For older adults, assisted living can offer an appealing blend of support and self-sufficiency. This type of long-term care setting allows people to live independently in a private apartment while receiving help with everyday tasks when needed. It's ideal for those who need a little extra assistance, but don’t require the level of care provided in a nursing home.
Yet there’s no sugarcoating the price tag of assisted living (hint: it’s expensive). The national average cost now tops $6,000 a month—and in some areas like Massachusetts, it’s closer to $10,000.1 While Medicaid may cover nursing home care and some long-term care services, and Medicare covers short-term skilled nursing care in certain cases, neither program pays for room and board in an assisted living community. That leaves many families wondering how they’ll cover the cost of care.
The fact is that assisted living is rarely paid for through a single source. Many families initially fund it with savings, retirement income (e.g., Social Security, pensions), and investments. But there are additional options that can help offset remaining costs and reduce the out-of-pocket burden.
How can I reduce the costs of assisted living?
Whether you're exploring assisted living for yourself or a parent, here are 10 strategies that can help put this senior care option within reach.
1. Use long-term care insurance
Long-term care insurance is designed to help cover services that Medicare and traditional health insurance typically do not. It can help pay for a variety of assisted living expenses, including:
- Help with daily activities like bathing, dressing, and grooming
- Physical, occupational, and speech therapy
- Housekeeping and laundry services (under some policies)
If you already have a long-term care insurance policy and assisted living is part of your future care plan, make sure your policy covers care provided in this type of community. Many newer policies offer flexible benefits that can be used in a variety of settings.
Premiums for long-term care insurance can be expensive, and the cost usually increases with age. That's why many people choose to buy a policy in their 50s or early 60s, while they're still healthy and premiums tend to be lower. If you’re considering buying a policy, take time to explore your options and don’t hesitate to talk to a professional for advice.
2. Tap into your home’s equity
If you’re like many older adults, your home is your largest financial asset. Options like a reverse mortgage, home equity loan, or home equity line of credit (HELOC) could be a source of funding to help you cover assisted living costs.
A reverse mortgage allows you to convert part of your home's value into cash without selling the property immediately. Home equity loans and HELOCs allow you to borrow against the equity you’ve built up in your home.
These options can be helpful, but they also carry risks and costs. It's important to fully understand how they work before making a decision.
3. Explore veterans benefits
The U.S. Department of Veterans Affairs (VA) offers supplemental long-term care benefits that help eligible veterans and surviving spouses pay for care and support services associated with assisted living.
To access these services, you typically must:
- Be enrolled in VA health care
- Need ongoing care or personal support
- Have access to a participating provider or care setting in your area
If you or your family member served in the military, contact the VA or a Veterans Service Officer to learn what benefits may be available.
4. Consider the PACE program
PACE stands for Program of All-Inclusive Care for the Elderly. This program helps eligible older adults (age 55+) receive Medicare and Medicaid services such as:
- Primary, specialty, and dental care
- Hospital care and emergency services
- Transportation
- Nutrition counseling
- Therapeutic services
- Prescription drugs
- Recreational therapy
While PACE doesn’t cover room and board in an assisted living community, it may help pay for a wide range of coordinated health care and long-term care services. By funding services you might otherwise have to pay for out of pocket, this program can lower your overall care expenses and free up financial resources for assisted living costs.
What you pay for PACE depends on whether you’re enrolled in Medicare or Medicaid:
- If you have both Medicare and Medicaid (you are "dual eligible”), you generally pay nothing for PACE services.
- If you have Medicaid but not Medicare, you may pay a monthly premium for the Medicare portion of PACE.
- If you have Medicare only, you typically pay a monthly premium for the long-term care portion of PACE (and the Part D premium, if applicable).
If you’re not enrolled in either program, you have the option to self-pay.
PACE is not available in every state, but it's worth exploring if it's offered in your area.
5. Ask about pricing flexibility
Many families don't realize assisted living pricing may be more flexible than it appears. Don't be afraid to ask questions or negotiate.
Some communities may offer move-in specials, temporary discounts, reduced fees, or other incentives, especially if they have vacant apartments they’re trying to fill. You can also ask whether certain fees can be waived or reduced.
The answer may be no, but it never hurts to ask.
6. Look into Medicaid home and community-based services (HCBS)
Medicaid home and community-based services (HCBS) programs help eligible older adults receive care at home or in their community (including assisted living) rather than in institutional settings like nursing homes.
Depending on your state, HCBS may provide services that cover health care as well as daily living needs. These include:
- Personal care assistance
- Therapeutic services
- Meal delivery
- Transportation
- Adult day care
- Caregiver support
Reducing these expenses can help make assisted living costs easier to manage.
HCBS eligibility and services vary by state—contact your state Medicaid office or local Area Agency on Aging for guidance. Find your AAA here.
7. Be flexible about your living arrangements
A few small adjustments can often make a big difference in what you pay for assisted living. For example, a studio apartment is often less expensive than a one-bedroom unit, and sharing an apartment with another resident can translate into lower monthly costs. It's also a good idea to ask about features that may boost the price, such as a balcony, larger floor plan, or premium view.
You may also find lower prices at smaller communities or facilities located in areas with a lower cost of living.
Another important question to ask when exploring assisted living options is how pricing works. Some communities charge one all-inclusive monthly fee, while others charge separately for services. Depending on your needs, one approach may be more affordable than the other.
8. Explore tax deductions
Some assisted living costs may be tax deductible if you meet certain health and care requirements, such as being chronically ill or needing help with at least two activities of daily living (ADLs). In some cases, your family members may also be able to claim these expenses if they provide you with financial support.
Tax rules can be complicated, so it's a good idea to speak with a qualified tax professional to determine what deductions may apply to your situation.
9. Consider life insurance options
Some life insurance policies can help pay for assisted living.
For example, you may be able to sell your policy through what's known as a life settlement. In exchange for a lump-sum payment, the buyer takes over your policy, pays future premiums, and receives the death benefit later.
Some policies also allow you to access a portion of the death benefit tax-free while you're still living. This is called an accelerated death benefit (ACD). Some life insurance carriers include this benefit automatically in their policies, while others will add it for an additional premium.
Before making any decisions about using life insurance to pay for assisted living, talk with a financial professional. They can help you understand how it works and the potential impact on your family's finances.
10. Check for financial assistance programs
There are many public and private benefits programs available to help older adults with health care costs, food, medications, utilities, transportation, and other essential expenses. Cutting costs in these areas can help you free up money for assisted living and other care needs.
To see what benefits you or your family member may qualify for, use NCOA’s online BenefitsCheckUp® tool. It’s fast, free, and 100% confidential. Visit the site and enter your ZIP code to get started.
Looking at the full picture
Assisted living can feel out of reach at first, but the cost can become more realistic once you consider how resources can be combined. The key is to research, ask plenty of questions, and plan ahead.
“Doors of opportunity can open once you take a closer look at all your options for funding care and saving money,” said Daniel Davis, NCOA Associate Director for Integrated Care. “With the right mix of support, assisted living doesn’t have to be an all-or-nothing decision. You may have more options than you think.”
Source
1. CareScout. Cost of long-term care calculator. Found on the internet at https://www.carescout.com/cost-of-care
