17 Ways to Afford Assisted Living Costs in a Senior Living Community
Assisted Living Communities and Independent Living Communities
Many seniors find a time when assisted living and living with care resources are needed. Unfortunately, assisted living costs can be high, yet understanding how much it costs can be low. The national average monthly price for assisted living residents and their care assistance is $4,300. Fortunately, there are many ways to afford essential services and assisted living expenses for seniors. Often, more than one source of income is used.
Senior living costs and essential services vary greatly depending on many factors such as the state you live in, private room versus shared, one-bedroom unit, type of meal preparation, medication management, daily assistance, etc.
Here are some avenues open to you if you or a loved one is considering senior living or a continuing care retirement community.
If you're a senior citizen, you likely receive Social Security benefits. These can partially or fully cover the cost of assisted living. You may also be able to supplement your income with part-time work.
Retired or disabled, you may be eligible for Social Security benefits. These benefits can help supplement your income and help pay for food, housing, and health care costs.
Social Security is a government public pension plan. For people who have worked and paid into social security, social security benefits are available starting at age 62.
Some people elect to start taking their benefits later to receive increased payments. Social security benefits are available to widows and widowers of recipients as well. 90% of seniors receive Social Security benefits averaging about $1500 per month.
Social security, on average, covers about 50% of senior living expenses; however, benefits vary, as do other sources of income and expenditures for care needs (SSA GOV, Investopedia).
To find out if you qualify for Social Security benefits, visit the Social Security Administration website or call them at 1-800-772-1213.
If you're a veteran, you may be eligible for benefits that can help cover the costs in assisted living or an assisted living residence, including in-home care.
The Department of Veterans Affairs provides a wide range of veterans programs and benefits for veterans and their families, including health care, disability compensation, education and training benefits, and more.
State Assisted Living Community Programs
Some states offer programs that help seniors afford the costs of assisted living. These can include things like Medicaid waivers and supplemental grants.
Medicare is health care coverage through the US Government for people aged 65 and older. This government health insurance program can help cover the cost of some medical expenses related to assisted living, including doctor's visits, hospital stays, and prescription drugs. While it does not cover assisted living residences, it does cover some medical and care needs to be provided by assisted living facilities and providers.
To know the amounts and costs covered by Medicare, you must understand the Medicare plan you have selected, the options, and whether the assisted living community is approved to accept Medicare. Coverage varies with each state (HHS GOV). Check out our resources page here.
Since the median cost for assisted living is so high, the Medicaid program is available for seniors with low or limited incomes and resources. Prospective residents in a low-income financial situation may qualify for affordable assisted living assistance. Unlike Medicare, Medicaid is managed at the state level, and each state has different eligibility terms and benefits.
Each state has different eligibility requirements, so check with your local Medicaid office to see if you qualify. (Chey put in a link to our resources page)
Many assisted living facilities provide varying degrees of senior care. For example, a skilled nursing facility or nursing home offers assisted living in a clinical setting with nursing care staff overseen by a doctor. Nursing homes and such do not provide a home-like environment found in seniors living in a community that offers assisted living.
Visit the Purple Door list of state Medicaid programs to learn more about Medicaid in your area
Benefits for veterans 65 and over and their spouses (survivor’s pension) are available to seniors who were active during applicable war times. Veterans’ benefits usually refer to veteran pension plan payments; however, once assisted living or advanced care is required, VA Aid & Attendance is available to eligible seniors in addition to veterans’ pensions, based on daily living care needs.
There are additional need-based assistance programs and resources for need-based veterans as well. All veterans’ benefits have eligibility requirements and must be applied at the national center. (VA GOV).
An employer makes a pension payment to an employee after they retire. A pension is a fund usually created by an employer, government, or union to benefit its employees. Employees and employers contribute to it during working years for benefit payout and income after retirement.
If you have a pension, you are likely aware of it, and while each retirement is different, it may also include survivor benefits.
If you have a pension, it may help cover the cost of assisted living costs. Contact your HR department to determine if your employer offers a pension plan.
Employer-Assisted Housing Programs
Some employers offer assistance to help their employees afford to house, including the cost of assisted living as part of their employee benefits package. These programs provide low-interest loans, down payment assistance, or direct subsidies.
Contact your HR department to find out if your employer offers assisted housing programs.
Private Grants and Scholarships
Private organizations offer grants and scholarships to seniors who need help paying for assisted living. These are typically need-based programs, so you must provide documentation of your financial situation to receive assistance.
A few places to start your search for private grants and scholarships include:
- The National Council on Aging's (Read about the Benefits Check-Up Service)
- The Foundation Center's online grant search
- Your local Area Agency on Aging - See our Resouces Page.
Personal Home Investment
If you have saved up money over the years, you can use those personal savings to help cover the cost of assisted living.
You can also use your home equity to help pay for assisted living costs. This can be done through a reverse mortgage or home equity loan/line of credit.
Family and Friends
Many rely on family and friends to help them afford assisted living costs or close friends who can help financially; they may be willing to contribute to your assisted living costs.
Be sure to have a frank discussion about your financial assistance needs and situation and what you can contribute, and try to come to an agreement that works for everyone involved.
Long-Term Care Insurance
Long Term Care Insurance offers some security for retirement assisted living and care needs. Policies vary in pricing benefits and terms.
If you have long-term care insurance, it may cover a portion of the cost of assisted living. People typically purchase this type of policy over 55.
Premiums average $2700 annually and provide financial support for assisted living costs and if increased care needs arise.
Long-term care insurance policies typically have a waiting period before benefits begin, so it's essential to plan if you think you may need this type of coverage in the future. Genworth Financial and Cal-Pers are two standard plans in the industry.
Long-term care insurance does not cover independent living or independent living communities. It's important to understand that assisted living communities provide care and home health services, whereas independent senior living communities do not offer care.
Whole Life Insurance
Whole Life Insurance policies operate similarly; however, there are life settlement benefits for survivors, and the funds have a monetary value (AARP).
Whole life insurance provides cash value that can be borrowed against and used for assisted living services and costs. Whole life insurance policies have level premiums and guaranteed cash values.
Suppose you have a whole life insurance policy. In that case, you may be able to borrow money against the cash value to help cover the cost of assisted living communities and assisted living care.
Be sure to speak with your agent about the terms of your policy and what options are available to you.
Personal Savings, Including 401(k)
An assisted living facility is a significant investment. While government benefits or insurance policies may cover some costs of personal care services, you will likely need to supplement your income with personal savings.
In addition to investments, pensions, and government programs, many people use personal savings to cover assisted living.
When referring to personal savings, some are still taxable money but have been saved or earned.
This includes 401(k)s, 403(b)s, and other personal savings plans. These are only a few examples of how to afford assisted living. For more information on financing options, please get in touch with your local financial planner or the Assisted Living Federation of America.
Personal Savings, including IRA
There are a few options for tax-deferred saving, the most common being an IRA. An IRA is an individual retirement account that allows you to set aside money for retirement and take advantage of tax benefits.
With a traditional IRA, you contribute pre-tax dollars, and your withdrawals in retirement are taxed as ordinary income. With a Roth IRA, you contribute post-tax dollars, and your withdrawals in retirement are tax-free.
You can also use an IRA to purchase a guaranteed retirement income (Fidelity).
Investment income is any money earned from investing in stocks, bonds, mutual funds, and other securities. This income can form dividends, interest payments, or capital gains (the profit you make when you sell an investment) like a rental property.
These funds have been invested and need to be withdrawn from an investment or earned a monthly or quarterly payout.
Investment savings could be interest payments, rent from a real estate investment, or 401k withdrawal.
There are many ways to afford assisted living costs, but it is essential to understand your options and make sure it's the best decision for you. Assisted living is a significant investment.
A reverse mortgage allows seniors 62 and older to borrow against the home equity through lump sums, monthly payments, or even as a line of credit. The loan is due in payment upon death or sale of the property.
A reverse mortgage is a loan that allows seniors to tap into the equity in their homes. The loan doesn't have to be repaid until the senior citizen moves out of the house or passes away.
A reverse mortgage is a loan that allows homeowners 62 and older to convert a portion of their home equity into cash. The loan must not be repaid until the borrower moves, sells, or dies.
You are still responsible for property taxes and insurance with a reverse mortgage. If you default on these obligations, the lender can foreclose on the home.
Reverse mortgages can be a good option if you need money for retirement and want to stay in your home (NOLO).
Summary of Ways to Afford Assisted Living Facilities
There are many ways to afford the costs of assisted living for seniors. We provided you with many different options to look into and links to helpful resources.
Each option has different eligibility requirements and benefits, so be sure to research and learn how to make an informed decision on what is best for you and your family.
For more information on financing options, please get in touch with your local financial planner or the Assisted Living Federation of America.
Prolonged life expectancy is increasing the average number of years spent in retirement. Hopefully, this article helps you understand assisted living costs and the importance of planning ahead of time. Don't wait for a medical crisis to happen.
The demand for assisted living communities is increasing every day. Surveys indicate the availability of low-income communities in the United States will most likely not be able to meet the housing demand.
Assisted living communities offer many reasons to consider them for yourself or perhaps your aging parents.
What is a reverse mortgage?
A reverse mortgage allows seniors 62 and older to borrow against the equity in their homes through lump sums, monthly payments, or even as a line of credit. The loan is due in payment upon death or sale of the property.
What is long-term care insurance?
Long Term Care Insurance offers some security for assisted living and care needs in retirement. Policies vary in pricing benefits and terms. Premiums average $2700 per year and provide financial support if assisted living and increased care needs arise. Whole Life Insurance policies operate similarly; however, there are benefits for survivors, and the funds have a monetary value.
Does long term care insurance cover assisted living?
Yes, Long Term Care insurance does cover assisted living. Each policy is written differently and has its terms. Most plans will payout on a daily rate. Some programs have a maximum payout amount, while others may payout for the resident's lifetime.
What is Social Security?
Social Security is a government public pension plan. For people who have worked and paid into social security, social security benefits are available starting at age 62. Some people elect to start taking their benefits later to receive increased payments. Social security benefits are available to widows and widowers of recipients as well. 90% of seniors receive Social Security benefits averaging about $1500 per month. Social security on average covers about 50% of senior living costs; however, benefits vary, as do other sources of income and expenses for care needs.
Does social security pay for assisted living?
Unfortunately, social security does not pay for assisted living, nor does it typically even cover the entire cost of assisted living. Instead, most people pay out of pocket using their money, assets, or long-term insurance policy.