How to Pay for Assisted Living: 7 Funding Options Families Overlook

Option 1: Personal savings and retirement income

For many families, the starting point is personal savings, Social Security income, pension payments, and retirement account distributions. These are the most straightforward funding sources, but they rarely cover the full cost of assisted living on their own. Calculating a realistic monthly budget — and how long those savings can sustain care costs — is an important first step. Our cost calculator at /cost-calculator can help you estimate monthly expenses based on care level and location.

Option 2: Long-term care insurance

If your loved one purchased a long-term care insurance policy years ago, now is the time to dig it out. These policies are specifically designed to cover assisted living, memory care, and other long-term services. Benefits vary widely by policy: look carefully at the daily or monthly benefit amount, the elimination period (how long you pay out of pocket before coverage kicks in), and whether the policy covers assisted living specifically or only nursing home care. Contact the insurer directly to initiate a claim — the process takes time, so start early.

Option 3: Veterans benefits — Aid and Attendance

Many families are surprised to learn that wartime veterans and their surviving spouses may qualify for a VA benefit called Aid and Attendance, which can provide meaningful monthly financial support for assisted living costs. Eligibility depends on service history, level of care needed, and financial circumstances. This benefit is administered by the U.S. Department of Veterans Affairs; visit VA.gov or see our dedicated guide on VA Aid and Attendance at /guides/va-aid-and-attendance for a full overview. Because the application process has specific requirements, working with a VA-accredited claims agent or elder law attorney is strongly recommended.

Option 4: Medicaid — for those who qualify

Medicaid, the joint federal-state program for people with limited income and assets, can cover some assisted living costs in many states through Home and Community Based Services (HCBS) waiver programs. Coverage varies significantly by state: some states cover a broad range of assisted living services, others cover very little. Medicaid does not generally pay for room and board in assisted living, but may pay for care services delivered there. If your loved one has limited assets and income, it is worth exploring your state's Medicaid programs. Start at Medicaid.gov, or use our benefits screener at /eligibility to get a preliminary picture of potential eligibility.

Option 5: Life insurance policy options

Existing life insurance policies may be convertible into funds for long-term care in ways many families have never considered. A life settlement allows a policyholder to sell an existing policy to a third party for a lump sum greater than the cash surrender value. Some policies include accelerated death benefit riders that allow early access to a portion of the death benefit if the policyholder has a chronic illness or requires long-term care. These are financial transactions with significant implications; an independent financial advisor should be consulted before pursuing either option.

Option 6: Home equity

For families where the senior owns a home, the equity in that home is often the largest untapped financial resource. Options include selling the home and using the proceeds to fund care, a Home Equity Line of Credit (HELOC), or a reverse mortgage for those who remain in the home while a spouse moves into assisted living. Each of these approaches has important financial and tax implications that vary by situation. A housing counselor approved by the U.S. Department of Housing and Urban Development (HUD) can provide objective guidance.

Option 7: State and local assistance programs

Beyond Medicaid, many states administer their own assistance programs for seniors who need care but don't qualify for Medicaid or whose Medicaid waitlists are long. These may include state-funded personal care programs, Older Americans Act services coordinated through your local Area Agency on Aging, or community-based assistance programs. Your local Area Agency on Aging (findable at eldercare.acl.gov) is an excellent first call — they can point you toward programs specific to your state and county.

A note on combining sources

Most families who successfully navigate assisted living costs do so by combining two or more of these funding sources. A long-term care insurance policy might cover a portion of monthly costs; Social Security and a pension cover more; the proceeds from a home sale provide a reserve. The key is to map out all available sources before selecting a community, so you have a realistic picture of how long funding will last and when you may need to transition to other options. This guide is informational only. For guidance specific to your situation, consult a certified financial planner with elder care experience, an elder law attorney, or a benefits specialist.

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Sources & references

Genworth Financial. (2024). Cost of Care Survey. genworth.com

U.S. Department of Veterans Affairs. (2024). Aid and Attendance Benefits. va.gov

Centers for Medicare & Medicaid Services. (2024). Medicaid Home and Community Based Services. medicaid.gov

National Council on Aging. (2023). BenefitsCheckUp. ncoa.org

U.S. Department of Housing and Urban Development. (2024). Reverse Mortgages. hud.gov

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