How Much Does Assisted Living Cost?

Financial Planning for Senior Living

We’re living longer which means we get to enjoy our loved ones’ company longer than ever before. It also means we have to prepare ourselves financially in order to enjoy these extended golden years.

As the cost of living continues to increase, it’s perfectly normal to wonder if there is a better way to pay for your aging loved ones’ senior care. Fortunately, there are plenty of ways to offset residential care and senior living costs. Even better, your loved ones can likely mix and match several to reduce their monthly bills!

If you want to help your aging loved ones move into an assisted living community (but you aren’t sure how to finance this move), you’ve come to the right place.

Take a deep breath. Then, keep reading to learn more about realistic financial planning strategies for senior living and other elder care services.

Paying for Senior Living

People commonly experience “sticker shock” when browsing retirement communities for their aging relatives. But the truth is, most older adults and their families do not pay the full costs of these communities and their services upfront. Oftentimes, one or more of the following resources can help reduce — or completely cover — many older adults’ monthly fees.

Companion Living

Most senior living communities offer private or shared living options. Choosing a shared suite can reduce monthly costs and add even more social interactions to you or your loved one’s day.

Gift Tax Exemptions

There are times when adult children can deduct their aging parents’ senior living expenses from their taxes. To learn more about these deductions, you can visit the official IRS website.

Federal Government Programs

Many people associate three major federal programs in the United States with senior care: Medicare, Medicaid, and Social Security. Let’s break them down to see if they could help you or your loved ones pay for senior living services.

Medicare

Long-term care costs like room and board are not covered by Medicare.

Many people assume that Medicare will cover all of their residential care costs when they retire, but that isn’t the case. Medicare does not cover long-term stays in senior living communities. Rather, this health insurance program really only covers medical care costs or short-term stays (less than 100 days) in skilled nursing facilities.

Medicaid

Can Medicaid cover long-term care costs? The answer is yes… sometimes.

Medicaid is a state and federal program for low-income seniors and those living with disabilities. It can sometimes cover the costs associated with long-term residential care, although there are plenty of caveats. For starters, Medicaid usually will not pay for independent living. Instead, it often helps cover services received in assisted living facilities and skilled nursing care facilities (nursing homes) or medically necessary in-home care services.

There are, however, plenty of reasons why Medicaid may not help pay for assisted living, memory care, or skilled nursing care. For starters, some senior living communities do not accept Medicare or Medicaid; please keep this fact in mind while searching for a retirement community that your loved ones can call home. Furthermore, eligibility requirements for Medicaid can be strict, and simply gifting away all money and assets does not automatically make someone eligible for Medicaid benefits.

To learn more about what Medicaid can and cannot cover–and who qualifies for it–please visit your state’s official Medicaid website.

Social Security

Retirees who have worked a job covered by Social Security are eligible to receive Social Security benefits. These benefits are often received as a direct deposit that people can use to cover senior living expenses. While Social Security deposits can help offset senior living costs, they alone cannot pay for it all and will need to be paired with another source of income.

Long-Term Care Insurance

One of the best ways to receive peace of mind about the future? Investing in a quality long-term care (LTC) insurance policy. These policies, as the name implies, help pay for long-term care and oftentimes fill gaps that other types of insurance, like Medicare, miss. A handful of companies offer this private insurance, including:

  • Bankers Life & Casualty
  • John Hancock
  • MassMutual
  • Mutual of Omaha
  • New York Life
  • Northwestern Mutual

We encourage you to shop around and see what policies would best fit the needs of your aging relatives.

Downsizing

Bigger isn’t always better. In fact, when it comes to homes, “bigger” can mean bigger bills and expenses. One way to offset costs and save money for senior care and living services includes downsizing, or selling a larger home to move into a smaller home or condo. Your loved one can also create a tighter budget by cutting out extraneous expenses that could otherwise go toward quality residential care.

Assisted Living Waivers

There are plenty of states, like California, that offer assisted living waivers to cover costs associated with an assisted living community. All it takes is a simple Google search to discover state-sponsored financial assistance programs that your aging relatives could be eligible for!

Life Insurance

Your loved ones can take advantage of life insurance policies now—and there are a few ways to do it. For starters, they could invest in a hybrid life insurance policy that covers long-term care expenses in addition to paying a death benefit.

It’s also possible to convert a life insurance policy into a long-term care benefit plan, a pre-funded financial account that disburses a monthly benefit to help pay for long-term care needs. It’s important to note, though, that this account is a Medicaid-qualified asset.

Reverse Mortgages

Homeowners 62 and older can make use of their home’s equity with a reverse mortgage, a type of mortgage loan. Reverse mortgages are not for everyone. Ideally, they are for people who don’t plan to move and can still keep up with the cost of home maintenance, property taxes, and insurance.

Veterans Benefits

Wartime veterans may be eligible for certain benefits from the U.S. Department of Veterans Affairs, including benefits that help pay for assisted living and skilled nursing care services rendered in either a facility or at home. You can visit our page on Veterans Benefits to learn more about these benefits, what they cover, and who is eligible to receive them.

Selling the Home

Many people understandably don’t want to part with a home they have lived and loved in for years. It’s incredibly common to sell homes or condos when a loved one permanently moves into an assisted living community, however.

While we know that parting with a home filled with fond memories is difficult, we also encourage you to think of loved ones moving into a retirement community as an opportunity for them to make a new home filled with new friends and memories. Unlike a home, where your loved ones can easily become lonely and isolated, an assisted living community is a vibrant place that is full of potential friends, wellness and social activities, and more for your loved ones to enjoy.

Moving may be difficult, but that’s okay; fun new experiences can still lie ahead that may never have been possible if your loved ones remained in their old home.

Price Comparison: Assisted Living vs Home Care

Did you know that sometimes living in an assisted living community is just as affordable as living at home, if not more?

According to Genworth Financial’s Cost of Care Survey, the national average cost of assisted living is less than the cost of some in-home services. Specifically, this survey states that the 2021 median monthly cost of an assisted living facility was $4,500, while homemaker services cost $4,957 and a home health aide $5,148.

It’s important to remember that these assisted living costs typically include not just room and board, but also transportation, caregiving services, utilities, food, activity coordination, and more—all making the move into an assisted living community a savvy financial choice in many cases.

But life isn’t all about finances. Moving into a senior community can also be the right choice for your relatives’ physical, mental, and emotional well-being.

When Moving into a Senior Living Community is the Right Choice

Family members can receive peace of mind knowing that helping aging relatives make the move into a senior community is oftentimes not just the right move financially, but medically and emotionally as well.

In these communities, older adults receive the level of care they need from highly trained professionals. This care can include help with activities of daily living (ADLs) like medication management and showering, tasks that may be dangerous for some older adults to complete alone. Besides ensuring their physical safety, these communities also help older adults feel connected.

According to the 2020 Understanding America Survey, older adults living alone are at increased risk of depression and anxiety, in large part due to feeling isolated. Moving into a vibrant community can help seniors feel connected and empowered every day. At Monarch Communities®, we do just that by fostering socialization between residents, their families, and our staff members. No matter how joyful or difficult each day is, we can guarantee that our residents never experience a day alone.

Your Next Steps