You’ve weighed your options, considered your needs, and decided that assisted living is the right choice for you or your loved one. While that’s a huge step in the process, it’s only the beginning.

Paying for assisted living can be a major hurdle for many people. Fortunately, you have options and there are plenty of resources out there to help you figure out what works best for your situation. 

Taking the time to consider each possibility and talking to a financial or insurance advisor is a great place to start.

How Much You Can Expect to Pay

The national median cost for assisted living facilities is $3,600 a month. That’s a 2.86 percent increase from 2014, according to the latest figures from Genworth Financial. Those are median numbers, meaning half pay more and half pay less. The range varies from $600 to $11,250 a month.

In contrast, a private room at a nursing home goes for about $250 per day, ranging from $101 to $1,255 a day. 

Type of RoomAnnual CostCost Per Day
Assisted living$43,200$118
Nursing home (private room)$91,250$250

Ways to Pay for Assisted Living

There are four main ways to pay for assisted living or nursing home care:

  • self-funding
  • long-term care insurance
  • government assistance like Medicare or Medicaid
  • housing subsidies

Many of these depend on a person’s individual situation, including what programs are offered in their state. Here are some details on the different ways to pay for assisted living care.

1. Self-funded Assisted Living

About 86 percent of assisted living residents pay for their care from savings or liquidating their assets, like selling their home. 

Friends and family often help with funding. But like personal savings, there are limits to what’s available and risk for financial hardship.

If you have a life insurance policy, you may be able to leverage the one-time payment that you would receive upon your death to pay for long-term care. Talk to your insurance agent about your options.

2. Long-Term Care Insurance

Some health insurance policies don’t cover certain parts of long-term care, or they offer low caps on what they’ll pay. But, they do cover medical services. 

Long-term care insurance policies pay out a preselected amount to cover custodial care services like bathing, changing clothes, and more.

Many insurance companies don’t accept people already in long-term care. If they do, premiums are often much higher or benefits are limited. You should buy long-term care insurance before you need the services, if possible. 

When weighing the costs and benefits of long-term care insurance, American Association of Retired People recommends people consider:

  • age
  • health
  • income
  • savings
  • taxation considerations
  • ability to pay premiums
  • support system 

They offer an online calculator to help you estimate what you can expect to pay depending on where you live and the kind of care you’ll need.

3. Government Assistance

The two government programs that can help you fund assisted living are Medicaid and Medicare. 

Medicaid covers long-term care services for people with low incomes. Since it’s a state and federal government partnership, states can choose which services they cover. Custodial care isn’t typically covered under Medicaid, but medical care is.

Medicaid is an important safety net for someone paying for long-term care with personal funds that are running out. Spouses are allowed to keep assets including their homes, income, and savings while their partners receive Medicaid benefits. 

Medicare pays for short-term, in-home nursing and medical care for conditions that are expected to improve. People over the age of 65 or those with disabilities qualify for Medicare. 

For Medicare to pay for your care, you must meet these qualifications:

  • You’ve recently stayed in a hospital for three days.
  • You’ve been admitted to a Medicare-certified nursing facility.
  • You’re in need of skilled care like physical therapy.

Medicare currently covers all the costs for the first 20 days. After that, you will be responsible for paying (up to $140 a day) for those services. Medical supplies and equipment are covered with no limit on how long they are needed.

4. Housing Subsidies

The United States Department of Housing and Urban Development’s section 202 program can help cover the room and board part of assisted living. Those who qualify must be considered a low-income household where at least one person is 62 years old or older when they first moved in. A low-income household is defined as one that makes less than $12,000 a year. 

There are also state programs that divert various taxes and funds to keep people over 60 living independently in their communities as long as possible.

The Takeaway

You have many options when it comes to paying for assisted living. At first glance, that may make the process seem more complicated. But the options mean that you’ll likely be able to find exactly the right fit for your personal and financial needs. 

More resources:

If you’re having trouble figuring out how to fund assisted living care for you or a loved one, talk to a financial advisor or an insurance agent. They’ll be able to walk you through the decision-making process.