Original Medicare does not cover expenses related to assisted living. This includes memory care services, which is common in the case of Alzheimer’s disease.
So, how do people pay for assisted living costs? In most cases, they do it with the assistance of Medicaid and other financial aid programs. In this MedicareWire article, we’ll cover the difference between assisted living and independent living, as well as how to get financial aid for yourself or a loved one.
Key Takeaways
- Medicare does not cover the cost of assisted living, but it does cover some of the services provided in assisted living facilities.
- Medicare Part A covers short-term stays in a skilled nursing facility, but it does not cover long-term stays in an assisted living facility.
- Medicare Part B covers some medical services that are provided in an assisted living facility, such as doctor visits, lab tests, and medical equipment.
- Medicare Part D covers prescription drugs that are prescribed by a doctor in an assisted living facility.
- Medicare Advantage plans may cover some of the costs associated with assisted living, such as meals, activities, and transportation.
- Medicaid may cover some of the costs associated with assisted living, depending on the state and the individual’s income and assets.
- Veterans’ benefits may cover some of the costs associated with assisted living for veterans and their spouses.
- Long-term care insurance may cover some of the costs associated with assisted living.
- While Medicare will not cover assisted living costs, Medicaid can provide coverage depending on the state you live in.
Assisted Living vs. Independent Living
Assisted living and independent living are very different. Assisted living is when someone receives assistance with their daily living tasks, including bathing, grooming, cooking, cleaning, and taking prescription drugs. Independent living is when someone lives at home with minimal or no assistance.
Medicare, which is health insurance that people ages 65 and older are eligible to receive, doesn’t typically cover assisted living, independent living, retirement living, or long-term care. But, there are financial aid programs and other federal benefits.
Let’s take a deeper look into each one of these forms of senior living for a better understanding.
Assisted Living
Assisted living can be home-based or in a facility. Home health aides, nursing, and even medical professionals can come to a home or a facility where seniors live to provide services. These services ensure seniors have a good quality of life by maintaining their health and well-being.1aging.ca.gov, “Assisted Living Facilities“, Accessed November 19, 2021
Assisted living services may include, but are not limited to:
- Assistance with activities of daily living
- Help with preparing nutritious meals
- Providing educational activities
- Ensuring emergency call systems are in place
- Encouraging movement with exercise activities
- Health services, including medication administration
- Housekeeping
- Social activities to prevent isolation
- Transportation
- Wellness programs
By providing a safe, comfortable environment to seniors, they can live their last stage of life with as much care as they need to be happy and healthy.
Independent Living
Seniors who are living independently may live in a community with other seniors and assistance is nearby, if needed. They may live in an apartment, condo, or even in a home with a private room.2umh.org, “Your Guide to Senior Care: Independent Senior Housing“, Accessed November 19, 2021
Independent living communities provide seniors with activities that help them continue living by themselves, such as exercise programs, medication and medical condition education, and social activities.
As seniors grow older in independent communities, they may need additional assistance performing daily living skills and that assistance is available where they live. Seniors can remain in an independent living community for as long as they need. If they end up requiring care services that are not provided, they may have to move to an assisted living facility that provides a higher level of care.
How to Know Which Living Situation Is Best
Assessing the needs and desires of the senior is the best way to know which living option is best. Consider whether the senior can live independently with little to no assistance or needs to have someone help on a daily basis to ensure they are safe and healthy. If the latter is the case, an assisted living facility or community may be best.
It might also be a good idea to ask the doctor about which senior living option he recommends. He can review medical history and current medical conditions to determine if the senior is able to take care of medical conditions alone.
Senior advisors are also available to help with the assessment process. Advisors know the right questions to ask and can match up seniors with the best living options for their needs and desires.
Assisted Living Costs & Fee Structures
Most assisted living facilities offer a choice of fee-for-service or all-inclusive pricing. The fee-for-service means you pay only for the services you use. All-inclusive means you pay a flat monthly fee for everything (rent, meals, housekeeping, transportation, etc.). In most cases, if you plan to use the full spectrum of services offered, the all-inclusive model costs less. If you only need certain services or want to use outside assistance for services, fee-for-service is the way to go.3arborassistedliving.com, “All-Inclusive vs. A la Carte: Which Pricing Structure is Best for Assisted Living“, Accessed November 19, 2021
How to Pay for Assisted Living
The decision to move a loved one to assisted living is a difficult one and comes with many questions:
- How do we pay for assisted living?
- Does Medicare or Medicaid cover assisted living?
- Which assisted living community is the best fit?
- Will my surviving spouse be well cared for?
- What will their quality of life be like?
Unfortunately, assisted living is expensive. According to the Genworth Financial Cost of Care 2020 Survey, the cost for assisted living community care services increases an average of 1.88% to 3.80% per year. When you do the math, it amounts to an increase of $797 to $2,542 per year, outpacing the U.S. inflation rate. With this in mind, it’s important to understand the payment options available to you.4genworth.com, “Cost of Care Trends and Insights“, Accessed November 19, 2021
Private Pay
Most people start off paying for care using their own income or savings. If your loved one has a retirement fund, income from stocks, 401(k) plans or IRAs, or profit from selling their home, these are viable options, too. Unfortunately, the rising costs of care mean a year’s worth of care can easily be more than what’s been saved. For many people, paying out of pocket is well beyond what they can afford for a long period of time.
Long-Term Care Insurance
Long-term care insurance is the best option to protect your savings and assets. A long-term care insurance policy protects you from the burden of the cost of long-term care by supplementing monthly payments to an assisted living facility. Plus, many policies let their beneficiaries choose where they receive care (e.g., nursing home, their own home, assisted living, etc.) and expand the range of services they’re eligible to receive. Unfortunately, most people who were able to afford a long-term care policy when they were younger can’t afford one by the time they reach age 50.5acl.gov, “What is Long-term Care Insurance“, Accessed November 19, 2021
Reverse Mortgage
A reverse mortgage on a home allows you to borrow money on the home’s equity. Once the last family member moves out, the money must then be repaid, typically by selling the home. This is a viable option for couples who only need care for one person, or if care is required immediately and the sale of the home is not possible.
Veterans Benefits
The Veterans Administration (VA) offers benefits that can be used to help Veterans pay for assisted living. Known as Non-Service Connected Improved Pension Benefit with Aid and Attendance (or just Aid and Attendance), as of 2021, the program offers assistance up to $23,238 annually for a single veteran and up to $27,552 annually for a married veteran. Eligibility is very complex and the approval process is long.6va.gov, “Veterans Pension rates“, Accessed November 19, 2021
Medicare and Medicaid
Medicare will not pay for residential services, custodial care, or personal care in an assisted living community. However, it does pay for medical care while in assisted living.7payingforseniorcare.com, “Medicare Benefits for Assisted Living & Long Term Care“, Accessed November 19, 2021
Medicaid is available to those who have completely exhausted their personal resources or have a low income. The Medicaid program will pay for:8payingforseniorcare.com, “Medicaid & Assisted Living: State by State Benefits & Eligibility“, Accessed November 19, 2021
- Nursing Care
- Medical Exams
- Medication Management Services
- Case Management and Assessments
The Medicaid program is administered by each individual state. Additionally, be aware that many assisted living facilities do not participate in state Medicare programs due to low reimbursement rates and regulations. That said, most states have one or more programs that pay for assisted living.8payingforseniorcare.com, “Medicaid & Assisted Living: State by State Benefits & Eligibility“, Accessed November 19, 2021
| State | Medicaid Policies and Programs for Assisted Living |
| Alabama | Alabama has several Medicaid programs that help individuals remain living in their homes but does not currently provide assistance for those in assisted living. |
| Alaska | The state of Alaska will pay for assisted living or “Residential Supported Living Services” through the Alaskans Living Independently Waiver, as well as Adults with Physical Disabilities Waiver. Enrollment may be capped, and therefore, waiting lists for services may exist. |
| Arizona | Arizona, through the Arizona Long Term Care System (ALTCS) will pay for services for individuals residing in an assisted living community, provided there is space available in the program. Self Directed Attendant Care offers ALTCS program participants the option to choose their own care providers |
| Arkansas | Arkansas now offers two options that help pay for assisted living for Medicaid beneficiaries. The specifically designed Living Choices Assisted Living Waiver is a great option. Personal Care under the state’s regular Medicaid program can be provided to assisted living residents, and via this program, program participants can self-direct their own care through the Independent Choices Program. |
| California | Medi-Cal (California Medicaid) pays for assisted living via the Assisted Living Waiver (ALW). This waiver is not available statewide, and as of 2019, assisted living residences are available in only 15 counties. However, persons not living in those counties can choose assisted living residences in those counties. |
| Colorado | Colorado has an Elderly, Blind, and Disabled Waiver (EBD) that allows program participants to receive care services in an assisted living residence. Be aware that assisted living is referred to as alternative care facilities. Via the Consumer Directed Attendant Support Services (CDASS) option, EBD program participants can choose and hire their own care providers. |
| Connecticut | Medicaid in CT pays for care in assisted living (which it calls congregate housing) through the Home Care Program for the Elderly (CHCPE). The Connecticut Assisted Living Program further explains the assisted living services under CHCPE. Adult Family Living is another option, although it is analogous to adult foster care, not assisted living. |
| Delaware | Through the Diamond State Health Plan Plus program, Delaware provides assistance to individuals in assisted living. |
| D.C. | The District of Columbia Medicaid program offers the Elderly and Persons with Disabilities Waiver which now covers assisted living in limited situations. |
| Florida | Florida has eliminated its HCBS Waivers and now covers assisted living through the Statewide Managed Medicaid Care – Long Term Care. |
| Georgia | Under Georgia’s Community Care Services Program, assisted living services, also referred to as alternative living services, are provided. The Georgia SOURCE Waiver also includes this benefit |
| Hawaii | Hawaii offers Med-QUEST (Medicaid managed care), which will pay for an individual’s nursing services in assisted living residences. Another option is Adult Foster Care which provides assisted living type services in small home-like environments. |
| Idaho | Idaho Medicaid provides three programs that pay for participants’ personal care regardless of the location in which they reside (at home or in assisted living) provided they do not live in a nursing home. These programs are the HCBS Aged & Disabled Waiver, Personal Care Services Program, and the Idaho Medicare Medicaid Coordinated Plan. |
| Illinois | Illinois offers the HCBS Waiver for Supportive Living Facilities. While there is an enrollment cap on the program, the state does offer a large number of slots and has many more residences under development. |
| Indiana | Indiana includes assisted living as a benefit under its Aged and Disabled Waiver (A&D) provided participants reside in Medicaid-approved assisted living communities. The waiver also offers an alternative to assisted living called Structured Family Caregiving. |
| Iowa | Iowa allows residents to consumer direct their attendant care. Attendant or personal care can be provided at home or in assisted living. The HCBS Elderly Waiver is the name of the program that provides funding. Another option for adults under 65 is the Health and Disability Waiver. |
| Kansas | Medicaid in Kansas (KanCare) offers payment for nursing services regardless of the location in which an individual resides, be that at home or in assisted living. Funding is provided by the HCBS/ FE Waiver. |
| Kentucky | Kentucky Medicaid has the Supports for Community Living Waiver, which covers adult foster care. However, it is not available to most seniors as it is for persons whose intellectual or developmental challenges developed prior to the age of 22. |
| Louisiana | Louisiana Medicaid does not currently provide assistance to individuals to help with the cost of assisted living. However, under the Community Choices Waiver, there is a benefit called Monitored In-Home Caregiving, which is similar to adult foster care. |
| Maine | MaineCare (Medicaid’s name in Maine) offers two Medicaid programs that help persons remain living in their homes but does not currently provide assistance for those residing in assisted living facilities. |
| Maryland | For Medicaid (called Medical Assistance in Maryland) eligible individuals who are assessed as requiring a higher level of care, but do not have a need so great that it would be less expensive for them to live in a nursing home, Maryland Medicaid will pay for assisted living under the Community Options Waiver (formerly the Waiver for Older Adults). Another option with different eligibility criteria is the Increased Community Services (ICS) Program. Finally, Community First Choice, under the state Medicaid plan, will provide care services in assisted living. |
| Massachusetts | In Massachusetts, Medicaid is called MassHealth. MassHealth pays for personal care for individuals living in assisted living through the Personal Care Attendant program. Massachusetts also has a program called Caregiver Homes in which participants receive a similar level of 24/7 care as they do in assisted living but instead live in the private homes of caregivers. Finally, Group Adult Foster Care covers personal care but not rent. |
| Michigan | Through the Michigan Choice Waiver Program, the state will pay for assisted living. However, the state may refer to it as adult foster care or homes for the aged. Another option is Health Link. |
| Minnesota | Minnesota pays for assisted living through the Medicaid Waiver called the Elderly Waiver. As with most waivers, participation is limited. A second option is the Community Access for Disability Inclusion (CADI) Waiver. A third option is the state’s Medicaid managed care program called MSC+ & MSHO is available via all programs above. |
| Mississippi | Mississippi has a Medicaid Waiver specifically designed to help individuals reside in assisted living residences. Read more about the Assisted Living Waiver. |
| Missouri | Missouri Medicaid covers the cost of personal care for qualified individuals through its Aged and Disabled Waiver. The waiver does not specifically designate the residential location of the care recipient other than to exclude personal care from being provided in a nursing home. The same rules apply to the State Plan Personal Care option. The Supplemental Nursing Care Assistance Program also offers financial assistance for both assisted living and nursing home care. Finally, Medicaid Care Options provides long-term care services in assisted living. |
| Montana | The Montana Home and Community Based Services Medicaid Waiver will cover the cost of care services in assisted living for its participants. Note that this waiver refers to assisted living as Adult Residential Living. |
| Nebraska | Nebraska offers residents the Aged and Disabled Medicaid Waiver. Under this waiver, assisted living is an included benefit. |
| Nevada | Nevada HCBS Waiver covers “augmented personal care” or in more common language, the program covers personal care in assisted living residences. Another option for disabled adults of any age is the WIN Waiver. |
| New Hampshire | New Hampshire, through the Choices For Independence Medicaid program, pays for assisted living. However, it is referred to as adult family care in the list of the program’s benefits. |
| New Mexico | New Mexico now has a managed Medicaid program for long-term care. Under this program, titled Centennial Care Community Benefit assisted living is an included benefit. |
| New Jersey | New Jersey has a Medicaid managed care program called Managed Long Term Services and Supports (MLTSS), which includes assisted living as an option. |
| New York | New York offers the Assisted Living Program (ALP), which provides approximately 4,200 units statewide in licensed assisted living communities. However, this program is not strictly open to Medicaid participants. Personal care provided under Managed Long Term Care can be provided to persons residing in assisted living, as can the Consumer Directed Personal Assistance program. |
| North Carolina | North Carolina’s Medicaid State Plan Personal Care option provides personal care assistance in assisted living. |
| North Dakota | North Dakota’s State Plan Personal Care is provided regardless of the living situation (excluding nursing homes). |
| Ohio | Ohio offers a Medicaid waiver specifically for assisted living called the Assisted Living Waiver Program. This program pays for care services in residential care communities but does not pay for the room and board cost. There are a limited number of slots available and participants must select from approved providers. In certain counties, for persons eligible for both Medicaid and Medicare, the AL Waiver has been replaced with a Managed Medicaid program called MyCare Ohio. |
| Oklahoma | Through Oklahoma Medicaid’s ADvantage Program Waiver, services in assisted living communities are covered. Under the Medicaid State Plan Personal Care can also be provided to persons living in assisted living. |
| Oregon | Oregon, under the K Plan (part of the Community First Choice state plan option), offers attendant care services as a benefit regardless of the location in which the beneficiary lives (except for nursing homes). Eligible locations include at home, in adult foster care, independent living, or assisted living communities. |
| Pennsylvania | Pennsylvania does not provide financial assistance or care services funded by Medicaid to residents that live in assisted living communities. However, the Department of Aging Waiver does provide personal care assistance in domiciliary care homes, which can be thought of as adult foster care. There is also the Community HealthChoices Program, a managed care program, which provides personal care assistance in domiciliary care homes. Additionally, PA offers a supplement to Supplemental Security Income (SSI) to persons who are living in non-nursing residential care. |
| Rhode Island | Rhode Island has a program called SSI Enhanced Assisted Living that provides up to approximately $1,500 / month to be put toward the cost of assisted living. However, this is not a Medicaid program. RI does have a Medicaid program called RIte @ Home, which offers 24/7 personal care in a caregiver’s home, but not in assisted living communities. Finally, the state’s Global Consumer Choice Compact Waiver covers supported services in assisted living. |
| South Carolina | South Carolina Medicaid under the Community Choices Waiver includes assisted living as a benefit. |
| South Dakota | Under South Dakota’s HCBS Waiver for the Elderly, (now called the HOPE Waiver) services in assisted living communities are covered. |
| Tennessee | TennCare CHOICES in Long-Term Care Program helps participants that wish to reside in assisted living communities by paying for nursing and personal care services in those communities. Room and board however are not considered eligible expenses for the Medicaid Waiver. |
| Texas | Texas Medicaid will cover the cost of services provided in an assisted living community through the state’s STAR PLUS program. The cost of room and board is not included. |
| Utah | Utah Medicaid pays for services in assisted living residences via the New Choices Waiver. |
| Vermont | Vermont’s Choices for Care Medicaid Waiver operates under the Global Commitment to Health Waiver and continues to pay for services in non-nursing homes, residential care facilities. Another Medicaid option is Assistive Community Care Services. Finally, there is the Attendant Services program. |
| Virginia | Virginia does not currently have a Medicaid program that helps to pay for assisted living. However, while the VA Adult Services program does not provide care services in assisted living, it does provide assisted living assessments. |
| Washington | Washington has Medicaid waivers and programs that provide help for residents in assisted living or adult family care. Two of the options, the Medicaid Personal Care Program, and the Community First Choice program, are state plan options that provide care assistance. The COPES Program also has an assisted living option, as does the New Freedom Program. Finally, the Nurse Delegation Program is a unique program that trains non-medical caregivers to assist with some medical-related tasks |
| West Virginia | West Virginia, through its Medicaid Personal Care option, will pay for personal care for state residents if they live at home or in assisted living but does not cover rent. |
| Wisconsin | Wisconsin, in a limited capacity, provides services to state residents that live in assisted living communities through the Family Care program which is designed to replace COP-W. Another option is Personal Care, provided under the general Medicaid program. Finally, persons can receive care assistance in assisted living residences via IRIS. |
| Wyoming | Wyoming Medicaid offers the Community Choices Waiver. This program will pay for a variety of personal care and nursing services for residents in assisted living but notably does not pay for their room and board costs. |
Summary
It can be difficult to decide that it is time to move into an assisted living facility, let alone deal with the costs for the services you need. The best place to start is to determine whether you need assisted living services to help you with some daily life activities, or if you are fine with independent living in a community that supports your current lifestyle.
Speaking with a senior care or health care professional can help you determine what kinds of services are available, which facilities they are available in, and what kind of financial aid programs and federal benefits are available to you.
Take your time with researching assisted living and independent living communities. Through your research, you will start to see which one is right for your loved one based on the services they provide.
Citations
- 1aging.ca.gov, “Assisted Living Facilities“, Accessed November 19, 2021
- 2umh.org, “Your Guide to Senior Care: Independent Senior Housing“, Accessed November 19, 2021
- 3arborassistedliving.com, “All-Inclusive vs. A la Carte: Which Pricing Structure is Best for Assisted Living“, Accessed November 19, 2021
- 4genworth.com, “Cost of Care Trends and Insights“, Accessed November 19, 2021
- 5acl.gov, “What is Long-term Care Insurance“, Accessed November 19, 2021
- 6va.gov, “Veterans Pension rates“, Accessed November 19, 2021
- 7payingforseniorcare.com, “Medicare Benefits for Assisted Living & Long Term Care“, Accessed November 19, 2021
- 8payingforseniorcare.com, “Medicaid & Assisted Living: State by State Benefits & Eligibility“, Accessed November 19, 2021