How to Pay for Assisted Living in 2026
Assisted living costs $4,500-$7,000+ per month on average—more in expensive markets. For most families, this creates a significant financial challenge. Here's a comprehensive look at all the ways to pay.
| Cost Type | National Average 2026 |
|---|---|
| Assisted Living (monthly) | $5,350 |
| Memory Care (monthly) | $6,500 |
| Community Fee (one-time) | $2,000-$5,000 |
This is one of the most common misconceptions. Medicare (and Medicare Advantage) does not pay for assisted living room and board, only for specific medical services like skilled therapy.
Payment Options
1. Private Pay (Out of Pocket)
What it is: Using personal savings, income, and assets to pay directly.
Sources:
- Social Security income
- Pension payments
- Retirement account withdrawals (IRA, 401k)
- Investment income
- Selling home
- Savings accounts
2. Long-Term Care Insurance
What it is: Insurance purchased specifically for long-term care needs.
Coverage: Typically $150-$300/day benefit, may have waiting period
Reality: Only about 7% of Americans have this coverage. Check if your parent has a policy—sometimes forgotten or bundled with life insurance.
3. Veterans Benefits (Aid & Attendance)
What it is: VA pension with Aid & Attendance for veterans/surviving spouses who need help with daily living.
Amount (2026):
- Veteran: Up to $2,229/month
- Surviving spouse: Up to $1,432/month
- Veteran with spouse: Up to $2,642/month
Requirements: Wartime service, need for assistance, income/asset limits
4. Medicaid Waivers (State Programs)
What it is: State Medicaid programs that cover some assisted living costs for eligible individuals.
Important: Not all states offer this. Coverage varies widely. Often long waiting lists.
Requirements: Must meet income/asset limits (typically $2,000 in assets, ~$2,829/month income)
5. Life Insurance Conversion
What it is: Converting a life insurance policy to pay for care while still living.
Options:
- Life settlement: Sell policy to investor for lump sum
- Accelerated death benefit: Some policies allow early payout if terminally ill
- Cash value withdrawal: Borrow against or withdraw from permanent policies
6. Reverse Mortgage
What it is: Converting home equity into cash while maintaining ownership.
Consideration: Works if spouse still lives in home. Otherwise, selling may be better.
Requirements: Age 62+, primary residence, significant equity
7. Family Contributions
What it is: Adult children and other family members pooling resources.
Options:
- Monthly contributions from each child
- One sibling provides housing, others pay for care
- Family fund for care costs
8. Bridge Loans
What it is: Short-term loans to cover care costs while waiting for home sale, benefit approval, etc.
When useful: Temporary gap between needing care and accessing funds.
Stretching the Money
Negotiate with Facilities
- Ask about discounts for upfront payment
- Negotiate community fee waiver
- Ask about rate lock guarantees
- Compare multiple facilities
Choose Wisely
- Smaller, older facilities often cost less
- Rural and suburban locations cheaper than urban
- Consider shared rooms if available
- Choose appropriate care level (don't overpay for services not needed)
Reduce Other Expenses
- They no longer need home maintenance, utilities, property tax
- May be able to reduce or eliminate car costs
- Cancel unnecessary subscriptions and services
What About Medicaid?
Traditional Medicaid covers nursing home care, not assisted living. However:
- Some states have Medicaid waiver programs that help pay for assisted living
- Waiting lists are common—often 1-3 years
- Not all facilities accept Medicaid waiver residents
- Coverage is limited—may not cover full cost
Contact your state Medicaid office or an elder law attorney to understand what's available in your state. Programs vary dramatically.
Planning Ahead
If you have time before needing care:
- Estimate costs: Use our calculator to project care costs
- Apply for VA benefits: Start early—approval takes months
- Consult elder law attorney: Legal strategies to protect assets
- Get on waiting lists: For Medicaid waiver programs if applicable
- Review all assets: Life insurance, annuities, property, investments
Common Questions
What happens when the money runs out?
If your parent can no longer afford assisted living, options include: moving to a Medicaid-funded nursing home, moving in with family, or applying for Medicaid waiver programs if available.
Do I have to pay for my parent's care?
In most states, you are not legally required to pay for a parent's care. However, some states have "filial responsibility" laws that could make children liable. Consult an attorney in your state.
Can I use my parent's home to pay?
Yes—selling the home, taking a reverse mortgage, or renting it out are all options. Consider Medicaid implications before selling.