As they get older, many people consider moving into an assisted living facility — and how they could pay for it. It’s an issue that affects tens of millions of people in the U.S. Overall, about 70% of people who are age 65 or older today will need some kind of long-term care, according to long-term care estimates by the federal government.
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An assisted living facility helps residents manage the tasks of daily living, such as cooking, bathing, cleaning, doing laundry and toileting.
Depending on the level of care that’s needed and the specific services you’re paying for, the monthly cost of entering an assisted living facility generally falls between $4,500 and $6,500 a month, says Roxanne Sorensen, owner of Elder Care Solutions of WNY in Buffalo, New York, a case management consultancy. In addition to owning Elder Care Solutions, Sorensen is also an aging life care specialist, which is “a health and human services specialist who helps families who are caring for older relatives,” according to the Aging Life Care Association (formerly the National Association of Professional Geriatric Care Managers).
The cost is higher for two people who move together into assisted living. The cost may be the same for both individuals, or there may be a discount for the second person.
Does Medicare Pay for Assisted Living?
A 2020 survey from Genworth financial found that the median annual cost for an assisted living community in the U.S. was $51,600 annually, up from $48,612 a year. It can be hard to predict how long you’ll need to live in such a facility, so you’ll need to budget your retirement savings carefully.
Some people believe that Medicare — the federal health insurance program for individuals age 65 or older, people with end-stage renal disease and certain young individuals with disabilities — will pay for a good chunk or most of the costs of assisted living. That assumption is incorrect, Sorensen says.
“Medicare does not pay for assisted living in any form,” she says. No version of Medicare — including Medicare Advantage and Medigap — provides long-term care insurance to pay for assisted living. However, you can purchase long-term care insurance from a private insurer — the same way you’d obtain insurance for your car or home.
Medicare is still health insurance, however. So if an assisted living resident sees the facility’s health care provider, that would be billed to their Medicare plan.
While Medicare doesn’t pay for assisted living, it does cover Medicare-certified home care, also known as Certified Home Care services. These home care nursing services are generally for care related to a specific illness, injury or post hospitalization.
This is a short-term program that includes:
— Physical therapy.
— Occupational therapy.
— Speech therapy.
— Nursing care.
The patient is responsible for the copayment required under their Medicare or Medicare Advantage plan related to the Certified Home Care services they receive, the same way they’d be responsible for making a copayment to a primary health care provider or specialist.
In addition to a person’s home, Medicare-certified home care is available in assisted living facilities, Sorensen says. The patient’s primary health care provider must order the care, and the individual is then assessed for need by a home care agency, typically a registered nurse or a physical therapist. If qualified, the individual can receive physical or occupational therapy on a short-term basis, covered by Medicare, several times a week.
How long Medicare will pay for such short-term care varies. “It depends on the progress of the individual related to the standards required by Medicare,” Sorensen says.
A Medicare-certified home care agency will report to the patient’s insurance company how he or she is progressing. The insurance company then determines if additional hours are needed to continue the services based on Medicare guidelines, or if the patient has plateaued and met their baseline.
Typically, such care related to physical or occupational therapy lasts an average of six to eight weeks. If the patient has a wound, they would see a registered nurse in their own home or in an assisted living facility for several months for treatment. “No two people are alike,” she says.
[READ: How to Coordinate a Parent’s Care With Siblings.]
Does Medicaid Pay for Assisted Living?
If your income is below a certain level, Medicaid can offer coverage to pay for assisted living, says Ari Parker, head licensed Medicare advisor at Chapter, a Medicare advisor that uses proprietary technology to help consumers navigate the complicated Medicare system. He’s based in Phoenix.
Medicaid provides health coverage to about 75 million Americans, “including eligible low-income adults, children, pregnant women, elderly adults and people with disabilities,” according to the Medicaid website. Each state has a different Medicaid application process and income eligibility requirements. For more details, consult the websites of the State Health Insurance Assistance Program and the Social Security Administration.
How Else to Pay for Assisted Living
Since Medicare doesn’t pay for assisted living, many consumers will have to explore other ways of financing the costs.
Aside from Medicaid, other options for paying for assisted living include:
— Personal assets.
— Family assistance
— Long-term care insurance.
Personal assets
If they have the resources, an individual can pay for assisted living with his or her personal assets.
These assets can include:
— Social security.
— Pension funds
— Money from a 401(k) or 403(b) savings plan.
— Individual retirement account distributions.
Family Assistance
If you don’t have sufficient funds to pay for assisted living, family members can chip in, Sorensen says. “Assisted living facilities have been known to ask for a promissory note from the family stating how long they will privately pay for their loved one’s rent.”
A promissory note is a signed document with a promise to pay a specific amount of money on a specific date or on demand.
[SEE: When to Move From Independent Living to Assisted Living.]
Long-Term Care Insurance
You can plan ahead for the costs of assisted living by purchasing long-term care insurance, Parker says.
The majority of long-term care insurance policies allow you to use them to pay for:
— Adult day care.
— Hospice care.
— Memory care.
— Nursing home care.
Many people purchase long-term care insurance between their mid-50 and mid-60s. Insurance companies typically screen individuals for eligibility. As of 2020, average annual premiums could range from $1,700 for a single man who’s 55 to $3,100 for a 65-year-old single woman with health issues, according to AARP. Couples who purchase this kind of insurance pay less per individual.
If you obtain a long-term care policy to pay for assisted living, it’s important to keep in mind that the facility won’t accept the policy directly. Rather, when you need the funds, you’d trigger the policy to make them available so you can use them to pay the assisted living facility. “The individual will private pay the facility, receive a receipt and submit that to the policy for reimbursement,” Sorensen says. “The reimbursement is based on the daily rate associated with that policy.”
If you’re filling out an application for admission to an assisted living facility, be sure to let them know you have a long-term care policy. This will give the facility a full picture of your means to pay privately.
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Does Long-Term Care Insurance or Medicare Cover Assisted Living? originally appeared on usnews.com
Update 02/04/22: This story was previously published at an earlier date and has been updated with new information.
