Community Corner
6 Ways to Help Pay for Senior Living
Insurance, home equity, savings, and government aid are a few ways families can help cover the costs of senior living.
There are many different types of senior living facilities, from 55+ communities for active seniors to fully staffed communities for seniors with Alzheimer’s or other types of dementia — and because of those diverse options, the costs for long-term care can vary widely. According to A Place for Mom’s 2023 Cost of Senior Living and Long-Term Care Report data, the median monthly cost of assisted living in the U.S. is $4,807. However, costs may vary based on location, community amenities, and the level of care provided.¹
If you’re looking for personalized assistance finding the right senior living option for your family, A Place for Mom is here to help. You can read reviews, get pricing, and connect with a Senior Living Advisor near you.
While senior care costs may seem overwhelming, there are several ways to make long-term care for a loved one more affordable. Here are six ways to help pay for senior living.
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1. Long-term care insurance
Otherwise known as nursing home insurance or senior care insurance, long-term care insurance can be used to help with senior living costs and the cost of ongoing medical care for chronic health issues. Each policy is different, but seniors are typically eligible for benefits if they have cognitive impairment or can’t independently perform two or more activities of daily living (ADLs), such as dressing, toileting or eating.
Not all policies will cover assisted living costs, so it’s important to review your loved one’s policy to determine coverage. Generally, long-term care insurance coverage will include hospice, adult day care or memory care centers, assisted living communities, extended nursing home stays, professional home health, and more.
If your family member needs assisted living services, A Place for Mom can help you review and determine the best option for them.
2. Life insurance
Another option for paying for senior living is to utilize your loved one’s life insurance policy. Depending on the policy they hold, aging adults can “surrender” their life insurance policy and any benefits to the insurer for cash value. However, not all policies accumulate cash value. For example, term life insurance policies do not, while universal and whole life insurance policies do.
Seniors may also consider selling their life insurance policy to a third party at its market value, and the exact amount will depend on the individual’s life expectancy. This can provide funds needed to help cover a long-term care plan, managed by a licensed benefit management company.
Before you make any decisions, it’s best to consult a financial advisor to determine whether using your loved one’s policy is the right step.
3. Home equity
In some instances, tapping into your loved one’s home equity can help provide funds for senior living expenses. One option is getting a reverse mortgage, in which the homeowner borrows from the funds that have been paid into the home to receive funds in either one lump sum or as needed. However, be alert, as scammers often target seniors seeking a reverse mortgage.
Homeowners can also acquire a short-term loan such as a bridge loan. This helps borrowers get cash in hand fast until they can secure permanent financing, such as through the sale of a property or other asset liquidation.
If holding onto the property isn’t a priority, selling it can provide a cash influx to help cover senior care expenses. For seniors who want to keep their property, renting can provide a steady monthly income to help support care or community costs.
4. Health savings account
If you need to fund medical expenses that aren’t covered by your loved one’s health insurance plan, a Health Savings Account (HSA) can be a helpful resource. An HSA allows individuals to contribute pre-tax dollars over time to save for potential emergencies and health care expenses. When the funds are used for qualified health care expenses, like long-term care insurance premiums or in-home nursing care, withdrawals remain tax-free.
As of 2023, HSA contribution limits have been increased to account for inflation.² However, relying solely on HSAs — even with catch-up contributions for people over the age of 55 — might not be enough to cover long-term senior living expenses.
5. Medicaid
Medicaid is a joint federal and state program that offers financial aid to seniors unable to cover the costs of necessary medical care on their own, and it’s the primary way that the U.S. government helps people pay for long-term care.³ Unlike Medicare, Medicaid provides coverage for services such as long-term nursing home care and assistance with ADLs.
In most states, Medicaid can help provide coverage for home health care from a licensed health care professional. While each state’s program is different, Medicaid generally covers hospice care, whether services are received at home, in an assisted living facility, or in a nursing home.
Additionally, Medicaid provides coverage for inpatient and outpatient hospital visits that aren’t covered by Medicare. Medicaid also offers financial assistance for seniors needing personal care, including bathing and dressing, in various settings. Eligibility and covered services vary by state, so contact the state's medical assistance office for specifics if your family member plans to apply.
6. Veterans benefits and more
Eligible veterans and their surviving spouses can access VA Aid and Attendance or Housebound benefits to help with long-term care.⁴ These benefits provide extra financial assistance to veterans already receiving VA pensions. Senior veterans need to meet certain criteria, including needing support to complete ADLs.
Explore A Place for Mom's comprehensive guide to VA benefits for long-term care and ensure your eligible family members receive the support they need.
Government or railroad retirees and their eligible relatives may qualify for an assistance stipend to help with assisted living expenses. Federal employees and those who receive annuities can apply for Federal Long Term Care Insurance (FLTCI) to cover future long-term care costs.⁵ Note that this must be done before retirement and is subject to potential medical condition restrictions.
Find senior care options near you with A Place for Mom
Navigating different senior care options for a loved one can be stressful. A Place for Mom aims to reduce that stress burden by connecting caregivers to our Senior Living Advisors. These local experts have access to the largest network of participating senior living communities and home care providers in the United States. From early research to touring and move-in tips to in-depth cost considerations, A Place for Mom’s Senior Living Advisors are ready to provide personalized recommendations and answer any questions you may have.
Ready to explore senior living options for your loved one? Contact A Place for Mom today to speak with a trusted Senior Living Advisor.
¹Source: https://www.aplaceformom.com/senior-living-data/long-term-care-costs
²Source: https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/2023-irs-contribution-limits-for-hsas-and-high-deductibel-health-plans.aspx
³Source: https://www.medicaid.gov/medicaid/long-term-services-supports/index.html
⁴Source: https://www.opm.gov/healthcare-insurance/long-term-care/
⁵Source: https://www.va.gov/pension/aid-attendance-housebound/
