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Will Insurance Pay for Senior Living? Breaking Down Senior Care Costs

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Will Insurance Pay for Senior Living? Breaking Down Senior Care Costs

Whether it’s for a loved one or yourself, finding the right senior living option can be tricky. First, there’s the issue of care. You’ll want to check the services and amenities offered at each place, along with the staffing. Location may be a consideration, as well, especially if your goal is to have loved ones nearby.

But one of the trickiest factors is cost. Senior living can be expensive, especially if more advanced care is needed. Although medical insurance typically doesn’t pay for senior care, we have some options to explore.

The Cost of Senior Care

The term “senior care” covers a wide range of options, varying in care level. If you enter an assisted living facility, you’ll pay substantially less than if you require a private room at a skilled nursing facility. Senior care costs can also vary depending on the type of facility (corporate or locally owned), the region of the country and the level of care you or your loved one requires.

According to a survey of senior care pricing, here’s the median monthly cost of various types:

  • In-home care: $4,957-$5,148
  • Adult day health care: $1,690
  • Assisted living facility: $4,500
  • Nursing home facility: $7,908-$9,034

Often retirement funds and savings accounts are used to pay for senior care. But before you start digging into your piggy bank, there might be some ways to cut those costs. The first place to check is any insurance plans that might apply.

What’s the difference between assisted living and a nursing home? Experts at our sister site, Safewise.com, break it down here.

Does Insurance Pay for Senior Care?

As you’re researching insurance, it can be easy to assume it doesn’t pay for senior living. Health insurance plans are designed to cover medical services, while the monthly fee you pay a care facility includes much more.

“People mistakenly believe that long-term care is a provision of medical care,” said Joy Loverde, author of Who Will Take Care of Me When I’m Old and The Complete Eldercare Planner. “It is not. As far as insurance policies are concerned, long-term care refers to assistance with activities of daily living, otherwise known as ADLs, like getting dressed, eating and bathing. These types of services are typically not considered health care services, and consequently, a different kind of insurance is required to cover the costs.”

But don’t stop researching when you get the first “no.” Depending on your situation, there may be some options that will help you with your senior care costs.

Senior Care Insurance Options

Chances are, your private health insurance doesn’t cover the monthly cost your senior living facility charges. Health insurance is designed to cover your medical costs, while senior living facilities provide housing, meals and help with daily activities.

But private insurance isn’t the only medical policy available. Here are some routes to investigate to help offset the cost of long-term care.

1. Medicare

Medicare covers healthcare costs for those aged 65 and older. With a Medicare supplement plan, that coverage can be extended to cover the copays and deductibles not covered by original Medicare.

Unfortunately, Medicare and Medicare supplements don’t cover long-term care insurance. However, it’s important to carefully review your individual plan. Some medically necessary healthcare costs may be covered by Medicare, whether you’re receiving them in a doctor’s office, at home or in a long-term care facility.

2. Medicaid

Medicaid is a state-administered program that helps with healthcare expenses for eligible residents. While it doesn’t cover the room and board part of senior living, Medicaid does offer vouchers that could reduce your out-of-pocket cost. Look into the Home and Community-Based Services (HCBS) Medicaid/1915(c) Medicaid waivers available in your state.

“It’s essential to thoroughly understand the specifics of these programs, as they can vary in terms of eligibility and coverage,” Peter Ross, co-founder and CEO at Senior Helpers, said. “Consulting with a financial advisor or elder care specialist can provide clarity and guidance in navigating these options.”

3. Veterans Benefits

Military veterans should look into long-term care benefits through the Veterans Administration. You’ll need to be enrolled in VA health care, and your care will need to be provided by an approved VA facility. But this option could provide substantial savings.

The VA offers 24/7 nursing care, physical therapy, help with daily activities and even support for caregivers. VA long-term care is provided through facilities, private homes or your own home, as long as it qualifies.

4. Long-Term Care Insurance

As you can see, getting insurance to pay for senior living can be a challenge. That’s why long-term care insurance exists. If you happen to have one of those policies lying around, it can cover a large portion of the costs. For a long-term care insurance policy to kick in, you’ll need to require assistance with at least two of the six activities of daily living (ADLs):

  • Bathing
  • Dressing
  • Transferring (moving to and from a bed or a chair)
  • Toileting
  • Eating
  • Caring for incontinence

Your plan may also limit how long you can claim benefits. For instance, if your plan has a limit of two years, that assistance will lapse once you’ve reached the end of the 24-month period.

5. Tribal Long-Term Care Assistance

Loverde names one more option for those who qualify. Seniors in tribal communities can be taken care of through tribally run nursing homes. A list of those facilities is available here.

Other Financial Options to Consider

If you hit a dead end after your health insurance search, don’t give up. Here are a few other options to consider before you start taking money out of your own bank account:

  • Life insurance policies: Life insurance is designed to take care of your loved ones after you’re gone. But if you need to pay for life insurance, it might be worth cashing it out.
  • Home equity: If you have equity in your home, taking a loan against that equity could give you the funds you need to pay for senior care. If you’re not ready to sell the home, a loan could be a great way to squeeze a little money out of it.
  • Caregiver tax credits: For family members who provide (or pay for) caregiving services, tax credits are available. This only applies if you itemize deductions, though. Now that the standard deduction has climbed to $14,600, you may find itemizing isn’t worth it.

Whether it’s for yourself or a loved one, finding the right senior living setup can be challenging. Having resources to help with the costs can ensure you get the best care without emptying out your savings accounts. If you’ve explored various options and are still stumped, a financial advisor may be able to help you find payment options you haven’t yet considered.

Stephanie Faris is a professional finance writer with more than a decade of experience. Her work has been featured on a variety of top finance sites, including Money Under 30, GoBankingRates, Retirable, Sapling and Sifter.


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