Assisted living costs an average of $119 a day, or $3,628 a month, according to the government’s Administration on Community Living. Juliano-Villani adds that assisted living facilities can “cost $5,000 per month, [and that’s] on the lower side.”
Most people pay for assisted living out of pocket, with Medicaid (a federal and state program that provides free or low-cost health care to people with limited income or resources) or with private long-term care insurance. Some also finance it with reverse mortgages, life insurance options and annuities.
How to Pay for Assisted Living
If you don’t have significant savings to draw from to pay for assisted living, other options may be available to you.
Veteran Benefits
Aid & Attendance is a need-based benefit offered to eligible veterans by the U.S. Department of Veterans Affairs (VA). Received in addition to a VA pension, this monthly stipend may be used to cover the cost of a long-term care or assisted living facility.
To be eligible for this benefit, a veteran must meet at least one of the following criteria:
- They are confined to a bed.
- They are a resident of a long-term care facility.
- They need assistance with activities of daily living (ADLs).
- They have severe vision impairment.
Medicaid Assisted Living Coverage
Medicaid covers some costs of assisted living for residents who qualify. Recipients must:
- Live in the state in which they’re applying for Medicaid.
- Reside in an assisted living facility that’s licensed for Medicaid.
- Meet certain financial need requirements.
- Demonstrate a functional need for assisted living.
Benefits and requirements vary from state to state.
Reverse Mortgages
With a reverse mortgage, a person borrows against the equity in their home. The most common type of reverse mortgage is a home equity conversion mortgage, which is only available to homeowners who are at least 62 years old.
The home’s title remains in the homeowner’s name, and no mortgage payments are made over the life of the loan. Unlike a conventional mortgage, interest and fees increase the amount owed on the loan over time, thus decreasing the homeowner’s equity.
The home must remain the principal residence of the borrower, so a reverse mortgage can only be used to pay for assisted living if there is a second borrower still living in the home.
The loan is then repaid either by the homeowner or their heir(s) when the homeowner no longer lives in the home.