How to Save Money on Assisted Living

• Paying for Assisted Living

• Assisted Living Costs
• Other Funding Options
  • Home equity
  • Government Benefits
• Assisted living costs around $4,500 per month on average nationwide. The expense is substantial, but several options can help: long-term care insurance, veterans' benefits, state aid programs, and direct negotiation with facilities. The key is to use available resources strategically to get good care within your budget.
  • Ask about special offers and discounts
  • Compare package vs a la carte costs
  • Choose a shared room
  • Hire a senior move manager
  • Explore financial assistance programs for low-income seniors
  • Take advantage of tax credits and deductions
• Final Thoughts

Paying for Assisted Living

Assisted living may be appropriate if your older relative is active and fairly independent but needs help with some daily tasks—bathing, dressing, managing medications, preparing meals, or getting around.

Assisted living is for seniors who don't need medical care but struggle with activities of daily living. Moving to a community typically doesn't upend their routine. Instead, it makes daily life easier while letting them keep their independence.

Costs depend on location, the services needed, amenities, and other factors. Here's what you should know about funding options and saving on assisted living.

Assisted living costs

Assisted living focuses on daily living support rather than medical treatment, so Medicare does not cover it. According to Genworth's 2020 cost of care survey, the median assisted living cost is $4,300 per month, though prices vary by region based on local costs of living and the level of support needed.

Most families pay for assisted living from private sources. Common options include:

• Retirement account
• Pension payments
• Personal savings
• Family contributions

Some insurance policies can also help cover costs.

• Medicare covers only some basic healthcare at an assisted living community, such as insulin injections.
• Private health insurance may cover skilled nursing or medical care, but not personal care like bathing and dressing.
• Long-term care insurance (LTCI) is more comprehensive. You typically need to buy it before age 80, and it usually applies when someone needs help with at least two daily living activities. Premiums are often high, but the policy can be valuable if purchased early.
• Life insurance policies can be converted to cash. You can sell the policy to a third party at market value while keeping the death benefit, or surrender it to the insurance company for its cash value and lose the death benefit.

Other funding options

Home equity

If your loved one owns a home, they can sell or rent it to help pay for assisted living. A bridge loan using the house as collateral can provide quick cash for a down payment. A reverse mortgage lets senior homeowners convert equity into cash without monthly payments.

With a reverse mortgage, the homeowner keeps the house while the loan covers moving costs and ongoing care.

Government benefits

Veterans and their spouses may qualify for the Department of Veterans Affairs pension program, which can help cover assisted living costs.

Federal Long-Term Care Insurance (FLTCI) is available to federal and postal employees and their qualified family members. Enrollment must happen before retirement, subject to medical review.

Saving on assisted living costs

Once you've sorted out how to cover the basic costs, consider these ways to reduce expenses further.

Ask about special offers and discounts

Many communities offer moving discounts during slower months or at month-end. These might include a waived entrance fee or reduced rates for the first few months. Some facilities offer discounts for long-term leases or lump-sum payments.

Compare package vs a la carte costs

Most communities let you pay for specific services as needed or choose an all-inclusive package that covers rent and all available services. If your loved one needs help with only a few activities and can manage the rest independently, paying for individual services may cost less. Calculate both options to see which works better for your situation.

Choose a shared room

A shared room is cheaper and often provides companionship.

Hire a senior move manager

A senior move manager charges a fee but can reduce moving expenses and help sell items from your loved one's previous home.

Explore financial assistance programs for low-income seniors

The National Council on Aging's website lists senior benefit programs that may cover medications, eye care, hearing care, dental care, food, and utility costs.

Take advantage of tax credits and deductions

Your loved one may qualify for a senior living tax deduction of up to $7,500 if they are chronically ill or need help with at least two daily activities. You may be eligible for a caregiver tax credit if you pay for 50% or more of their assisted living costs.

Final thoughts

Assisted living is expensive, especially when the need arises suddenly. Early planning helps. Getting long-term care insurance while still healthy, freeing up assets beforehand, or converting a life insurance policy to cash can make the transition manageable.

Cutting costs should not mean worse care. Explore all the options, weigh what works for your situation, and keep your loved one's well-being first.

Assisted living can be costly, especially when the need for such a service happens with very little time to prepare. If planned early enough, your family can make sure that your elderly loved one will get the best care they deserve without worrying about the costs.

Your loved one can get long-term care insurance early to ensure coverage when they need to move into a community. Alternatively, your family can plan to free up assets before a move becomes necessary. A life insurance policy can also be a good savings option for future assisted living costs, as it can be converted into cash. A retirement insurance plan can also cover assisted living costs later on.

Saving money on assisted living should not mean compromising the quality of care your loved one receives. Explore all money-saving options, weigh the pros and cons, and always prioritize your loved one’s well-being and quality of life.