Paying for assisted living can feel overwhelming, but understanding your options makes planning easier. From personal savings and home equity to Medicaid, VA benefits, and long-term care insurance, there are several ways to cover costs. Whether you’re exploring care for yourself or a loved one, knowing how to pay for assisted living helps you make informed decisions. Read on for more details on assisted living payment options and financial planning strategies.
Personal Funds (Private Pay)
You or your senior loved one may have several options that fall under the umbrella of private pay.
Savings and Income
Retirement savings are often spread across multiple accounts including 401(k)s, IRAs, and Roth IRAs. It’s important to review all accounts carefully. Some seniors may have multiple 401(k) accounts. They may not have consolidated them when switching jobs or because of other factors like self-employment or an unknown account due to auto-enrollment.
If your loved one has invested in mutual funds or other stocks, their financial advisor can help manage these funds so they’re available for assisted living costs. They can also use income from Social Security or a pension, if they qualify.
Personal Assets
When it comes to paying for assisted living, your loved one may have more resources than you realize. Beyond savings and retirement accounts, they might own valuable personal assets that can be sold, such as:
- Art
- Cars
- Collectibles
- Fine jewelry
- Furniture
Homes are perhaps the biggest personal asset that your loved one owns. Selling provides the most cash upfront, but it’s not the only option if they’re not quite ready to sell.
Home Equity Solutions: Bridge Loans and Reverse Mortgages
When time is of the essence, bridge loans can offer a quick financial solution. These short-term loans allow seniors to access some of their home’s equity right away—especially if they need to move to an assisted living community sooner than expected due to a fall or illness or if their home doesn’t sell right away. In these cases, a bridge loan can provide needed funds until the home sells.
Reverse mortgages are another option for tapping into home equity without selling. However, it’s important to be cautious. Unfortunately, some seniors have been misled into a reverse mortgage that doesn’t serve their best interests. Before proceeding with a reverse mortgage, be sure your loved one fully understands the terms and is working with a trusted lender.
Family Assistance
After reviewing assets with a loved one, it’s helpful to have an open discussion about how the family can contribute. If multiple family members are involved in supporting your loved one, consider gathering everyone to start the conversation.
Try to go into this conversation with an open mind and a realistic understanding of what each person can offer. Being upfront and honest about how much you can contribute will help everyone plan for the coming years.
Private Insurance Policies
Don’t overlook the power of existing insurance policies as they could provide great financial support. If your loved one has a long-term care insurance policy or life insurance policy, it may help cover the cost of care in senior living.
Long-Term Care Insurance
Seniors with long-term care insurance (LTCI) policies can use them to help pay for assisted living. These policies work typically reimburse your loved one for care-related expenses Usually, LTCI plans begin providing benefits once a senior meets a certain level of need—often decided as requiring assistance with at least two activities of daily living (ADLs), such as bathing or dressing.
It’s pertinent to know that some policies have a waiting period—also known as an elimination period—before seniors can be reimbursed for their care expenses. Review your loved one’s policy to make sure that it’s still in good standing.
Life Insurance
You may be surprised to learn that a life insurance policy can be used to pay for assisted living. Some policies offer accelerated death benefits, which lets a policy holder get a tax-free advance on the death benefit should they need long-term care services.
If a senior needs to, they can sell all or a part of their policy. Read your loved one’s life insurance plan carefully and consult a financial advisor before making any decisions.
Government Assistance
Your loved one may qualify for certain government programs that they can use to help pay for assisted living, such as VA benefits or Medicaid.
VA benefits
If your loved one is a veteran, or the surviving spouse of a veteran, they may be eligible for VA benefits that can be used to cover assisted living costs.
The VA offers several benefits, and seniors should apply for any they may be eligible for. One of the most generous benefits is the Aid and Attendance benefit, which can be added to a VA pension for qualified veterans.
Medicaid
Medicaid can also help cover some assisted living costs for seniors who qualify. However, it’s important to know that Medicaid doesn’t pay for the room and board costs associated with assisted living. Instead, it pays for care services.
Many states offer home- and community-based services (HCBS) waivers that help with the cost of assisted living. These waivers require a separate application, and in most cases, states have a limited number of waivers available. There’s often a waiting list of applicants.
Not all assisted living communities accept Medicaid. If they do, they likely have a certain number of rooms set aside for residents using Medicaid. They may also have a spend-down requirement, meaning that residents would need to live in the community and pay with their own funds until they qualify for Medicaid.
Supplemental Security Income and Optional State Supplements
Supplemental Security Income (SSI) is a federal program that seniors over 65 with limited money and resources can apply for. In many cases, these seniors also qualify for Medicaid since the programs use the same application.
Some states may choose to supplement SSI payments with an Optional State Supplement (OSS) that are specifically for seniors living in a community. To find out if your state offers OSS and to apply, visit your local Social Security office.
Financial Planning for Assisted Living
Once you understand your payment options, it’s helpful to learn about the cost of assisted living, common pricing structures, and how to make the most of your budget to cover costs.
Understand Care Costs
People are often surprised by the cost of assisted living. In 2024, the national median monthly cost of assisted living was $5,900, according to CareScout and Genworth’s annual Cost of Care report.
This monthly cost of assisted living varies based on numerous factors, including:
- The amount of assistance your loved one needs
- The cost of living in their area
- The size of their room
- Additional fees for things like pets or parking
Negotiate Costs
Some communities may be able to offer you a lower monthly rate. Ask a community for a sample contract so you can prepare for negotiations.
Consider asking about:
- Move-in incentives
- Pricing specials
- Waiving the entrance fee, which may be the same as a month’s rent
- Getting a reduced rate for an extended lease
- Reduced rates for cash payments
Time of year may also affect your negotiating leverage—some assisted living communities offer a lower rate at the end of the month, quarter, or year.
Evaluate Pricing Structures: All-Inclusive vs. À la carte
Assisted living communities typically use either an all-inclusive or à la carte pricing structure.
All-inclusive means residents pay one monthly fee for all their needs. It covers costs for:
- Room and meals
- Help with ADLs
- Activities in the community
- Housekeeping and laundry
À la carte pricing means that care needs are itemized and charged as needed. It’s ideal for seniors who need little assistance, however it can be unpredictable. For example, if a senior typically needs minimal assistance but has a month with higher care needs due to an illness, they’ll end up paying more for that month.
Some communities offer a tiered model that provides the predictability of an all-inclusive community while also considering the amount of care your loved one needs. For example, one tier may cover assistance with three ADLs while a higher tier covers assistance with five ADLs.
Cost-Saving Options for Assisted Living
In addition to planning ahead and negotiating your bill, you can find other ways to save money that can make paying for assisted living a little more affordable.
Share a Room
If your loved one is open to the idea of sharing an apartment, you may be able to save on room and board. Some communities have roommate matching programs, so make sure to ask if they’re able to match your loved one with a resident who would be a good fit.
Utilize Discount Programs
Use the National Council on Aging’s BenefitsCheckUp tool to see if your loved one qualifies for senior benefit programs in their area. While these programs don’t cover assisted living costs directly, they can help seniors save on daily expenses—freeing up money for care.
Depending on their location, your loved one could qualify for savings in:
- Food
- Legal Services and Assistance
- Prescriptions
- Transportation assistance
- Vision and dental care
Save on Moving Expenses
Moving to assisted living can be a significant expense, but there are several ways to cut costs.
To maximize your potential savings, you can:
- Ask the community if they offer a referral discount for moving services
- Ask the movers if they offer a senior or veteran discount, if applicable
- Book the moving company as early as possible to get a lower rate
- Downsize belongings to reduce moving costs
- Find free packing materials by joining a “buy nothing” group on Facebook or other sites
- Use movers for heavy items and bring in lighter boxes yourself
Claim Tax Deductions
Seniors can take advantage of additional tax deductions starting in 2025. The One Big Beautiful Bill Act (OBBA) offers a new senior tax deduction for filers 65 and older. Seniors can claim up to a $6,000 deduction in addition to their standard or itemized deduction. This deduction will be available through 2028.
The IRS doesn’t offer a specific tax deduction for senior living, but you might be able to deduct some qualified long-term care services if your loved one meets the IRS’ definition of chronically ill. To meet this definition, a senior must require assistance with two activities of daily living. If they qualify, you can deduct some care costs as a medical expense. Consult a tax professional to see if this is a possibility.
Get Help Understanding Assisted Living Costs
Even with careful planning, questions about costs are bound to come up, especially because seniors’ needs and financial situations vary. Whether you’re wondering which payment options a community accepts or need guidance on selling a home, your nearest Sunrise Community can help. Our team can answer your questions about community costs or connect you with our trusted partner, ElderLife Financial, for expert financial planning support.
References
[1] Kagan, J. (2025, July 27). What is a bridge loan and how does it work, with example. Investopedia.com.
[2] Consumer Financial Protective Bureau. (2023, August 28). What is a reverse mortgage?
[3] Rodeck, D. (2024, February 8). How to use long-term care insurance. AARP.org.
[4] LongTermCare.gov. (2020, February 18). Using life insurance to pay for long-term care.
[5] U.S. Department of Veterans Affairs. (2024, July 18). VA Aid and Attendance benefits and housebound allowance.
[6] National Council on Aging. (2025, May 29). Does Medicaid pay for assisted living?
[7] Centers for Medicare and Medicaid Services. Home and community-based services 1915(c).
[8] Social Security Administration. Supplemental security income (SSI).
[9] Social Security Administration. Understanding Supplemental Security Income (SSI) and other government programs — 2025 edition.
[10] Genworth. CareScout. (2024, December). Calculate the cost of long-term care near you.
[11] Internal Revenue Service. (2025, July 14). One, big, beautiful bill act: tax deductions for working Americans and seniors.
[12] Internal Revenue Service. (2024). Publication 502: Medical and dental expenses.