Page Reviewed / Updated – September 22, 2020

Assisted Living or Home Care?

Is the cost of long term care at home more or less expensive than the cost of assisted living? Before answering this question, it is important to acknowledge that there are other factors that 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.

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 $4,000. State by state averages range dramatically, from as low as $2,844 to as much as $9,266.

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 $1,000 if higher level care, such as for Alzheimer’s care is required. (Please keep in mind that the cost of dementia care, just like the cost of basic assisted living, can vary dramatically between states and even within the same state).

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. Therefore, they 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 $16 / hour in the least expensive states, mostly in the southeastern area of the country, to $28 / hour in Washington. Alternatively, for regional averages within a state, use our calculator.

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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 Week Hours/Week
Line # Type of Care Description Sample Your Data
1.1 Medical / Home Health Care From a health professional to give shots, tube feedings, change dressings or other medical care 12 hrs
1.2 Personal Care Assistance with activities of daily living such as bathing, toileting and getting dressed 100 hrs
1.3 Monitoring Someone is on-call in case of emergency but not in the home, for example during sleeping hours 56 hrs
1.4 Independent Requires no assistance or monitoring 0 hrs
1.5 Total Hours 7 Days x 24 hours / day = 168 hrs 168 hrs 168 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 provider options.

Step 2 – Determine Personal Care Providers Hours/Week
Line # Type of Care Description Sample Your Data
2.1 Medical Care – Home Health Provider # of care hours from health care professionals per week 12 hrs
2.2 Personal Care – Friends and Family # of care hours you, your friends and family can provide per week 20 hrs
2.3 Personal Care – Respite Care Add 1 hour for each true statement about the person who needs care 1) They are a U.S. Veteran 2) Their income is less than $18,000 year 3) Family & friends give 40+ hrs of care / wk 2 hrs
2.4 Personal Care – Adult Day Care # of care hours in adult day care per week 24 hrs
2.5 Personal Care – Home Care Aide # of care hours using an in-home care aide per week 54 hrs
2.6 Monitoring Service # of hours someone’s is on-call in case of emergency per week 56 hrs
2.7 Independent # of hours with no assistance or monitoring 0 hrs
2.8 Total Hours 7 Days x 24 hours / day = 168 hrs 168 hrs 168 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 Type Cost Per Hour x Hours Per Week
Line # Type of Care Provider Cost Per Hour Sample Calculations Your Data
3.1 Medical Care – Home Health Provider National avg. is $22/hr See State Specific Avg. $22/hr x 12 hrs = $264 $__/hr x Line 2.1 = $__
3.2 Personal Care – Friends & Family No cost – $0/hr $0 x 20 hrs = $0 $__/hr x Line 2.2 = $__
3.3 Personal Care – Respite Care No cost – $0/hr $0 x 2 hrs = $0 $__/hr x Line 2.3 = $__
3.4 Personal Care – Adult Day Care National avg. is $12/hr $12/hr x 24 hrs = $288 $__/hr x Line 2.4 = $__
3.5 Personal Care – Home Care Aide National avg. is $21/hr See State Specific Avg. $21/hr x 54 hrs = $1134 $__/hr x Line 2.5 = $__
3.6 Monitoring Service Avg. about $3/day $3/day x 7 days/wk = $21 $__/hr x Line 2.6 = $__
3.7 Independent No cost – $0/hr $0 x 0 hrs = $0 $__/hr x Line 2.7 = $__
3.8 Total Weekly Cost 7 Days x 24 hours / day = 168 hrs Total = $1,707/ week Add 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 of these expenses will not be eliminated.

Step 4 – Determine Other Monthly Cost Savings
Line # Expenses Expense Estimates / Descriptions Sample Your Data
4.1 Gas, Water and Electric Estimated at $150 / month for one person $180
4.2 Cable TV Estimated at $35 / month $50
4.3 Food Estimated at $150 – $275 / month per person $200
4.4 Rent Rent only. Not mortgage payments as those continue even if a person moves into assisted living. $0
4.5 Other Misc. Costs Phone, yard work, snow removal etc. $40
4.6 Total Hours $470 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 Calculations Your Data
5.1 Take the Total Weekly Cost from Line 3.8 $1,707
5.2 Divide Line 5.1 by 7 to determine average daily cost of care. $1,539 / 7 = $243.86
5.3 Multiple Line 5.2 by 30 to determine monthly cost (because there are more than 4 wks / month) $243.86 x 30 = $7,315.80
5.4 Add Total Other Cost Saving from Line 4.6 $470
5.5 Add Line 5.3 and 5.4. This is your Monthly Home Care Cost for Comparison to Monthly Assisted Living Costs $7,315.80 + $470 = $7,785.80