Dementia care costs can accumulate quickly, especially if your loved one requires a move to a memory care facility. Fortunately, some insurance plans may cover memory care expenses, depending on your loved one’s policy coverage, health, and financial status. Medicare doesn’t cover the cost of custodial care like assistance with activities of daily living, but Medicaid may. However, Medicaid programs vary from state to state, so your loved one must meet strict criteria to qualify. Other options that help families pay for memory care include long-term care insurance, life insurance, and VA health care, but policies and eligibility requirements vary.
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Yes, most types of health insurance cover medical care costs related to Alzheimer’s disease and other types of dementia. Medicare, Medicaid, VA health care benefits, and private health insurance policies typically provide some coverage for medically necessary care services such as:[01,02]
Health insurance can help defray out-of-pocket health care costs for an aging loved one’s care. However, Medicare and private health insurance policies don’t cover long-term custodial care services provided in a loved one’s home, such as in-home dementia care, or in a senior living setting like a memory care facility. Custodial care generally consists of nonmedical services, such as assistance with activities of daily living, help with household duties, and general supervision.
Memory care communities are a type of senior living designed to help seniors with Alzheimer’s disease or another type of dementia age safely. Prices of these communities can vary depending on amenities, location, and the level of care your loved one needs. Keep in mind that memory care services can sometimes be provided in other settings, such as assisted living facilities and smaller care homes.
Families can use a variety of resources to pay for memory care facilities, including personal funds, retirement savings, long-term care insurance, VA health benefits, and health insurance such as Medicaid. Below, we’ll explore several types of insurance and which memory care costs they cover.
Medicaid may cover custodial memory care cost. A health insurance program jointly funded by state and federal governments, Medicaid is available to lower-income individuals who otherwise could not afford health care. Medicaid coverage and eligibility requirements vary from state to state, and a senior must meet strict functional and financial criteria to enroll.
Depending on their state of residence, your loved one will likely have to choose an eligible memory care community for costs to be covered. Only about 50% of assisted living and memory care communities are Medicaid-approved.
If your loved one has late-stage dementia and requires 24-hour care, they may qualify for institutional long-term care through Medicaid. It covers residential stays in Medicaid-approved facilities designed to provide rehabilitation, skilled nursing, and long-term care.[03] In this situation, room and board, personal assistance, and nursing care costs are all covered by Medicaid.
Although VA health care isn’t considered a health insurance plan, it’s still a benefit that helps qualifying veterans cover health care costs. Eligible veterans who can’t live alone due to physical or mental health conditions (such as dementia) may qualify for covered community residential care in medical foster homes, adult family homes, or assisted living facilities. The type of care provided in these settings may be comparable to what’s provided in a memory care facility: 24/7 care and support provided by trained professionals.[04]
Depending on your loved one’s qualifications and needs, they may be able to use VA benefits to pay for dementia care in other settings, too, including their own home, an adult day center, or a nursing home.
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Long-term care insurance coverage varies from policy to policy but may cover a memory care facility. These specialized policies are designed to help pay for long-term custodial care provided in various settings.
However, long-term care insurance requires planning and preparation. Policies are medically underwritten, so an applicant must meet certain health criteria to qualify for coverage. If your loved one has already been diagnosed with dementia, they can no longer enroll in a policy.
In general, to be eligible for benefits, a policyholder has to either receive an official dementia diagnosis or be unable to perform at least two activities of daily living. They must also satisfy their policy’s elimination or waiting period before it will begin paying for services. During this time, care must be paid for out of pocket.[05]
Keep in mind that long-term care insurance doesn’t guarantee a fixed premium, and costs can increase enormously over time. Your loved one can experience financial hardship by paying for a policy they may never need to use. But if they don’t enroll in long-term care insurance when they’re still healthy, there may not be many options for care coverage should they need it in the future. It’s always a good idea to speak with a financial advisor before enrolling.
Life insurance doesn’t cover memory care in the traditional sense. But in some cases, your loved one may be able to use their life insurance policy to pay for memory care.
For example, a whole life insurance policy can be sold to a third party (known as a life settlement) for a lump-sum payment or various other payment options.[06] A policy may also be “surrendered” to the provider for cash value to free up funds for senior care. However, selling or surrendering a policy often means death benefits are reduced or aren’t paid at all.
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Whether your relative has an official dementia diagnosis or you’re just exploring insurance policies to prepare for the future, it’s good to understand the options available. Of course, other programs and insurance products can be used to pay for medical and long-term care costs. But most families should expect to supplement insurance and benefits with personal funds to cover room and board and custodial care in a memory care facility.
If you think a transition to memory care may be right for your loved one, or if you want to learn more about care options that fit your family’s budget, reach out to one of A Place for Mom’s Senior Living Advisors. They can discuss memory care costs, communities in your area, and way to pay for care — all at no cost to your family.
Centers for Medicare and Medicaid Services. Parts of Medicare. Medicare.gov.
Centers for Medicare and Medicaid Services. Seniors & Medicare and Medicaid enrollees. Medicaid.gov.
Centers for Medicare and Medicaid Services. Institutional long-term care. Medicaid.gov.
U.S. Department of Veterans Affairs. (2022, October 12). VA nursing homes, assisted living, and home health care.
Administration for Community Living. (2020, February 18). Receiving long-term care insurance benefits. LongTermCare.gov.
The Financial Industry Regulatory Authority. (2023, July 31). What you should know about life settlements.
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