Paying for Memory Care: 7 Things to Know

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A relatively new alternative to at-home care for someone with dementia is a residential community that specializes in dementia care. Known as "memory care" or "Alzheimer's care," such housing is increasingly under development as cases of Alzheimer's and other forms of dementia rise.

Demand still outpaces supply, which can make memory care hard to find and get into, especially outside of larger cities. Memory care also costs more than most forms of eldercare because it's specialized, long term, and residential. On the upside, families find peace of mind in a housing setting tailored to the unique needs of someone with a progressive cognitive disorder -- which has made it an increasingly popular option.

Here's what to know about paying for memory care:

Understand what you get for your money

Memory care describes a type of care rather than a place. Sometimes found in dedicated facilities, it's most often offered within an assisted living community, continuing care community, or skilled nursing facility (a.k.a. nursing home or long-term care facility). In 2010, 17 percent of residential care communities had dementia special care units, with 6 percent serving adults with dementia exclusively and another 11 percent having a distinct unit, wing, or floor designated as a dementia special care unit, according to the National Center for Health Statistics. Just over half of all nursing homes have a special Alzheimer's unit, according to the Alzheimer's Association's 2014 report.

In a memory care unit (also called a special care unit), you can expect to find:

  • An understanding of the special needs of those with dementia and how they change over time
  • A secure physical environment that keeps residents safe (such as secure doors with alarms, an enclosed courtyard, or special monitoring)
  • Staff with special training in dealing with dementia (who can provide more respectful communication and reduce reliance on medications)
  • Activities tailored to the needs of those with dementia (such as arts or sensory programs) to enhance quality of life and functioning
  • A private or semiprivate room, meals, and personal help, with a lower staff-to-resident ratio

Good to know: Typically people whose dementia is in the mild to moderate stage can fare best in an assisted living setting, but because Alzheimer's worsens over time, this may not remain the best setting. Those in mid- to late-stage dementia (or who also have other, concurrent health problems) may require the more skilled nursing care provided by a nursing home.

Be realistic about what this premium care costs

Because it's specialized, memory care tends to cost more than regular care, requiring more training, more hands-on care, and more personnel (a lower staff-to-resident ratio). Assisted living settings usually cost less than nursing homes (where residents require more intensive care). According to the Alzheimer's Association report, 2014 Alzheimer's Disease Facts and Figures, the average cost of memory care is $59,250 per year ($4,937 per month) in assisted living settings. Rates range widely by location. For example, according to the Genworth 2014 Cost of Care Survey, a semiprivate room in a nursing home ranges from $94 per day to $800 per day, with a median cost of $200 per day. (That survey doesn't break out memory-care costs.)

Good to know: Most rates are all-inclusive for basic care; additional required services may cost extra. A geriatric care manager can be a great resource to weigh in on local options; the best place for your family member isn't always the most expensive.

Leave "no stone unturned" -- and get help to do so

To cover these costs, it helps to form a plan with the input of other family members as well as professionals. Remember that someone with Alzheimer's can live for many years. Consulting an elder-law attorney or financial planner familiar with eldercare as you map a plan can save you money in the end.

Obvious sources of funds to explore include the person's personal savings, stocks, bonds, other investments, and pensions. Don't overlook the liquidation of jewelry, artwork, antiques, collections, or cars, all of which might benefit the owner more as cash than as "stuff." Many families trade the prospect of heirlooms and inheritance for equally valuable peace of mind now.

Good to know: Along with an eldercare lawyer, a senior move manager can advise about liquidating assets.

Take advantage of applicable veteran's benefits

If the person with dementia served in the active military, naval, or air service with an honorable discharge, veteran's (VA) benefits from the U.S. Department of Veteran's Affairs may apply toward housing costs. Aid may come from the VA's Community Residential Care program, which is group care in about 1,300 facilities nationwide, or from VA Aid and Attendance benefits, which are available for disabled vets who require extra help. (The disability didn't have to happen during active duty, so Alzheimer's in the retirement years would apply.)

Good to know: The surviving spouse of a veteran is eligible for these benefits as well. Contact a Vet Center for free advice, or call (800) 827-1000.

Explore other benefits

Medicaid, the joint federal-state program for very low-income elders, covers some long-term costs if the facility accepts Medicaid. Facilities aren't required to do so, however; according to a 2013 NCHS survey on dementia care, places offering memory care accept Medicaid less often than those without such units. Some locations set aside a limited number of beds for Medicaid patients. Coverage varies by state. (Medicare doesn't cover residential memory care.)

Also check the federal or Eldercare Locator for benefit information.

Good to know: Although qualifying for Medicaid requires "spending down" most of one's assets and income, a "spousal protection rule" enables healthy spouses to maintain some assets, an amount that varies by state.

Read insurance policies closely

If a life insurance policy provides for "accelerated" or "living" benefits, you may be able to recoup half or more of the face value of the policy. Or the policy may offer a "life assurance" benefit, which pays directly for long-term care, although at a much lower cost than the value of the policy.

Good to know: Long-term care insurance pays for residential care but is probably only an option if purchased well in advance. It's perhaps better for you, the caregiver, to look into for yourself, rather than being a solution for someone already experiencing dementia.

Look for cash in current housing

If the person in need of residential memory care still owns a home, selling or renting the property can be a way to pay for care. This financial product taps equity in your home to provide funds that are repaid when the house is sold. Well spouses or adult children should beware using a reverse mortgage on their home to pay for another's care, however. You may need these funds yourself down the road, and you have no way of knowing how long you'll need to pay the memory care bills. Always consult a financial planner in advance, since reverse mortgages are more complex than they might seem.

Good to know: See more ideas on how to pay for assisted living.

Paula Spencer Scott

Paula Spencer Scott is the author of Surviving Alzheimer's: Practical Tips and Soul-Saving Wisdom for Caregivers and much of the Alzheimer's and caregiving content on Caring. See full bio