Who Pays for Assisted Living?

The resident or their family pays for assisted living most times. Some people use a reverse mortgage, sell their home, purchase long-term care insurance or invest in an annuity to cover the cost of long-term care. Many people use a combination of these methods.

Individuals typically pay for assisted living using personal savings or retirement accounts. Many family members also contribute to the cost of assisted living for their loved ones. Life insurance provides another option if you cash in the value of a permanent life policy. Some life insurance policies allow you to add a rider that covers long-term care.

Medicare does not pay for assisted living care. However, Medicaid covers some assisted living expenses in certain states. Check with your state Medicaid office to learn more about available financial programs to help with long-term care costs. Most states limit eligibility to individuals with income below the median for their area.

According to a 2023 report from the Kaiser Family Foundation, Medicaid funds about half of U.S. long-term care costs, including expenses for assisted living, nursing homes and home care. State waivers can remove some of the cost of assisted living from the resident and their family.

According to the Genworth’s Cost of Care Survey, assisted living costs about $5,350 a month. While the average long-term care costs in the U.S. vary by state, some residents pay more while others pay less for assisted living.

Assisted living residents require this level of care for 3.5 years on average at a total cost of approximately $225,000. Someone who needs 8 years of care could pay more than $514,000.