How to pay for assisted living: every option, explained
Savings, the family home, long-term care insurance, VA benefits and Medi-Cal: what each one covers, and what Medicare does not.
“Mom's savings will cover maybe two years of assisted living. What happens after that? Does Medicare or Medi-Cal kick in?”
Medicare won't. Medi-Cal can help with care costs at some California communities, but not with rent and meals. Most families combine several sources, so it's worth mapping them out before the move, not after.
A composite of questions families send us. The details are illustrative, not one person's story.
Key takeaways
- Medicare does not pay for assisted living. Plan as if most of the cost is paid privately.
- Most families combine sources: income and savings, the sale of a home, long-term care insurance and veterans benefits.
- In California, Medi-Cal's Assisted Living Waiver can cover care services, but not room and board, and often has a waitlist.
What the monthly cost covers
The base monthly rate usually covers the apartment, meals, housekeeping, activities and some transportation. Personal care, such as help with bathing, dressing or medications, is priced separately at most communities, in levels or as a package.
Ask for pricing in writing, including how care levels are assessed and what it costs to move up a level. Many communities also charge a one-time community or move-in fee.
The main ways families pay
| Source | What it can cover | Good to know |
|---|---|---|
| Income and savings | Everything | The most common source. Pensions and Social Security often cover part of the bill, and savings the rest. |
| Selling or renting the home | Everything | Often the largest asset. A short-term bridge loan can cover the gap until the house sells. |
| Long-term care insurance | Care costs, and often room and board, up to a daily limit | Benefits usually start when someone needs help with two or more daily activities, or has cognitive impairment, after a waiting period. |
| VA Aid and Attendance | A monthly pension payment toward care | For wartime veterans and surviving spouses who need help with daily activities. Service, income and asset rules apply. |
| Medi-Cal Assisted Living Waiver | Care services only | Not room and board. Only at participating communities in certain California counties, often with a waitlist. |
| Life insurance | Varies | Some policies pay benefits early for long-term care, or can be sold. Both usually reduce what heirs receive. |
What Medicare and Medi-Cal do, and don't, pay for
Medicare
Medicare covers doctor visits, hospital stays, prescriptions and short-term skilled nursing or rehab after a qualifying hospital stay. It does not pay for assisted living rent, meals or help with daily activities, however long someone stays.
Medi-Cal
Medi-Cal, California's Medicaid program, pays for long-term nursing home care for people who qualify. For assisted living, its Assisted Living Waiver covers care services at participating communities in some counties. The resident still pays for room and board, often from income or SSI.
Not every community accepts the waiver, so ask each one directly. Medi-Cal eligibility rules change, so check the current rules with your county's Medi-Cal office. For free, unbiased help with Medicare questions, California's HICAP program offers counseling.
Veterans benefits
Aid and Attendance is an extra monthly amount added to a VA pension for veterans and surviving spouses who need help with daily activities. There are service, income and net-worth requirements. A separate, smaller Housebound allowance exists for people largely confined to home; you cannot receive both.
Accredited veterans service organizations help with applications at no cost. Be cautious of anyone who charges to file an initial claim. Read more about veterans benefits.
Questions to ask before you sign
- What does the base rate include, and what costs extra?
- How are care levels assessed, and how often can they change?
- How much have rates gone up in each of the last few years?
- Is there a one-time community fee? Is any of it refundable?
- Do you bill long-term care insurance directly? Do you accept the Assisted Living Waiver?
- What happens if my parent runs out of money while living here?
Making a plan
- List monthly income and every asset, including the home and any insurance policies.
- Get written pricing from at least three communities, including care-level fees.
- Check any long-term care policy's benefit triggers, daily limit and waiting period.
- Find out whether a veteran or surviving spouse in the family may qualify for VA benefits.
- For Medi-Cal planning, talk to an elder law attorney. The rules are complex, and mistakes can be costly.
Frequently asked questions
Does Medicare pay for assisted living?
No. Medicare doesn't cover room and board or help with daily activities in assisted living. It still covers medical care, such as doctor visits and prescriptions, while someone lives there.
Is assisted living tax-deductible?
Sometimes, in part. Care costs can count as medical expenses when the resident is chronically ill and receives care under a plan from a licensed health practitioner. Ask a tax professional about your situation.
What if my parent runs out of money?
Ask about this before moving in. Some communities accept the Assisted Living Waiver and let a resident stay; others require a move. If care needs are high enough, nursing home care through Medi-Cal may be an option.
Can a reverse mortgage pay for assisted living?
Usually not. A reverse mortgage generally comes due once the borrower has lived away from the home for more than 12 months in a row, including in a care facility. It can help pay for care at home. If one spouse moves out, the loan stays in place only if the spouse at home is also a borrower on it.
Ready to look at options?
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This article is general information, not medical, legal or financial advice. Talk to your loved one's doctor about their specific needs.