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How to Pay for Memory Care: Surprising Tips for Families

21 minute readLast updated September 21, 2023
fact checkedon March 27, 2023
Written by Haleigh Behrman
Reviewed by Denise Lettau, J.D., wealth management specialistAttorney Denise Lettau has over 15 years of experience in the wealth management industry.
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If you’re caring for a loved one with Alzheimer’s disease or another type of dementia, you may be considering memory care. Memory care communities and home care options can help seniors experiencing cognitive decline stay healthy, safe, and engaged, but the price tag on these services can feel overwhelming. Fortunately, a number of assistance options are available to help your family cover the cost of care.

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How do you pay for memory care?

Your family will likely use a combination of personal funds and public pay resources to cover the cost of memory care for your loved one. Private pay options generally include personal assets, pensions, retirement funds, savings, and financial assistance from family members. Your aging relative may also qualify for government-funded assistance through Medicare, Medicaid, or the VA.

Understanding your family’s budget and financial circumstances should be one of the first steps of your search — and advance planning is essential, given that the median cost of memory care in 2023 is $5,995 a month, according to A Place for Mom’s most recent proprietary data.[01]The more you know about the resources available, the more you can ensure your loved one receives the benefits they deserve.

Explore various benefits below, and learn some surprising ways seniors and their families can pay for memory care.

Medicare coverage for memory care

Medicare is a federal health insurance program available to all adults in the United States over the age of 65, as well as those with certain disabilities. The total number of people enrolled in the program sat just shy of 66 million Americans in 2023, according to the Centers for Medicare and Medicaid Services (CMS).[02]

Medicare does offer some memory care financial assistance, but there are limitations on when it will pay for care and how much of the cost it will cover. In most states, benefits are strictly for medical needs. The tasks required to provide personal care for an individual with Alzheimer’s or dementia — including supervision and assistance with activities of daily living (ADLs) — are classified as nonmedical, and thus are not eligible for Medicare coverage.

Some memory care services that are considered medical needs and are covered by Medicare include:[03]

  • Durable medical equipment (DME)
  • Inpatient care for clinical research studies
  • Annual wellness visits 12 months after enrollment
  • Inpatient hospitalization for an injury- or illness-related treatment
  • Hospice care costs for pain management and relief in end-stage dementia
  • Up to 100 days of skilled nursing care that meets Medicare requirements
  • Cognitive impairment assessment and diagnosis

Medicare Advantage for memory care

Medicare Advantage plans are offered through private, Medicare-approved companies.[04] They include the same benefits listed above, as well as potential benefits that can be exceptionally advantageous for individuals with Alzheimer’s or other types of dementia.

These potential benefits may cover or provide:

  • Prescription drug coverage for dementia medication
  • Meal delivery
  • An annual cap on out-of-pocket expenses
  • In-home memory care beyond 35 hours per week
  • Adult day care
  • Personal emergency response systems
  • Home safety modifications

Additionally, Medicare Advantage plans include Special Needs Plans (SNPs), which can provide benefits for specific medical concerns or chronic conditions.[05] Individuals considering long-term nursing care, whether in their home or an assisted living facility, may qualify for an SNP.

Other persons who may qualify for an SNP include those receiving Medicare benefits and Medicaid services, or those with any of the following chronic conditions:

  • Diagnosed dementia
  • Neurological disorders
  • Cardiovascular disorders
  • Stroke
  • Autoimmune disorders
  • Chronic and disabling mental health conditions
  • Chronic heart failure
  • Chronic lung disorders
  • Medicaid benefits for memory care

Let our care assessment guide you

Our free tool provides options, advice, and next steps based on your unique situation.

Medicaid benefits for memory care

Jointly funded by the federal and state governments, Medicaid is a health insurance program for people with limited income or financial resources. Individuals diagnosed with Alzheimer’s or another type of dementia mayqualify for Medicaid benefits if they’re unable to work or have a limited ability to work, or if their income or assets fall below a certain level.

Medicaid has broader benefits than Medicare for individuals with cognitive decline. While Medicaid, like Medicare, doesn’t cover the cost of personal care, plans may pay for:

  • Home health services
  • Physician services
  • Prescription drugs
  • Inpatient and outpatient hospital services
  • Transportation to medical appointments
  • Laboratory and X-ray services
  • Health center services, if federally qualified

Medicaid assistance is determined on a state-by-state basis, and, in order to utilize these benefits, assisted living and memory care providers must participate in the program. Only about 50% of assisted living communities are Medicaid-approved.

When it comes to Medicaid benefits for dementia and Alzheimer’s care, it’s important to recognize the different Medicaid programs available.

Institutional long-term care through Medicaid

Institutional long-term care is a Medicaid program for individuals who need nursing or long-term care in a residential facility. These facilities are required to be licensed and certified by the state, and they should primarily provide long-term care, skilled nursing, and rehabilitation.[06]

This program covers a range of inpatient and comprehensive services such as institutional benefits. These services include:

  • Room and board
  • Personal care
  • Nursing care
  • Therapy services

Medicaid Home and Community Based Services

Home and Community Based Services (HCBS) are person-centered care provided in an individual’s home or community. HCBS programs are designed to help individuals stay in their homes, rather than moving into an institutional setting or nursing home.[07]

These programs can offer a variety of medical and personal care services, which may include:

  • Home health care
  • Transportation
  • Physical and occupational therapy
  • Home meal deliveries
  • Skilled nursing care

In-home dementia care costs may be more expensive than care provided in a community.

Paying for memory care with veterans benefits

The Department of Veterans Affairs (VA) offers a variety of benefits that can help qualifying senior veterans cover the cost of care. VA health care programs provide medical benefits that may include services beneficial for people experiencing dementia or cognitive decline. The VA may provide ongoing assistance for eligible veterans from the time of a dementia diagnosis through the disease’s terminal stage.[08]

The VA offers a number of different programs that can help cover memory care costs, including those listed below.

Veteran-Directed Care

The Veteran-Directed Care (VDC) program provides a monthly budget to veterans or their caregivers.

The budget covers the costs of:

  • Personal care services, including assistance with ADLs
  • Home modifications or other items that help the veteran continue living at home
  • Adult day care
  • Caregiver education and training
  • Homemaker services

Unlike traditional VA services, the VDC puts veterans at the center of their long-term care service. Under the VDC, veterans can:

  • Manage their budget
  • Decide which services best fit their needs
  • Hire relatives and close friends as personal care aids
  • Purchase items that help them live independently

Aid and Attendance

The Aid and Attendance benefit provides financial assistance to low-income veterans or surviving spouses. The veteran or surviving spouse must meet at least one of the following conditions to qualify:

  • Require assistance with ADLs
  • Be bedridden for all or most of the day due to illness
  • Reside in a nursing home due to physical or mental incapacity, including Alzheimer’s and other forms of dementia
  • Have severe visual impairment

The Aid and Attendance benefit is an additional monetary amount that can be added to a VA pension, which can help cover the cost of:

  • Assisted living
  • Memory care
  • Skilled nursing
  • In-home medical care services

VA Dependent Parent Benefit

The VA Dependent Parent Benefit is a needs-based cash benefit available to veterans caring for a parent with Alzheimer’s or another type of dementia. The parent must be financially dependent on the veteran for care.

This benefit:

  • Is available to veterans only if they’re receiving disability compensation or VA educational benefits
  • Has no income restrictions
  • Is above and beyond disability compensation
  • Can be used to provide care as the veteran sees fit
  • Is available through all stages of dementia

State veterans homes

State veterans homes are long-term care facilities that are certified by and receive funding from the VA, but they are run by individual states.

The types of care provided in these homes can include:

  • Nursing home care
  • Memory care
  • Assisted living
  • Adult day care

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Paying for dementia care with home equity

A home is often a senior’s largest asset or investment and can be used as a source of funds for dementia care. Here are a few ways you can leverage your loved one’s home equity to pay for memory care:

  • Selling a home can create funds that can directly cover memory care costs.
  • Renting a home to others can cover the mortgage and free up other funds for memory care costs. If the home is paid off, renting it may produce regular income that can fund memory care.
  • Reverse mortgages allow homeowners age 62 and older to convert equity in their home into tax-free income by either receiving a lump-sum amount, a line of credit, or a monthly payment.

Using life insurance to pay for memory care

Life insurance plans may be able to cover memory care costs. A policyholder can sell their policy to a third party and use the proceeds to fund assisted living. Or, a life insurance policy may be “surrendered” to the insurance company for its cash value. However, using life insurance to fund memory care can involve relinquishing policy ownership and not receiving benefits upon death.

Paying for memory care with personal assets

Many families cover the cost of memory care with personal assets. A senior may have saved for retirement throughout their career, or they may have a pension. Adult children also frequently contribute to a parent’s cost of care.

Some assets typically used to fund the cost of memory care include:

  • 401(k) plans
  • Stocks
  • Employer pensions
  • Bonds
  • Personal property
  • Savings accounts

Using non-Medicaid state programs that fund memory care

Some states have funds available to provide financial assistance for individuals with Alzheimer’s or other types of dementia. Some of these programs can require a formal dementia diagnosis, while others can be for a variety of age-related care needs.[09]

It’s worth noting that, as state programs, these operate with a limited availability of funds and are available to a limited number of people. State-based programs typically assist caregivers by paying for adult day care or in-home respite care.

The best way to learn more about these programs is to get in touch with your local Area Agency on Aging.

Other surprising ways to pay for memory care

If the previous examples given don’t apply to your unique situation, there are additional resources available to help pay for memory care:

  • Tax credits for dementia. Tax credits, such as the Credit for the Elderly or the Disabled, can be an advantage for an adult child supporting a parent with dementia if they cover at least half of the financial assistance their parent needs.[10] While this specific credit helps offset federal taxes, some states have their own credits available as well.
  • Caregiver loans. Caregiver loans are similar to reverse mortgages, in that a parent uses their home equity to compensate their adult children for providing care. The main difference between these loans and reverse mortgages is where the money goes. Funds from a reverse mortgage obtained for memory care are usually used to pay an in-home care agency or a memory care community. Funds obtained through a caregiver loan are paid to the adult child or family member for providing care. Caregiver loan funds could be used to “settle up” with an adult child or family member for past caregiving, or those funds could be held and disbursed as care is provided.
  • Alzheimer’s care loans. These loans are typically taken out by families who have an immediate need for memory care but don’t currently have the ability to pay for it. Like all loans, Alzheimer’s care loans are intended to be paid off in the future.
  • Nonprofit organization assistance. Some nonprofit organizations may provide respite care for caregivers free of charge or for a significantly reduced amount.

As the cost of memory care services increases, understanding the options available to you and your loved one can be instrumental in determining how much you pay. A Place for Mom’s Senior Living Advisors can help you with any questions you have about memory care or finding financial resources to cover the associated expenses — all at no cost to your family.


  1. A Place for Mom. (2022). A Place for Mom Proprietary Data.

  2. Center for Medicare Advocacy. (2023, June 29). Medicare enrollment numbers.

  3. Centers for Medicare & Medicaid Services.Is your test, item, or service covered?

  4. Centers for Medicare & Medicaid Services.Medicare Advantage Plans

  5. Centers for Medicare & Medicaid Services.Special Needs Plans (SNP)

  6. Centers for Medicare & Medicaid Services.Institutional long term care.

  7. Centers for Medicare & Medicaid Services.Home and community based services

  8. U.S. Department of Veterans Affairs. (2022, October 1).VA benefits for spouses, dependents, survivors, and family caregivers.

  9. Dementia Care Central. (2023, February 15). Getting financial help for dementia and Alzheimer’s care.

  10. Internal Revenue Service. (2023, March 3).Credit for the elderly or the disabled.

Meet the Author
Haleigh Behrman

Haleigh Behrman is a former copywriter at A Place for Mom, where she wrote articles on senior living community types and services, healthy aging, and caregiving tips and trends. Before joining A Place for Mom, she managed several community-focused print publications and a wedding magazine. She earned a bachelor’s degree in journalism from the University of Kansas.

Edited by

Eric Staciwo

Reviewed by

Denise Lettau, J.D., wealth management specialist

The information contained on this page is for informational purposes only and is not intended to constitute medical, legal or financial advice or create a professional relationship between A Place for Mom and the reader. Always seek the advice of your health care provider, attorney or financial advisor with respect to any particular matter, and do not act or refrain from acting on the basis of anything you have read on this site. Links to third-party websites are only for the convenience of the reader; A Place for Mom does not endorse the contents of the third-party sites.

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