The Assisted Living Federation of America reports that the median cost of a private one-bedroom apartment in an assisted living facility is $,2575 per month as of 2010. Prices range from $800 to over $4,000 monthly depending on a number of factors including the size of the rental unit, location and services offered. With 36,000 assisted living communities nationwide, a growing number of senior citizens and their families face the question of how to pay for this popular housing option.
Seniors cover most of the cost of assisted living through private financial resources. These include income from savings, investments, pensions and retirement. Family members often help to cover the costs of assisted living.
Long-Term Care Insurance
Long-term care insurance covers the cost of care for persons as they age. It covers a variety of senior housing and services, including assisted living. This insurance usually pays a certain daily rate to providers. The Assisted Living Federation of America suggests long-term insurance is the best option to ensure future housing needs are met. Like other insurance plans, benefits vary among policies. Experts advise researching policies and owning one by age 50.
The biggest asset for most seniors is their home. Many sell their homes and use the revenue to help pay for assisted living. Renting is also an option. Some seniors manage the administrative responsibilities of renting while others rely on friends, family members or real estate companies.
A reverse mortgage allows seniors to borrow against the equity in their home while maintaining ownership. The financial institution pays the homeowner in a lump sum, installments or through a line of credit. This money can be used to pay for assisted living costs. Reverse mortgages require at least one of the borrowers to live in the home. Consequently, couples often choose this option if one spouse is able to remain at home. The loan comes due when the borrower(s) move, sell the home or die. The home serves as collateral.
According to a recent AARP survey, over half of American adults thought--incorrectly--that the government pays for the majority of assisted living costs. Medicare Part A does not provide benefits for assisted living care and part B covers only services provided by a doctor. Many states offer limited help with assisted living costs under the Medicaid program, but the eligibility and benefits vary widely. Seniors with incomes less than $12,000 annually can apply for subsidies under the Department of Housing and Urban Development to help cover room and board expenses.
Benjamin Davis is the News Editor for "The Northerner," the campus newspaper of North Central University in Minneapolis, Minn. He began as a news writer for the paper in 2009 and has written several articles for the publication. He will complete a bachelor's degree in media communications in December 2010.