Does Medicare cover assisted living?
The median cost of assisted living in the United States is $51,600 per year. Older adults and their families researching long-term care options like assisted living often ask if Medicare helps cover the cost. Unfortunately, Medicare does not cover any of the nonmedical costs of assisted living. This includes nonskilled personal care, like assistance with daily living activities and personal health care that most individuals do themselves.
Medicare Part A covers skilled nursing care on a short-term basis at a certified facility, as long as you meet certain conditions.
How to pay for assisted living
Because many insurance policies don’t pay for assisted living, many people use other financial strategies. Below are some of the most common solutions and how they work.
Long-term care insurance
Long-term care insurance is a type of insurance policy specifically designed to pay for nonmedical and medical care at home or in a long-term care facility. It’s a private insurance solution, meaning customers who can afford it are able to buy it outright as part of their health care planning. The annual cost of long-term care insurance is about $2,000 to $2,500.
This option is best for aging adults who aren’t yet considered seniors — usually those between 45 and 55. The earlier you shop for it, the lower your premium is likely to be. Keep in mind, however, that with a traditional policy, you don’t get back any money if your benefits go unused.
Veterans benefits
According to the U.S. Department of Veterans Affairs, the VA pays for certain services a veteran needs in an assisted living facility. It does not pay for rent at an assisted living facility, but it covers a geriatric evaluation to assess your care needs and create a care plan, adult day health care and respite care services while you are at an assisted living facility.
The VA determines eligibility for long-term care services based on individual need for personal assistance, service availability, financial eligibility and VA disability status. For more information, the department recommends contacting your VA social worker.
Life insurance benefit
If a loved one dies and is covered with life insurance, the beneficiary can use the funds to pay for assisted living.
Certain life insurance products allow the covered individual to tap into funds while they are still living. Combination life and long-term care insurance products ensure that your benefits won’t go unused. Other policies have an accelerated death benefit, which gives the policyholder a tax-free cash advance on the death benefit in some situations, like if they need long-term care.
Medicare doesn’t cover assistance with activities of daily living, like bathing, getting dressed and eating.
Reverse mortgage
A reverse mortgage is a loan solution for homeowners 62 or older who have significant equity in their property. It allows you to convert the equity in your home into cash income and continue to live in the house; the loan doesn’t have to be repaid until you die or move out.
This may be a good option for older adults who aren’t concerned about leaving as much money for heirs. There are options to receive the funds in a lump sum or in regular payments. Keep in mind that at least one co-borrower must continue living in the home after you take out a reverse mortgage.
Annuity income
If you purchased an annuity to manage your retirement income, you can use the funds to pay for the costs of assisted living.
Home equity “bridge” loans
A bridge loan is usually used when someone wants to buy a new home but doesn’t have enough money for a down payment. The borrower takes out a loan against the equity in their house in order to cover the cost, or bridge the gap between selling and buying. These loans have very short terms and expensive costs. An older homeowner who needs to move to assisted living before selling their house and needs the cash might consider a bridge loan.
Local aging-in-place agencies
Each state has a number of local aging-in-place agencies that help older adults and their families pay for assisted living. In addition to providing financial advice and resources, these organizations help people understand long-term care services and find appropriate facilities. Local agencies are a great starting point when you’re considering moving to assisted living.
Does Medicaid pay for assisted living?
Medicaid is the main payer for long-term care services throughout the United States. Because Medicaid is partly a state-run program, what’s covered and to what extent varies depending on where you live. The best way to determine how Medicaid covers assisted living in your state — and in your circumstances — is to contact your state Medicaid agency and ask.
Bottom line
Medicare doesn’t cover living arrangements at an assisted living facility or custodial care, including assistance with activities of daily living. As a result, many older adults turn to alternative options to pay for the cost of long-term care, such as long-term care insurance. Take time to explore different financial options and discuss them with family members. Local organizations that provide services for older adults are accessible and helpful if you have questions or concerns.
- Article sources
- ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- U.S. Centers for Medicare and Medicaid Services (CMS), “Long-term care.” Accessed May 12, 2021.
- U.S. Centers for Medicare and Medicaid Services (CMS), “Long Term Services & Supports.” Accessed May 12, 2021.
