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How Much Does Assisted Living Cost?

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Most of us hope to live independently for the entirety of our lives; however, this often proves difficult as we age. Health concerns, mobility issues, and even home maintenance all become more complicated and, in some cases, untenable. Especially for those who live alone, even everyday household tasks can pose a significant danger. When we think of alternative housing arrangements, nursing homes often come to mind; however, another great option is an assisted living facility.

Assisted living facilities ensure you or your loved one will have access to social connections, cultural experiences, medical support, wholesome meals, and 24/7 security. All of this can significantly improve one’s quality of life. With that said, neither Medicare nor Medicaid covers assisted living costs (in most cases), and the price of entry is far from cheap.

But have no fear! In my experience as a caregiver, I’ve learned how assisted living works, particularly with regard to the financial aspects. In this rundown, we’ll look at the costs, explore some ways to offset them, and examine all the benefits of these types of services.

Assisted Living Cost Breakdown

There are three key components that comprise the majority of assisted living costs. First off, when initially moving into an assisted living facility, you’ll need to shell out a fixed fee that can range from $1,000 to $5,000. This can be paid upfront in full or prorated monthly.

Secondly, you’ll have to pay monthly rent, almost like an apartment. While this figure varies depending on the location of the community, the apartment size, and some additional factors, this will likely be around $4,000.

Finally, there are a number of add-on care services such as help with bathing, eating, and medication. These offerings will vary by the facility, but they’ll most often come with additional charges on top of the monthly rent.

A Recent Rise in Costs

In 2021, the average cost of assisted living rose by 6.15 percent. Due to a growing shortage of qualified elderly caretakers, facilities have needed to pay more in order to secure the right people. Recent hikes in minimum wage requirements and changes in overtime payment legislation are also increasing assisted living costs.

Additionally, more adults with Alzheimer’s and dementia are entering retirement homes than ever before. Finding qualified staff to take care of their specific set of needs is proving to be quite expensive. Finally, with older adults waiting longer to sign up for long-term care, the care they end-up needing often proves more costly.

The More You Know: Assisted living costs go up each year, and these costs are passed along to the patrons of these facilities. When setting aside funds for assisted living, be sure to account for this annual increase.

What Goes Into Assisted Living Costs?

The one-time move-in fee is like a reservation deposit for holding your spot at an assisted living facility, many of which have lengthy waitlists. Some facilities will refund this charge in the event that you are unable to move into the property. Additionally, your monthly rental fee would cover the likes of apartment rent, exercise, health and wellness programs, utilities, basic housekeeping, maintenance, transportation, personal assistance, and catering.

Different Levels of Care

Aside from the move-in fee and monthly rent, there is also a monthly care services fee to consider. This is charged in case older adults need help with everyday activities such as bathing, eating, or dressing. Depending on the range of activities for which you need assistance (and the number of hours entailed), the total service fee will vary.

Generally, it starts from around $150 and increases as you add on services a la carte. You may also have to pay a couple of hundred bucks extra for services such as physical or occupational therapy and medication management. It’s very easy to get lost in the complexities of tiered pricing, so be sure to map your needs to services being offered by each facility.

On the other hand, some assisted living facilities offer an all-inclusive pricing model for a flat yearly fee. This one-size-fits-all model allows you to plan your monthly expenses a lot better. This means that you’re able to take advantage of basic services without incurring any additional charges.

Assisted Living Costs

Like the housing market, the cost of assisted living varies greatly depending on your geographic location. Regardless, assisted living usually costs less than both in-home care and nursing homes.

In-Home Care Assisted Living Nursing Home
National $4,567 $4,300 $8,821
Midwest (Kansas) $4,195 $5,090 $7,026
South (Texas) $4,195 $3,998 $6,388
West (California) $5,529 $5,000 $11,437
Northeast (Massachusetts) $5,649 $6,085 $13,535

*From Genworth Cost of Care Survey 2020.

Additional Costs

A number of assisted living facilities charge based on levels of service. The monthly cost will be a combination of a base rate that includes room and board, most utilities (cable and phone are generally extra), and group amenities like activities, transportation, and communal meals. In addition to the base cost, any additional care services needed will have to be add-ons. Services like medication management, toileting, bathing, or safety checks will all be charged as personal care in addition to the base rent.

Personal care costs can add up quickly. It’s important to understand how the assisted living facility tallies these additional costs. Some are based on a points system (time for care = cost), while others may use a tiered system.

It can be difficult to compare costs between multiple facilities. The only way to accurately predict the charges for your loved one is to request an assessment by the potential facility. This assessment is generally performed in person by a nurse or administrator and may include reviewing past and present medical records.

When planning for costs, keep in mind there may be additional costs like move-in deposits, cleaning fees, and pet fees. Also, expect to see a 3 to 6 percent cost of living increase on a yearly basis.

How to Pay for Assisted Living

It’s no secret; assisted living is costly. While personal funds, such as retirement and Social Security, are the most common means of paying for assisted living, many families also manage other payment methods. For example, some families will liquidate investments, settle with a life insurance company, utilize previously purchased long-term care insurance, apply for wartime veteran benefits, or work with their banks on reverse mortgages.

Pro Tip: For those who prefer to remain in their homes, a cost-effective alternative to assisted living is a medical alert system. Check out my pick for this year’s best medical alert system.

Does Medicare Cover Assisted Living?

Generally, Medicare will not cover the costs of assisted living, as it will only cover the costs of a short-term stay in a skilled nursing or rehabilitation facility. Assisted living is technically not a medical expense and therefore doesn’t qualify.

Does Medicaid Cover Assisted Living?

Age-related programs like Medicare will only cover senior care facility expenses related to skilled nursing; in other words, those facilities that are deemed medically necessary. Other programs, like Medicaid, might cover some of the assisted living costs. Medicaid, which offers government aid to low-income older adults and people with disabilities, often will.

Does Insurance Cover Assisted Living?

Generally, health insurance does not cover the costs of assisted living; however, this varies by provider. On the other hand, a long-term care insurance policy can be used to cover these costs. Be sure to plan ahead with a long-term care policy, as many providers will deny coverage if you have preexisting conditions such as Alzheimer’s, Parkinson’s, or multiple sclerosis.

Which States Have the Most Affordable Senior Assisted Living?

Does Veterans Affairs Pay for Assisted Living?

The VA will not pay for assisted living facilities for veterans. With that said, eligible persons may apply for VA Aid and Attendance benefits. For those who have vision issues or require daily assistance with normal tasks, this type of funding can certainly offset some of the costs of assisted living.

Is Assisted Living Tax Deductible?

Luckily, some or all of your assisted living costs may be tax deductible, qualifying for the medical expense tax deduction. To qualify for this deduction, a person must fit the IRS’s definition of “chronically ill,” meaning that they are unable to perform two or more daily acts, including bathing, dressing, eating, and using the toilet. A licensed health care practitioner can certify this status.

Top Tip: I would strongly urge you to choose an assisted living facility close to where your loved ones are so that they can visit more frequently. At the same time, remember that facilities tend to get cheaper the further they are from major metropolitan areas.

Weighing the Costs of Assisted Living

Above all, as we enter our years of retirement, many of us just want to relax, rather than lug around groceries or maintain our home. If you don’t see the need for 24/7 medical assistance offered at a nursing facility but want help with day-to-day living, then the best way forward is choosing one of the best assisted living facilities.

While the average assisted living provider charges around $51,600 per year, a private room in a nursing home (with everything from medical care to rehabilitative care) will cost nearly double this. On the other hand, just 44 hours a week of home health aide services will add up to $54,912 in 52 weeks, a figure that would only increase with more intensive care. Despite its seemingly high costs, assisted living is the most value-based option of the lot, without compromising on the needs of otherwise independent older adults.

If assisted living is not for you, then I’d recommend reading my guide to assisted living alternatives.

Frequently Asked Questions

Written By
Amie Clark

Amie has been writing about senior care products and services for the last decade. She is particularly passionate about new technologies that help improve the quality of life for seniors and their families. Seeing her parents and grandparents age made Amie ask herself, “Would this be good enough for my loved ones?” In her spare time, Amie enjoys outdoor adventures and spontaneous road trips. Learn more about Amie here

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