Choosing the appropriate care option for an older loved one can be one of the most difficult decisions of a person’s life. Any move is stressful, and moving a loved one into assisted living or another elder care community often involves leaving a residence they called home for many years. If you’re making the decision on behalf of a parent, you may even be saying goodbye to your own childhood home.
To make the transition from private residence to care facility as smooth as possible, it’s best to go into the decision process from a knowledgeable perspective. That is the purpose of this guide: to provide you with the information you need to make an informed decision and find the care option that’s right for you and your loved one.
If you’re reading this guide, you are likely already weighing the potential benefits of an assisted living community over other options. A number of factors will figure in your decision, including but not limited to cost, and level of care needed. This guide will help you answer several key questions that will arise in your decision process, including the benefits and potential downsides of assisted living, the cost of assisted living, and ways to pay for assisted living.
An Overview of Assisted Living
Assisted living is a type of residential senior care that focuses on providing residents with personal care services. Personal care services include meal preparation, housekeeping, and assistance with the activities of daily living (ADLs) such as bathing, eating, and dressing. Many assisted living facilities (ALFs) also offer lifestyle services such as transportation, scheduled activities and events, and on-site conveniences like a salon and barbershop.
ALFs are a good fit for seniors who need some assistance with their day-to-day tasks, or predict they will need such assistance in the near future, but do not need high-level, consistent medical care. One of the appealing aspects of ALFs is that residents can access as much or as little assistance as they need, allowing them to retain much of their independence and autonomy. Staff is always on-site 24/7 to ensure that assistance is readily available for residents and to help with any emergency situations.
The Advantages and Disadvantages of Assisted Living Communities
Assisted living communities are an attractive option for seniors who do not require around-the-clock health care, but do need some personal care assistance on a regular basis. While ALFs are a good option for many older adults, they may not be the right fit for your personal needs or preferences. Below, we explain some of the pros and cons of choosing this type of residential care community.
Benefits of Assisted Living Communities
- Independence: While assisted living staff is available to residents around-the-clock, residents are able to live as independently as they wish. Even if a senior needs daily assistance with some of their ADLs, they can retain independence in other areas of their lives.
- Emergency Support: Assisted living communities do not provide regular, high-level medical care. However, staff is always on-site to assist residents in the event of an emergency, including medical emergencies. Depending on the specific communities, there may be a resident doctor or nurse who can help on-site, or staff may transfer residents to the nearest medical facility.
- Security: Residents of ALFs are safe in a secure environment with controlled access. Risk of break-in or robbery is very small, especially compared to a private residence.
- Socialization: Continuing to live in one’s own residence can become quite lonely and isolating for elders. In an assisted living community, there is no shortage of opportunities for friendship and social interaction. Many offer regular, organized group activities, as well as wellness and exercise programs. Some even have on-site libraries and chapels, where seniors can bond over common interests.
- Simplicity: ALFs offer a maintenance-free lifestyle, simplifying residents’ day-to-day lives. Staff handles housekeeping, meal preparation, and interior and exterior maintenance, so residents can enjoy their golden years without having to worry about household tasks.
Possible Drawbacks of Assisted Living Communities
- Cost: Unlike nursing homes, ALFs are not usually covered by Medicare. While there are other financial assistance options (explained in more detail below), the cost of assisted living communities may be prohibitive for some seniors and their families due to the lack of Medicare coverage. Nursing homes and, sometimes, in-home care are covered by Medicare.
- Level of Care: If a senior has more extensive medical needs, an assisted living facility may prove to be insufficient in terms of services offered. If you or your loved one is very ill, has greatly reduced mobility, or dementia, they’ll be better suited for a nursing home or dedicated memory care facility.
- Change in Environment: Assisted living communities generally offer a high level of privacy and independence, but this is still less than a private residence. Moving to a residential care facility can be a hard adjustment for some seniors, especially those who are used to living alone.
The Cost of Assisted Living
In the United States, assisted living costs an average of $4,300 per month, according to the 2020 Genworth Financial Cost of Care Survey. Keep in mind that this is the national average, and costs in different states and cities differ dramatically. For example, in Massachusetts, the average cost of assisted living is well over the national average, at $6,085 per month. In areas where the cost of living is lower, assisted living expenses tend to be lower as well. For instance, the average monthly cost of assisted living in Alabama is $3,150, saving residents of this state over $12,000 per year compared to the national average.
Assisted living costs can vary even within the same town due to facilities offering different amenities and lifestyle services. A luxury community with extra amenities such as a spa, tennis courts, or resident concierge is going to cost significantly more than a community that offers more basic amenities, even if they’re located in the same area. It’s imperative that prospective residents and their families ask each individual ALF they’re considering for price information, rather than assume all communities’ costs will be comparable to the area’s average.
It’s also important to ask each facility about its pricing structure. Many ALFs charge one, all-inclusive monthly fee. Others may charge a standard fee for room and board, but bill residents and their families for services on an as-used basis. In the case of the latter, it can be more difficult to predict monthly and yearly costs, so if you’re on a set budget, it may be beneficial to choose a community with a more standardized pricing structure.
The Cost of Assisted Living Versus The Cost of Other Senior Care Types
For seniors who need daily assistance with their ADLs, assisted living may be the most economical senior care option. In-home care and home health care may appear to be less expensive, but is typically charged hourly, so cost increases with the amount of care. When used consistently, the cost of in-home care is quite high. For 70 hours of care per week, in-home care costs an average of $7,129 per month, and home health care averages $7,280.
Both are still less expensive than nursing homes, which cost an average of $7,756 for a shared room and $8,821 for a private room. Adult day care is relatively inexpensive at an average cost of $1,630 per month, but the level of care is much lower than other senior care options. Assisted living may ultimately be the best value for seniors who want the security of having assistance available 24/7.
How to Pay for Assisted Living
Many older adults and their families are not able to pay for assisted living entirely out of pocket, and most are surprised to learn that Medicare does not cover assisted living. There are several alternative financial assistance options for assisted living, some of the most common of which we explain below. Keep in mind that not all of these options are accessible to all people. However, most low-income seniors will be eligible for at least one of the following programs.
Medicaid is a joint federal and state program that provides health insurance to low-income Americans, including millions of elderly adults. Each state governs its own Medicaid program within federal guidelines, leading to some variation in eligibility and coverage between different states. While Medicaid typically does not cover 100% of assisted living costs, it does cover some portion of expenses for assisted living in almost every state.
If assisted living services aren’t covered by a state’s standard Medicaid program, there may be a Medicaid waiver program that does. Medicaid waivers are programs that expand Medicaid coverage to additional products, services, and care that are not part of the original program. 1915(c) Medicaid waivers, also known as Home & Community-Based Services (HCBS) waivers, expand coverage to enable seniors to receive long-term care in their preferred environment, such as an ALF, rather than having to default to a nursing home due to costs. All seniors who are eligible for Medicaid are also eligible for their state’s waivers, but waivers are not an entitled benefit, meaning that there can be a waitlist to access the benefits.
Veterans and spouses of veterans may qualify for aid from the Department of Veterans Affairs (VA). Although the VA does not directly pay for the veteran’s room and board, it offers financial benefits that recipients can use to cover some of the costs of living in an assisted living facility. The most relevant of these programs is the Aid & Attendance (A&A) benefit. A&A is a monthly, needs-based payment that some veterans receive in addition to their standard VA pension. Intended for veterans with long-term care needs, the monthly A&A benefit can be used towards covering the cost of assisted living.
In order to be eligible for A&A benefits, a veteran must meet at least one of these criteria:
- Need assistance with activities of daily living (ADL) such as bathing, dressing, eating, or adjusting prosthetic devices
- Be bedridden
- Reside in a nursing home due to mental or physical impairment
- Have severe visual impairment, with a correction of 5/200 or less in both eyes or concentric contraction of the visual field to 5 degrees or less.
Eligibility varies, but the benefits can be significant. Contact your local Veteran Affairs office or an elder law expert to determine whether you or your loved one qualifies.
Long-Term Care Insurance
Long-term care insurance, or LTCI, can be tricky. While it appears to be a natural hedge against a future possibility of becoming ill or disabled, like Medicaid, long-term care insurance is not a catch-all answer to paying for assisted living. Premiums are high, and what is covered varies by policy. For example, a “facility-only” policy covers care in a licensed assisted living facility or in a skilled nursing facility, but not in an unlicensed facility or in your own home. In almost all cases, the LTCI company will require the beneficiary to need assistance with at least two of their ADLs before they begin paying for assisted living services.
Additionally, most LTCI policies have a maximum issue age, meaning that people over a certain age or not eligible to sign up for a policy. Thus, seniors are unable to sign up for a policy when the need for assisted living arises; LTCI will only benefit those who signed up for a policy years prior. For those who do have a pre existing policy, it’s likely that at least some assisted living costs are covered, but be sure to check with the insurance provider about the benefit terms and amounts before signing a contract to move to an ALF.
A reverse mortgage is a loan taken against the value of one’s home, essentially converting a portion of one’s home equity into liquid funds. Reverse mortgages can help bridge the financial gap for seniors who are moving from a home they own to an ALF, and allow seniors to access some of their home equity without needing to rush and quickly sell their home in order to finance assisted living. The loans do need to be repaid, with interest, within a certain time frame from the homeowners’ move to an assisted living community.
Seniors who have existing life insurance policies have the option to “cash out” their policy early and use the funds to pay for long-term care. Some seniors may choose to do so if they feel that it will ultimately benefit themselves and their families more to use the funds to pay for assisted living in the present, rather than wait for their heirs to receive the policy death benefit when the policyholder passes. Some policies feature an accelerated death benefit (ADB), which allows policyholders to get a tax-free advance on the insurance benefit while still alive. There may be limitations to how much of the policy’s value you can access as an ADB. For example, some policies limit the monthly ADB to 2-3% of the total benefit amount.
Another option is a life settlement. In a life settlement, a life insurance policyholder sells their policy to a third-party company. In turn, the buyer (the third-party group) pays you a lump sum that you can use to pay for long-term care. The settlement amount will not be as large as the full policy death benefit, so be sure to consider if accessing your life insurance benefit early is the right choice for your family in the long run.
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