Line #Type of Care ProviderCost Per HourSample CalculationsYour Data
3.1Medical Care -
Home Health Provider
National avg. is $21/hr
See State Specific Avg.
$21/hr x 12 hrs = $252$__/hr x Line 2.1 = $__
3.2Personal Care -
Friends & Family
No cost - $0/hr$0 x 20 hrs = $0$__/hr x Line 2.2 = $__
3.3Personal Care -
Respite Care
No cost - $0/hr$0 x 2 hrs = $0$__/hr x Line 2.3 = $__
3.4Personal Care -
Adult Day Care
National avg. is $10/hr$10/hr x 24 hrs = $240$__/hr x Line 2.4 = $__
3.5Personal Care -
Home Care Aide
National avg. is $19/hr
See State Specific Avg.
$19/hr x 54 hrs = $1026$__/hr x Line 2.5 = $__
3.6Monitoring ServiceAvg. about $3/day$3/day x 7 days/wk = $21$__/hr x Line 2.6 = $__
3.7IndependentNo cost - $0/hr$0 x 0 hrs = $0$__/hr x Line 2.7 = $__
Total Weekly Cost
7 Days x 24 hours / day = 168 hrsTotal = $1,539 / weekAdd Lines 3.1 – 3.7



4) Determine Other Monthly Cost Savings

There are other monthly costs that would not exist if an individual were to move from their home to an assisted living community. However if one’s spouse continues to live at home, some these expenses will not go away.

Step 4 - Determine Other Monthly Cost Savings
Line #ExpensesExpense Estimates / DescriptionsSampleYour Data
4.1Gas, Water and ElectricEstimated at $150 / month for one person$150 
4.2Cable TVEstimated at $35 / month$35 
4.3FoodEstimated at $150 - $275 / month per person$200 
4.4RentRent only. Not mortgage payments as those continue even if a person moves into assisted living.$0 
4.5Other Misc. CostsPhone, yard work, snow removal etc.$40 
4.6Total Hours $425
Add Lines 4.1 – 4.5



5) Calculate Total Monthly Costs

In Step 3, we calculated the total weekly cost of care. We need to convert this to a monthly cost and include the Other Monthly Cost Saving from Step 4 to calculate Total Monthly Home Care Costs.

Step 5 - Calculate Total Monthly Home Care Costs
Line # Sample CalculationsYour Data
5.1Take the Total Weekly Cost from Line 3.8$1,539 
5.2Divide Line 5.1 by 7 to determine average daily cost of care.$1,539 / 7 = $219.86 
5.3Multiple Line 5.2 by 30 to determine monthly cost (because there are more than 4 wks / month)$219.86 x 30 = $6,595 
5.4Add Total Other Cost Saving from Line 4.6$425 
5.5Add Line 5.3 and 5.4. This is your Monthly Home Care Cost for Comparison to Monthly Assisted Living Costs$6,595 + $425 = $7,020