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Memory Care Help for Families: Surprising Ways to Pay for Care

Written by Haleigh Behrman
 about the author
15 minute readLast updated March 30, 2022

If you’re caring for a loved one with Alzheimer’s disease or another type of dementia, you may be considering memory care. Whether you’re looking for in-home or assisted living community-based help, memory care is designed to keep seniors experiencing cognitive decline healthy, safe, and engaged.

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However, when considering how to pay for assisted living or memory care, the price tag can feel overwhelming. In fact, the median cost of memory care in 2021 was $5,430, according to A Place for Mom’s most recent community survey.

Fortunately, a number of memory care financial assistance options are available. From federal and state-funded programs to veterans benefits, nonprofit organizations, loans, and tax credits, we’ll cover several funding sources that can offset the cost of memory care help.

In this article:

Medicare coverage for memory care

Medicare is a federal health insurance program available to all U.S. adults over the age of 65. The total number of those enrolled in the program sat just shy of 64 million Americans in October 2021, according to the Centers for Medicare and Medicaid Services (CMS).

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. 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 financial coverage.

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

  • 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 plans are offered through private, Medicare-approved companies. 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). These can provide benefits for specific medical concerns or chronic conditions. 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

Medicaid benefits for memory care

Medicaid is funded partially by the state and federal government, and it is a health insurance program for those with limited income or financial resources. Individuals diagnosed with Alzheimer’s or another type of dementia may qualify for Medicaid benefits if they are unable or have a limited ability to work.

Medicaid has broader benefits than Medicare for individuals with Alzheimer’s or another type of dementia. 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 varies on a state-by-state basis, and, in order to utilize these benefits, assisted living and memory care providers must participate in the program, and their participation is not guaranteed. 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

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.

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

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

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.

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

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

Veterans benefits for dementia care

The Department of Veterans Affairs (VA) offers a variety of benefits that can help senior veterans cover the cost of care. VA health care programs offer 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.

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 benefits

Aid and Attendance benefits give 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 activities of daily living
  • 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. The benefit helps 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, and it is available for 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

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 use you or your loved one’s home to pay for memory care:

  • Selling a home can create funds that can directly cover memory care costs.
  • Renting a home 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 policy holder may be able to 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 involves relinquishing policy ownership and not receiving benefits upon death.

Paying for dementia care with personal assets

Most 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

State (non-Medicaid) programs that fund memory care

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

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.

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Other sources of memory care financial assistance

If the previous examples given do not apply to your unique situation, there are additional resources available to provide memory care help and financial assistance. Although Medicare, Medicaid, and VA programs can be excellent options for memory care financial assistance, there are other options that can help with the costs of long-term care.

Some of these other options include:

  • Tax credits fordementia. 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. 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: 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 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 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 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. Our free, local Senior Living Advisors can help you with any questions you have about memory care or finding financial resources to cover the associated costs.

Sources

Alzheimer’s Association.Alzheimer’s and dementia facts and figures.

Centers for Medicare & Medicaid Services. (2021, December 21). CMS releases latest enrollment figures for Medicare, Medicaid, and Children’s Health Insurance Program (CHIP).

Dementia Care Central. (2019, November 4). Getting financial help for dementia and Alzheimer’s care.

Dementia Care Central. (2020, August 20). Respite care for Alzheimer’s and dementia caregivers.

Dementia Care Central. (2022, January 21). Medicaid benefits for dementia and Alzheimer’s care: at home, in memory care and nursing homes.

Geller, H. (2019, December 16). How to pay for assisted living or memory care. ElderCare Alliance.

IRS. (2021). Publication 524 (2021), credit for the elderly or the disabled.

Medicaid.gov. Nursing facilities.

Paying for Senior Care. (2020, August 14). Medicaid and assisted living: state by state benefits and eligibility.

White, D. (2021, June 14). How much does memory care cost?. Consumer Affairs.

Veteran Aid.org. Alzheimer’s and dementia care for veterans.

The information contained in this article 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 recommend or endorse the contents of the third-party sites.

Meet the Author
Haleigh Behrman

Haleigh Behrman is a copywriter at A Place for Mom. She focuses 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

The information contained in this article 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 recommend or endorse the contents of the third-party sites.