For most families seeking long-term care, cost is a key consideration. As the U.S. population ages, millions of baby boomers will need some type of care and support in the next decade. This means paying for senior care can quickly become a financial burden to seniors and families who may not know their options.
The monthly median cost of senior care can range from $4,300 at an assisted living facility to about $8,800 at a nursing home, according to a 2020 Genworth Cost of Care Survey.
Planning ahead can better position you to make good choices for your loved one’s care in the future. But if your aging family member needs care now, there are ways to finance the cost of long-term care through a combination of approaches. Families considering how to pay for senior care may rely on options such as retirement income, savings, long-term care insurance, public pay assistance, and other alternatives.
This complete guide to paying for long-term care provides an overview of senior care costs and options to help you evaluate how to cover long-term care expenses.
The first step in making a plan for how to pay for elder care is understanding your aging loved one’s care needs. Whether you’re looking for care at a senior living facility or plan to hire an in-home caregiver, care providers will want to discuss your loved one’s health and their care needs and goals during an initial assessment. A care provider may also evaluate your family member’s mobility and ability to perform certain activities of daily living (ADLs). This information will help them develop a care plan that is tailored to your family member.
The level and type of services your family member needs will affect the cost — the more assistance provided, the higher the cost of care. For example, a senior who only needs help with meal preparation or transportation a few times a week is likely to pay less for services than someone who needs daily help with bathing, dressing, or toileting. Costs associated with level of care may also change over time as a resident’s needs evolve.
As you consider care options, start by asking yourself these questions:
Next, seek to learn about the long-term care options available in your area and the services they offer. Each state has specific regulations that govern senior care facilities. This means care services and costs can vary greatly by facility type depending on where you live. If you need help matching your loved one’s needs with adequate care, a Senior Living Advisor can help.
Senior living has evolved greatly over the years, and many long-term care options with varying degrees of services are available to older adults.
Independent living communities are for older adults who are generally healthy, active, and able to live on their own. These communities offer a hassle-free lifestyle that includes restaurant-style meals, housekeeping, transportation, onsite activities and outings, and more. Typically, independent living facilities don’t provide assistance with activities of daily living, such as bathing and toileting. However, many independent living facilities offer onsite home care providers. For an additional fee, independent living residents may receive help with personal care as their needs evolve, while also maintaining a more active and independent lifestyle.
Assisted living facilities provide long-term housing and care for seniors. Older adults in assisted living are generally active, but may need help with certain activities throughout the day, such as bathing or dressing. Some residents may need help managing medications or monitoring chronic conditions. Others may benefit from rehabilitation therapy while recovering from an illness or injury. Assisted living facilities also offer care coordination, nutritious meals, housekeeping, and social activities in a senior-friendly environment.
Memory care is for seniors who have Alzheimer’s disease, another form of dementia, or other types of memory impairment. These residential facilities cater to the unique needs of seniors who have progressive memory loss in a safe environment, and are designed to reduce confusion and prevent wandering.
Memory care facilities provide 24-hour specialized dementia care with a focus on improving the quality of life of residents. Many memory care communities offer person-centered dementia care combined with memory-enhancing activities and therapies, which may include occupational therapy, music therapy, and more. Services may also include prepared meals, medication management, and help with personal care.
Nursing home care is for seniors who are seriously ill or have a severe health condition, or for those recovering from an illness or injury after a hospital stay. Nursing homes provide both short-term and long-term residential care that includes 24-hour nursing and personal care. Nursing home residents typically need a high level of nursing and medical care, but don’t need to be in a hospital. In addition to meals, housekeeping, and social activities, nursing home services may include skilled nursing care, rehabilitation programs, and palliative and hospice care.
|Services||Assisted Living||Nursing Homes||Memory Care||Independent Living|
|Housekeeping and laundry services||x||x||x||x|
|Help with daily activities (ADLs)||x||x||x|
|Exercise and physical therapy as needed||x||x||x|
|Specialized care for patients with memory loss||x||x|
|24-hour care and supervision||x||x|
|Secured entrances and exits to prevent wandering||x||x|
|Transportation to appointments||x||x|
|Unique facility layout and design to reduce confusion||x|
Home care provides non-medical care for seniors who wish to age at home. In-home caregivers are trained in senior care and provide a wide range of services that cater to individual needs. Home care services may include personal care, companionship, cooking, light housekeeping, mobility assistance, and more.
Long-term care costs vary significantly based on the type and level of care provided:
|Care Type||Nursing Home||Memory Care||Assisted Living||Home Care||Independent Living|
|Monthly Median Cost||$9,086||$5,250||$4,429||$4,615||$2,552|
Sources: Genworth Cost of Care Survey and 2019 A Place for Mom Move-in Data
While the level of care provided at a senior living facility is key in determining the cost of care, other factors affect prices.
Long-term care can be costly. However, paying for senior living may seem less daunting when you compare it to the costs of living at home, including rent or mortgage payments, taxes, and property upkeep. In many cases, the cost of utilities, meals, transportation, and entertainment is included in the monthly fee charged by senior living communities.
When assessing whether your loved one can afford senior living, seek to understand their financial resources and current expenses. Calculate the costs associated with aging in place:
Many families struggle with planning and paying for senior care. This is why it’s important to do your research to understand your options. Typically, families will finance senior care through a combination of options — from savings and retirement income to long-term care insurance and proceeds from the sale of a home or other alternatives.
Your loved one’s retirement income, pension funds, and savings may help cover the cost of senior care. If your parent has individual retirement accounts (IRAs), stocks, bonds, or other investments, they may be able to sell their assets or use dividends to pay for long-term care.
Long-term care insurance policies may cover some or all costs associated with long-term care. Coverage varies based on each specific policy, but long-term care insurance typically includes care for cognitive decline for seniors who have Alzheimer’s disease or another form of dementia, and care that provides help with ADLs, such as bathing, dressing, and toileting. This means long-term care insurance may help pay for the cost of an in-home caregiver for seniors aging in place or care provided at an assisted living facility, memory care community, nursing home, adult day care center, or hospice facility. Some policies may also cover the cost of having someone help with cooking, running errands, or doing chores.
If your family member has a long-term care insurance policy, it’s important to discuss exactly what it covers and how it can be used to pay for senior care with their insurance provider before hiring an in-home caregiver or moving to a senior living facility. If your loved one is relocating to another state to be close to family, check if the policy covers the types of services and facility in the new location before moving.
Long-term care insurance benefits may be paid in different ways depending on your family member’s policy:
While life insurance is typically a benefit for surviving family members, it may be possible to use your aging relative’s life insurance policy to help pay for long-term care. Your options will depend on the type of life insurance policy your loved one has.
Below are some options for using a life insurance policy for paying for senior care:
If your loved one is planning to use a life insurance policy to help pay for long-term care, it may be a good idea to consult with a financial advisor before making a decision. The choices your family makes may affect your loved one’s taxes or access to public assistance.
If your senior family member owns a home or property, there are many ways to use it to generate funds to pay for senior care.
A health savings account (HSA) allows you to set aside money to pay for medical expenses that aren’t covered by a health insurance plan. Those who have an HSA can contribute pre-tax dollars to save for health care costs. Withdrawals are also tax-free as long as the money is used for qualified health care expenses.
If your loved one has an HSA, it’s also possible to use HSA assets to help pay for long-term care.
For seniors with few or no assets who don’t have long-term care coverage, options are more limited. Medicare doesn’t cover long-term care and Medicaid has strict limits on income and assets. However, certain veterans benefits may provide financial assistance to eligible seniors and their surviving spouses who need long-term care.
All Americans who are 65 years old are eligible for Medicare, a national, government-funded health insurance program. In some cases, people who have a disability may be able to enroll in Medicare even if they’re under 65.
Medicare pays for short-term care at nursing home facilities for seniors who need rehabilitation or nursing care after an illness or injury that requires hospitalization. In some cases, Medicare may also cover rehabilitation services and therapies at home or at a senior living community. However, it won’t cover long-term care.
Short-term care expenses covered by Medicare may include the following:
Medicaid is the leading government assistance program for long-term care, providing financial support to seniors who can’t afford the care they need without it.
In most states, Medicaid will provide financial assistance to seniors who need help with personal care. However, Medicaid programs and eligibility requirements vary from state to state, and so do covered services. For this reason, if your family member is planning to apply for Medicaid, it’s a good idea to contact your state medical assistance office for more details. Depending on where you live, Medicaid programs may be referred to as auxiliary grant, elderly waiver, or frail elderly waiver programs.
Some long-term care expenses Medicaid covers in most states include the following:
Two types of benefits can help eligible veterans and their surviving spouses pay for long-term care: the VA Aid and Attendance and Housebound benefits. Both of these benefits for senior care provide supplemental income to seniors who are eligible to receive VA pension to help cover costs associated with long-term care.
To qualify for VA benefits for long-term care, your loved one must meet eligibility requirements, which vary depending on each specific benefit. However, to be eligible for either Aid and Attendance or Housebound benefits, seniors must meet certain basic requirements:
If your family member qualifies for VA benefits, their payment rate will be calculated based on their household income and the Maximum Annual Pension Rate (MAPR), which is set by Congress. Amounts will also vary based on factors such as number of dependents, whether they’re married to another veteran who qualifies for pension, and whether they qualify for Aid and Attendance or Housebound benefits.Back to top
When looking for senior care at a senior living facility, these tips may help you save:
Most aging adults will need some level of support or care at some point in their lives. In fact, approximately 70% of adults who live to be 65 or older will need long-term care, according to the U.S. Department of Health and Human Services (HHS).
With Americans living so much longer these days and with the record number of aging baby boomers reaching retirement age, the younger generations have to do more thinking about how they might care for parents who have either exhausted or lost their savings. The aging workforce is also straining Social Security and Medicare benefits, according to the Congressional Budget Office, leaving more of the financial burden on the individual families. So planning for your family and being cognizant of elder care costs is crucial.
Yet, many families often struggle with talking about senior care with aging loved ones. Planning ahead will give you and your family time to think about options and discuss what you need to do to prepare.
Set aside dedicated time, without distractions, to discuss your loved one’s wishes, needs, and potential solutions for care when they need more support. Be prepared to have a series of conversations before your family agrees on senior care plans that match everyone’s needs.
Some topics to cover may include the following:
For many people, money is a private topic. However, when it comes to paying for senior care, it’s vital to understand your aging parents’ financial resources. Talking to your loved one about finances doesn’t have to be awkward.
As you discuss future plans for senior care with your parent, organizing and understanding how to quickly locate important documents is an important step. This may help prevent a lot of stress for families in case your aging loved one becomes ill or needs to move to a long-term care facility unexpectedly.
Set aside time to help your family member organize or locate the following documents:
With so much to consider, many families feel overwhelmed when it’s time to look for long-term care. If you need help understanding senior care options and how to pay for long-term care, connect with one of our local Senior Living Advisors. They can help you find care that matches your loved one’s needs and budget in their desired locationBack to top
Assisted living facilities offer housing and care for active seniors who may need support with activities of daily living, like bathing, dressing, and medication management.
The score shown is the overall experience rating which is an average of the reviews submitted for those communities. The overall experience rating is a star rating that ranges from 1 being the lowest to 5 being the highest.
Below are the 51 largest cities grouped by their metropolitan area.
Top states for Assisted Living