As you age, you may consider moving to a long-term care facility. However, many older adults are understandably concerned about the cost of assisted living and nursing home care. These housing options can be double — or even triple — the cost of a monthly rent or mortgage payment.
As you age, certain daily tasks such as cooking, cleaning, and running errands may become more of a challenge. During these times, you may consider moving to assisted living. However, before you make any major life decisions, it’s important to note there are other, more affordable options to get the help you need while living at home. We’ll dive into these options later.
How much does assisted living cost? Who pays for assisted living facilities? Are there more affordable alternatives to assisted living? Below, we'll answer each of these common questions. In addition, we'll share alternative options to assisted living facilities and show you how to pay for the monthly fee.
How Much Does Assisted Living Cost?
The national median for monthly assisted living costs reached $4,051 in 2019, according to the Genworth Financial Cost of Care Survey. While these numbers are staggering, they're still less than half the cost of nursing home care, which has a median cost of $8,517 for a private room and $7,513 for a semi-private room per month.
The cost of assisted living varies by state. If you live in a state with a high cost of living, such as New York or New Jersey, the average monthly fee of assisted living rises to $4,630 and $6,400, respectively. However, if you live in Kentucky or Missouri, the average monthly cost is $3,497 and $2,881, respectively. If you live in the District of Columbia, the cost of assisted living is higher than the cost of all 50 states at $11,288 per month.
Assisted living is expensive because it includes not only a living space — you pay salaries for the onsite specialists and staff. Both assisted living and nursing homes have onsite nurses, nurses aids, cleaning staff, and cooks — and that’s just the bare minimum. The cost per month will rise based on the amenities offered or special care requirements (such as services for those living in memory units).
Who Pays for the Cost of Assisted Living?
Many people pay for assisted living out of pocket. However, there are a few options to help offset the cost. Unfortunately, there are many misconceptions about how government programs like Medicare and Medicaid pay for assisted living (spoiler: They don't).
Below, you'll learn which services help cover assisted living expenses and which do not.
Long-Term Care Insurance
Long-term care insurance can help offset the cost of assisted living if stated in your policy.
Long-term care insurance is purchased through a private insurer. It is used to offset the cost of assistance with activities of daily living (ADLs) such as bathing, dressing, or feeding. Like other insurance policies, the cost, premiums, and services rendered vary greatly according to your plan. In addition, some insurance companies may deny or increase the cost of coverage for people with pre-existing conditions such as dementia or Alzheimer's.
Medicare
Medicare does not pay for assisted living. Medicare is meant to cover hospitals, doctor visits, and short-term health care — not room and board for long-term assisted living or nursing homes.
If you experience an accident or need to recover from a fall, Medicare will pay for short-term rehabilitation. Typically, Medicare will cover hospice care, home health care, or care within a skilled nursing facility. However, there is usually a limit to how many days you can stay at these facilities.
Medicaid
Medicaid does not pay for assisted living. Similar to Medicare, Medicaid will help pay for certain health services such as emergency responses, memory care, medical exams, and skilled nursing care. However, it does not pay for room and board.
It's important to note that Medicaid was created to help low-income older adults. Therefore, there are certain eligibility requirements you need to meet to be approved for Medicaid. Lastly, both state and federal governments help fund Medicaid, so your specific benefits will vary depending on the state you live in.
Social Security
Technically, Social Security can help pay for assisted living. Unfortunately, for many people, Social Security isn't enough to cover the full expenses.
According to U.S. News and World Report, the average monthly Social Security check was $1,503 per month in January of 2020. The absolute maximum security benefit for retirees was $3,011 in 2020 or roughly $1,000 dollars less than the national average cost of assisted living.
The amount of financial assistance you get from Social Security depends on how much you earned over the course of your career (specifically, it's based on your 35 highest-earning years). In other words, Social Security pays more to those who earned more during their lifetime, which hurts low-income households.
VA Aid and Attendance
VA Aid and Attendance benefits will pay for assisted living care if you qualify. With VA Aid and Attendance, monthly payments are added to your pension to assist with daily activities.
If you're a United States veteran and receive a veteran pension, you may qualify for VA Aid and Attendance benefits. If you qualify and need help with daily activities, are bedridden for some or most of the day, are a nursing home resident, or have limited eyesight, you can receive VA Aid and Attendance benefits to offset long-term care costs.
Investment Options
Some investment options can help offset the cost of assisted living. For example, some individuals choose to cash in their life insurance policy (known as a life insurance settlement) to pay for long-term care services. In addition, you can trade the equity on your home (this is a reverse mortgage) to pay for assisted living. Lastly, annuities, or financial investments used as an income stream during retirement, can be used to pay for assisted living costs.
Aging in Place: An Affordable Alternative to Assisted Living
It may surprise you to hear most older adults don't live in nursing homes or assisted living facilities.
According to a study conducted by the NIH, a mere 4.5% of older adults aged 65 and older live in nursing homes and only 2% live in assisted living facilities. Partially due to budget reasons, people consider other care options such as home care, independent living, adult day care centers, and retirement communities.
Living independently at home is a more affordable alternative to assisted living. Plus, many services can make independent living safer and more comfortable. Please note: While some of these services come with a fee, it is still far more affordable to live at home and pay for these services than to move to assisted living.
Here are some services that you may want to consider to find help living independently:
Grocery delivery: Instacart, PeaPod, Amazon Fresh, and other services deliver your groceries straight to your doorstep. If you no longer drive, these services can ensure you have healthy, fresh food in your fridge.
Food and meal delivery: Postmates, GrubHub, Uber Eats, and DoorDash deliver takeout from all your favorite local restaurants. In addition, services like Sun Basket, HelloFresh, and others deliver partially or fully-prepared meals to your door.
Home cleaning and repair: Services like Handy and Angie's List connect you to trusted home cleaning and handyman services to help keep your home clean and comfortable.
Car or ride share service: Lyft or Uber drivers will pick you up at your home and drive you wherever you need to go.
Snug: The Snug app is a free, daily check-in service for seniors living alone. If you miss a daily check-in, we'll tell a friend or family member they need to check on you.
Independent Living Is More Affordable Than Assisted Living
But to live independently, you must first ensure your safety.
Assisted living costs thousands of dollars per month and is not covered by Medicare or Medicaid. To avoid high out-of-pocket expenses, many older adults choose to live at home, which also helps preserve their independence.
Living at home as you age may require a few changes. Luckily, many paid services offer grocery and meal delivery, home cleaning, and ride-sharing. While it may be frustrating to pay for these services, it is far more affordable than the alternative — moving to assisted living.
To help spare your budget and maintain your safety, Snug offers a free check-in service for older adults. Made specifically for independent seniors, Snug will alert a loved one if you ever miss a daily check-in. That way, you know someone is watching over you.