Your elderly relative is ready for a social, engaging lifestyle that includes activities, amenities, and meals. They do, however, require assistance with some daily activities. Assisted living facilities can provide assistance while encouraging your relative to maintain independence and enjoy retirement.

According to Genworth’s 2020 cost of care survey, the national median cost of assisted living is $4,300 per month. Many families are surprised and disappointed to learn that it is not covered by Medicare and that they may not have the necessary funds in the bank. Fortunately, there are several options for covering costs and saving money on your loved one’s care. Learn how people pay for assisted living, as well as how to select the best community without breaking the bank.

Who foots the bill for assisted living?

The majority of families pay for assisted living with their own money. This includes personal savings, pension payments, and retirement accounts. Despite the fact that many seniors save for retirement over time, family members frequently contribute to elder care costs. Consider how you’ll pay for assisted living before selecting a community for your loved one — determine the top features your relative prefers, how much care they’ll require, and what funds are available through insurance, savings accounts, and family contributions.

Is assisted living covered by insurance?

Medical procedures, hospital stays, and other care are frequently covered by health insurance for older adults. Can insurance, however, help you afford assisted living? The answer varies depending on the plan:

Medicare only covers non-custodial short-term care, so you can’t use it to pay for assisted living. However, Medicare may cover some of the health care provided to your loved one in an assisted living community. For example, if your relative requires assistance bathing, dressing, and administering insulin, Medicare will not cover the cost of personal care, but you may be able to claim the injection fees.

Private health insurance, such as Blue Cross, Aetna, or Humana, may cover some skilled nursing or health care costs, but it rarely covers personal care in an assisted living facility. You must make contact with

Long-term care insurance (LTCI), also known as nursing home or senior care insurance, kicks in when your relative is unable to perform two activities of daily living (ADLs). Your loved one would have had to sign up for and pay for a policy before turning 80. Is long-term care insurance comprehensive enough to cover assisted living? It offers more benefits than most policies, but at a higher cost over time. Find out more about LTCI coverage by age group and policy.

How to Use a Life Insurance Policy to Pay for Assisted Living?

Many people are unaware that a senior’s or a family member’s life insurance policy can be used to pay for assisted living. You can sell a policy for market value to a third party and use the proceeds to fund a long-term care benefit plan while keeping some death benefits. Another option is to “surrender” a life insurance policy for cash value to the life insurance company. In this case, you relinquish ownership and will not be entitled to any benefits upon death.

How can home equity be used to pay for assisted living?

If your loved one owns a home or other property, they may be able to use home equity to cover assisted living costs. Some examples of how to use home ownership to pay for assisted living include:

Bridge financing. This short-term loan is ideal for emergency situations and can help homeowners quickly gain cash flow. Bridge loans can be used to pay for assisted living while you are liquidating assets or awaiting the sale of your home.

Mortgage in reverse. This option allows a spouse or adult children to live at home. Reverse mortgages use the borrower’s home equity to provide funds in the form of a lump sum or as needed to supplement income.

You can either sell or rent your house. Selling a home can free up assets that can be used to pay for assisted living or other forms of elder care. A spouse or relative, on the other hand, may still live in the house or wish to keep the property in the family. Consider renting if the house is vacant but you aren’t ready to sell.

How do you pay for assisted living while also receiving other benefits?

If your loved one served in the military, worked for the government, or worked for a railroad, they may be eligible for a stipend to help cover some of the costs of assisted living.

Wartime veterans and their spouses may be eligible for a pension program administered by the Department of Veterans Affairs (VA) to help offset the cost of senior care. Our Guide to VA Benefits and Long-Term Care contains in-depth information on how to apply, what’s covered, and eligibility.

Federal and Postal employees, annuitants, and qualified relatives are eligible to apply for Federal Long Term Care Insurance (FLTCI), which helps pay for future long-term care expenses. Employees must apply for FLTCI before they can retire, and certain medical conditions may preclude approval.

7 ways to cut costs on assisted living

Even with the aforementioned benefits, senior care can be costly. With these seven suggestions, you can save money on assisted living.

1. Inquire about price flexibility and special offers.

Communities may be willing to offer a discount to fill vacant rooms depending on the time of year and location. Many facilities provide specials at the end of the month or during peak seasons, such as lower move-in rates. During your tour, ask the following questions:

Are there any move-in specials?
Do you have any current specials?
Is the community open to negotiating its monthly fee?
Is it possible to get the entrance fee waived?
Can you give us a month free if we sign an extended lease?
Are there any discounts for lump sum payments?

2. Contrast a la carte pricing with all-inclusive pricing.

Some assisted living communities allow families to choose between an all-inclusive rent fee and paying for services separately based on need. Choosing the best option for your needs will allow you to plan and budget more effectively. The two payment models are as follows:

Served a la carte. This option allows you to purchase services or items on an as-needed basis, such as laundry or bathing services, extra housekeeping, meal delivery, and more.

All-inclusive. A monthly fee covers a variety of services in this model, so there are no surprises. Make sure to inquire about what is included.
A la carte payments may save money in the long run if family members are available to help with services such as housekeeping or personal grooming. However, all-inclusive rent payments are frequently used.

3. Consider a roommate

A shared space is often less expensive than a single room or apartment in many senior living communities. Sharing a room can be safer and prevent loneliness, which is a common problem among the elderly, in addition to saving money.

4. Enroll in essentials discount programs for low-income seniors.

Your loved one may be eligible for funds or assistance from senior benefit programs, allowing them to redirect money that would otherwise be spent on necessities to cover assisted living costs.

The National Council on Aging (NCOA) provides a list of programs for vulnerable adults and low-income seniors to save money on prescription drugs, food, hearing care, dental care, vision coverage, and energy bills.

5. Reduce moving costs

Hiring a senior move manager can help cover the costs of downsizing and transitioning. Move managers may be able to assist you in determining the most cost-effective time to relocate, the best options for seniors, and how to sell belongings to help cover assisted living costs.

Most senior move managers collaborate with estate agents to organize sales of personal collections, antiques, automobiles, and other items. Many assisted living facilities provide referral discounts for senior relocation services.

6. Look into tax credits and deductions.

Senior and caregiver tax credits are an unexpected way to recoup assisted living costs. Seniors who are “chronically ill” or require assistance with two or more ADLs may be eligible for up to $7,500 in senior living tax deductions. Caregivers who pay for at least 50% of the care of an elderly loved one may be eligible for caregiver tax credits.

7. Receive tailored senior living advice

A Place for Mom’s senior living advisors have extensive experience assisting families in locating affordable senior living. One of the most frequently asked questions by families is, “How does one pay for assisted living?” “Some families can simply pay for care with their income and savings,” says Senior Living Advisor Mary Lontkowski. “However, for other families, a little more ingenuity is required.”