Page Reviewed / Updated - April 14, 2009
Understanding how assisted living works and the fee structures residences use to charge their clients is helpful to families when negotiating with care providers. Most assisted living and Alzheimer's care facilities offer at least one of the following three models for billing their residents. Although there are three types of fee structures, not every residence will necessarily offer all three choices.
This billing model groups the costs for monthly rent, meals, housekeeping, laundry, transportation, security, personal care, recreational activities and nearly everything else residents require in assisted living into a single monthly bill. However, the definition of "all inclusive" will vary from facility to facility. For example, some residences consider incontinence services or medication management to be above and beyond and bill extra for those services. Also worth noting is that optional expenses may be charged to a monthly bill such as purchases from an in-facility hairdresser or general store.
Also referred to as Tiered Pricing, the Levels of Care model of assisted living payment has 3-4 levels or tiers into which a variety of services are grouped. Each tier allows for a certain number of care hours per month (often called "points"). For example, individuals who require very little or no extra care would be placed in the lowest level of care which would also be the least expensive. Persons at the opposite end of the spectrum, those requiring significant care are in the highest level of care. There may be special levels specifically for Alzheimer's care or, depending on the severity of dementia, these individuals may be placed into the regular tier structure.
Individuals are assessed upon moving into the assisted living community to determine the level of care required and are re-assessed regularly to ensure they continue to be in the appropriate level. Non-care related services in assisted living typically account for 50% - 75% of an individual's total bill. A person paying $2,000 / month for room and board might require an additional $1,000 for their level of care costs.
In this model, assisted living residents are charged a flat monthly fee for rent or for rent and meals. Each service provided comes with an additional cost. This is also referred to as A La Carte pricing. Within the Fee for Service model there can be hourly assistance fees, usually to the quarter hour or flat fees for a service. For example, the monthly charge for helping a resident manage his or her medications might be a flat $500 or X dollars per hour multiplied by X number of hours. The Fee for Services model is less common in Memory Care communities (residences specifically for Alzheimer's).
Entrance fees, sometimes called Community Fees, are one-time charges that some, but not all, assisted living communities charge when the resident moves in. These fees can range from zero to several hundred thousand dollars. To be clear, these sky-high entrance fees don't affect most seniors. They are limited to a specialized type of senior living community called CCRCs or Continuing Care Retirement Communities. The average assisted living community might charge the equivalent of one month's rent as an entrance fee. The good news about entrances fees is that they are often negotiable depending on the occupancy rate of the specific assisted living facility and can frequently be waived entirely.
The average cost of assisted living in 2016, nationwide is approximately $3,600 / month. However, that number can be quite misleading since the average costs in some states is closer to $2,200 / month and $5,000 / month in others. Visit the Cost of Assisted Living page for more accurate information about the costs in your state.
Regardless of an assisted living community's fee structure, when choosing a senior living residence, it is important to consider the quality of care, how the resident adapts to the new environment and the long-term affordability of the community. Through a partnership, our organization is able to provide a free service that helps families address these concerns and find affordable care.
Other resources on this website that help families with the financial side of assisted living are our Resource Locator Tool and our Guide to Paying for Assisted Living.
In addition to the considerations outlined above for assisted living, families selecting residential care for a loved one with Alzheimer's or dementia also needs to consider the design and security of the facility. A careful balance is required to prevent wandering but not limit the individual freedom of the resident. It is vital to make decisions with an awareness of the progressive nature of Alzheimer's; what might meet a person's needs today, might not in six months time and almost certainly will not in two years time.
Several resources are available that can help families select and afford Alzheimer's care; our guide to paying for Alzheimer's care and our free service which matches families with the most affordable Alzheimer's care in their area.