Aging comes for us all, and the reality is that most of us will need some kind of long-term care services or support during our twilight years. According to the U.S. Department of Health and Human Services, almost 70% of people older than the age of 65 will require long-term care at some point in their lives. However, the duration and type of care may vary depending on health, preferences, and circumstances.
This article will explore the associated costs, how to find the right facility for your loved one, how to pay for it, and more.
Why is it so important to understand the costs of assisted living?
For starters, it’s a massive industry shaping America’s economy and health. Americans spend $475.1 billion annually on long-term care, and that number is projected to grow significantly over the next two decades.
Secondly, those currently seeking the services of an assisted living facility for themselves or a loved one find themselves overwhelmed with a mountain of information, and the easier we can make it to find the quality care they need, the better.
Thirdly, for those looking to invest in this rapidly expanding industry, this information will prove helpful in preparing them to become part of the solution to the growing demand for senior housing in this country.
And finally, although most don’t like thinking about life’s eventualities, assisted living will affect us all in one way or another. Either we or someone we know will eventually require the care provided in assisted living.
Long-Term Senior Care Overview
Long-term care for seniors includes a range of services and support that help with activities of daily living (ADLs), such as bathing, dressing, eating, managing medications, and more. Some people may receive long-term care at home, while others may need to move to a facility that provides more specialized care, such as a nursing home or an assisted living facility.
Average Length of Stay In a Long-Term Care Facility
The length of time needed for long-term care can depend on age, gender, health conditions, and lifestyle. On average, women usually need care longer (3.7 years) than men (2.2 years) because they tend to live longer. However, one out of three people who are 65 today will never need long-term care, but one out of five will need it for more than five years.
Long-Term Care Costs
The cost of long-term care can vary depending on the type and level of care needed and the location and availability of services in the area. Long-term care can be costly, especially if the resident needs a high level of care.
Genworth Financial says Americans spend $475.1 billion annually on long-term care. And this total is expected to increase dramatically over the next two decades as the baby boomer generation reaches the age where they require assistance with activities of daily living.
The national median monthly cost of assisted living in 2021 was $4,300, about $51,600 annually. Assisted living costs seem high until they are compared to the cost of nursing home care, which was $9,023 per month or $108,408 annually for a private room. (Genworth Financial)
(As of 2024, the national median monthly cost for assisted living has risen to $5,350.)
Even though they seem like a value by comparison, assisted living costs can still be a significant financial burden for many older adults and their families.
One of the fastest-growing options many older adults are now choosing for their long-term care needs is residential assisted living. These assisted living facilities are located in a residential setting, usually a single-family home, and offer personal care services, such as help with bathing, dressing, medication management, social and recreational activities, meals, and housekeeping.
Assisted living facilities are not nursing homes, which provide more intensive medical care and supervision. Assisted living facilities are designed to promote independence, dignity and quality of life for their residents.
Some families may prefer to care for their aging loved one at home with relatives as long as possible, even if it means hiring in-home caregivers or relying on support from family and friends.
Home care may be the ideal situation, but unfortunately, not everyone is able to care for an aging loved one. Some lack the skills needed, while others may lack the time, resources, and energy required to care for a relative full-time. This is why assisted living is such a popular option.
Many options are available if you are considering long-term care for yourself or a loved one. Let’s explore the different types of senior living available in the market right now.
How Much Does Assisted Living Cost?
Every single senior living facility or home will have different costs and services provided, so in this section, we will break down the average costs of assisted living in several different ways. This will give you a better idea of what to expect when looking for care for a loved one or a ballpark of what you might charge based on your particular situation if you are operating an assisted living home.
The cost of assisted living becomes clearer when you know just how much care your loved one will require, i.e., the level of assistance.
How Much Care Will You of Your Loved One Need?
One of the most important decisions people face as they age is how and where to receive long-term care services.
Long-term care refers to the assistance that people with chronic conditions, disabilities, or cognitive impairment may need daily over an extended period.
Long-term care can be provided in different settings, such as at home, in nursing facilities, or in assisted living communities.
But what are the patterns of long-term care use among older adults in the United States?
Long-term care is different for everyone. It depends on your individual needs and how they change over time.
To help you plan for your future, here are some sobering stats to be aware of: almost 70% of people who are 65 years old today will need some kind of long-term care services and support in their remaining years, women tend to need care for longer (3.7 years) than men (2.2 years), and one out of three people who are 65 years old today may never need long-term care support, but one out of five will need it for more than five years.
How long do people typically receive care, and in what type of setting?
To answer this, we can look at some data from the U.S. Department of Health and Human Services (HHS), which estimates the distribution and duration of long-term care services for people who turned 65 in 2015. The data shows that, in general, more people use long-term care services at home (and for longer) than in facilities. Here are some key findings:
- About 69% of people who turned 65 in 2015 will use some form of long-term care services for an average of 3 years.
- About 65% of people who turned 65 in 2015 will receive some type of care at home for an average of 2 years. This includes unpaid care from family or friends (59%) and paid care from home health aides or other providers (42%).
- About 37% of people who turned 65 in 2015 will receive some type of care in facilities for an average of 1 year. This includes nursing facilities (35%) and assisted living communities (13%).
These statistics highlight the importance of planning for long-term care needs and preferences and the potential costs and benefits of different options.
Now, let’s explore the affordability of long-term care for seniors and what assisted living costs look like nationwide.
Understanding Assisted Living Costs
If you or your loved one are considering moving to an assisted living home, you may be wondering how much it will cost and how to pay for it. So, what is the average cost of assisted living?
So much goes into running a quality senior living facility; thus, assisted living is not cheap. According to various sources, the average cost of assisted living in the U.S. in 2023 was around $4,774 per month. However, this depends very much on the location, type of facility, and services offered.
That monthly average for assisted living amounts to around $54,000 to $57,000 per year.
Compare this to traditional nursing homes, which cost an average of $7,800 to $9,000 per month or 93,600 to 108,000 annually.
Assisted living homes are generally more affordable and are also the preferred type of senior housing for individuals who don’t require 24/7 medical assistance.
However, they still represent a significant financial burden for many seniors and their families.
Although the national average for assisted living in 2023 was $4,774, this can be misleading, as the cost can range from $2,000 to over $10,000 per month, depending on the state, region, and other considerations.
For example, Missouri’s median monthly cost of assisted living was $3,175, while Massachusetts’s was $6,650.
To get a more accurate representation of your particular region, you can use online tools like the AARP Long-Term Care Cost Calculator or the Genworth Cost of Care Map to determine the average cost of assisted living in your area.
Beyond the cursory understanding of assisted living averages, a quick overview of the actual cost of assisted living varies widely depending on these factors:
· The location and quality of the facility
· The level of care and services required
· The size and features of the apartment or room
· The amenities and activities offered
· The availability of financial assistance or discounts
Some assisted living homes may charge a flat fee that covers all the basic services, while others may charge a base rate plus additional fees for extra services or care.
Some facilities may require a one-time entrance fee or deposit ranging from a few thousand to tens of thousands.
It is critical to compare different options and acquire a detailed breakdown of the costs before signing a contract.
Average Cost of Assisted Living State by State
The following is a breakdown of the average annual cost of assisted living facilities per resident by state, with the national average being about $54,000 annually.
(Source: https://www.genworth.com/aging-and-you/finances/cost-of-care.html/)
As you can see, the average costs can vary wildly from state to state.
There are also often significant disparities in assisted living costs between two different cities in the same state.
Again, it all comes down to location, quality, and availability of long-term care in your specific area. The more you know about what is available in your region, the easier it will be to compare and make informed decisions for you or your loved ones.
Assisted Living Fees
When comparing different assisted living facilities, it is vital to ask about all the fees that may apply to your specific situation.
While many assisted living homes offer all-inclusive care and amenities for a single monthly cost, there are some one-time fees that you should be aware of.
Additionally, some facilities nickel and dime their residents with various fees not included in the standard contract, which can fluctuate from month to month.
Some fees to watch out for include:
- Entrance or community fees
A one-time fee when moving in to cover administrative costs or reserve your spot. This fee can range from a few hundred to several thousand dollars, depending on the facility’s popularity and waitlist.
- Assessment fees
A one-time charge to evaluate your level of care needs before you move in or periodically during your stay. This fee can range from $100 to $500.
- Deposit or security fees
Either a refundable or non-refundable deposit or security fee when you sign the contract. This fee can range from one to three months’ rent.
- Utility fees
Some facilities may include utilities such as water, electricity, gas, cable, and internet in the base rate, while others may charge separately. This can add up to $100 or more per month.
- Transportation fees
Some facilities may offer transportation services to medical appointments, shopping centers, or other destinations for free or a nominal fee, while others may charge per mile or per trip. This can add up to $50 or more per month.
- Laundry fees
Laundry services may be offered at some facilities for free or for a nominal fee, while others may charge per load or per item. This can add up to $50 or more per month.
- Personal care fees
Some facilities may offer personal care services such as bathing, dressing, grooming, and toileting for free or for a nominal fee. However, others may charge per hour or per service. This can add up to hundreds of dollars per month, depending on your level of need.
- Medication management fees
Some facilities may offer medication management services such as ordering, storing, and administering medications for free or for a nominal fee, while others may charge per medication or per service. Depending on your medication regimen, this can add hundreds of dollars per month to your bill.
How to Pay for Assisted Living?
Paying for assisted living can be a challenge for many seniors and their families.
The following list is a simplified look at how people generally pay for assisted living.
This article isn’t intended to judge the best way to fund your assisted living needs, as that will depend on your individual situation, nor is this an exhaustive list. It is simply an overview to help inform how most people cover the expenses associated with assisted living.
Common sources of funding for assisted living include:
Personal savings and assets
Personal savings and assets are the most straightforward way to pay for assisted living, but it may only be feasible for some.
You can pay out of pocket with enough savings, investments, pensions, Social Security, or other income sources to cover the monthly cost of assisted living. However, you should also factor in other expenses, such as medical bills, insurance premiums, taxes, and personal needs, as this can deplete financial resources quickly and affect future security and quality of life.
Be sure to plan for increased assisted living costs over time. Like anything else, assisted living costs will rise with inflation.
Consider consulting a financial planner or an elder law attorney to help you manage your finances and protect your assets.
Social Security
Benefits from Social Security are not designed to cover the full cost of assisted living, which can vary widely depending on the facility’s location, size, and amenities.
That means that Social Security would only cover about 35% of the median cost of assisted living.
However, there are some ways that seniors can use Social Security to pay for more of their assisted living expenses.
One of those ways is to apply for Supplemental Security Income (SSI). SSI is a federal program that provides monthly cash assistance to low-income seniors and people with disabilities.
To qualify for SSI, you must have limited income and resources and be 65 or older, blind, or disabled. The maximum federal SSI benefit in 2020 was $783 per month for an individual and $1,175 per month for a couple. Some states also supplement the federal SSI benefit with additional payments. Individuals can apply for SSI online at www.ssa.gov or by calling the Social Security Administration at 1-800-772-1213.
Long-term care insurance
Long-term care insurance helps pay for long-term care services of various types, from homemaker services to nursing homes.
Long-term care insurance can be expensive and difficult to qualify for, especially for older adults or those with pre-existing conditions.
It is best to buy long-term care insurance when you are younger and healthier to lock in lower rates and avoid being denied coverage.
The amount and duration of coverage depend on the policy terms and premiums, and this type of insurance may not cover all the costs of assisted living.
Long-term care cost calculators can be a useful tool to better understand what to expect. AARP has a helpful calculator on their site.
Medicaid
This is a federal and state program that provides health coverage for low-income individuals and families.
Medicaid can also cover some or all of the costs of long-term care services for eligible seniors who need a nursing home level of care.
However, Medicaid rules and benefits vary by state, and not all states cover assisted living under their Medicaid programs. Even if your state does cover assisted living under Medicaid, you may face challenges such as limited availability of beds, waiting lists, strict eligibility requirements, and low reimbursement rates.
Consult with your local Medicaid office or a Medicaid planner to determine if you qualify for Medicaid and what options are available in your area.
Veteran’s benefits
If you are a veteran or a surviving spouse of a veteran who served during a period of war, you may qualify for a monthly benefit called Aid and Attendance (A&A) that can help pay for assisted living.
To be eligible for A&A, you must meet certain income and asset limits and need assistance with daily activities due to a disability or illness.
The amount of A&A depends on your income and assets, as well as your marital status and dependents. In 2020, the maximum A&A benefit was $2,266 per month for a single veteran and $1,228 per month for a surviving spouse. You can apply for A&A through your local Veteran’s Affairs (VA) office or online at va.gov.
Life insurance
Some life insurance policies may allow policyholders to access a portion of their death benefit while still alive to pay for long-term care expenses.
This option is known as an accelerated death benefit or living benefit. However, this option may reduce the amount of money that beneficiaries receive after the policyholder’s death.
Bridge loans
These are a type of short-term loan that can help you pay for assisted living while you are waiting for other sources of income or assets to become available.
For example, if you are selling your home or applying for veterans benefits or Medicaid, you may need some cash to cover the initial costs of assisted living until you receive the proceeds or benefits.
This option may have high interest rates, between 8.5% and 10.5%, in addition to fees, and usually requires collateral or co-signers.
Family support
If you have family members willing and able to help pay for your assisted living costs, this can be a great source of support. However, communication becomes even more important whenever family and money come together.
To avoid potential issues, you should discuss expectations and preferences with your family. You should have a written agreement that outlines how much each family member will contribute and how they will be reimbursed if needed.
Reverse mortgage
This type of loan allows homeowners 62 or older to borrow against the equity in their home and receive cash payments that can be used for any purpose, including paying for assisted living.
These long-term contracts have fees and several requirements that need to be met. They also have risks that should be carefully considered before using this as a solution to paying for assisted living. It should be noted that many consider this method to be a last resort when looking to cover long-term care costs.
Does Medicare Pay for Assisted Living or Nursing Homes?
Many people assume that Medicare, the federal health insurance program for older adults and people with disabilities, will cover the expenses of long-term residential care.
The short answer is no. Medicare does not cover the cost of assisted living facilities or other long-term residential care, such as nursing homes or memory care facilities. Medicare only covers medically necessary services provided by doctors, nurses, therapists, and other health care professionals.
Medicare does not pay for room and board, personal care, or non-medical services in any type of long-term care setting.
However, Medicare may still cover some needed medical services in an assisted living facility, such as outpatient care, prescription drugs, dental and vision care, and durable medical equipment.
These services are covered by different parts of Medicare:
- Medicare Part A covers inpatient hospital care, skilled nursing facility care (for a limited time), hospice care, and some home health care.
- Medicare Part B covers doctor visits, preventive services, lab tests, x-rays, mental health services, ambulance services, and some home health care.
- Medicare Part D covers prescription drugs at a pharmacy or mail-order service.
- Medicare Advantage plans (also known as Part C) are offered by private insurance companies that contract with Medicare. They provide all the benefits of Part A and Part B and may offer extra benefits such as dental and vision care, hearing aids, fitness programs, and more.
To get Medicare-covered services in an assisted living facility, you must use providers that accept Medicare or your Medicare Advantage plan. You will also have to pay the usual deductibles, coinsurance, copayments, and premiums that apply to your Medicare coverage.
There may be other sources of income or assistance that can help pay for assisted living besides what has been mentioned. You should explore all your options and weigh the pros and cons of each one before making a decision.
Finding the Right Assisted Living Home
Cost is not the only factor in determining the right assisted living home for you or your loved one. There are numerous options available and each has strengths and weaknesses.
Some options are better for those needing high levels of care and some are better for those who just need assistance with daily living activities.
In our article about choosing the right assisted living home you can read in detail about each option.
Our seniors have worked hard all their lives and deserve the best quality of life possible.
That’s why we are passionate about residential assisted living, a superior alternative to traditional assisted living facilities.
Residential assisted living allows seniors to live in a home-like environment with more personalized care, privacy, and dignity.
Unlike large, impersonal institutions, Residential assisted living homes have a smaller number of residents and a better ratio of staff to residents. This means that each senior gets more attention, support, and respect from the staff, who are trained and experienced in caring for seniors.
Residential assisted living homes also provide a safer and more comfortable setting for seniors who need assistance with daily activities. The homes are cozy, clean, and well-maintained, with amenities and features that make seniors feel at home.
The residents can enjoy socializing with their peers, participating in activities and hobbies, and having a say in their care. Residential assisted living is more than just a place to live. It’s a place to thrive.
If you are looking for the best option for your senior loved one who needs care, look no further than residential assisted living. It’s the better choice for seniors who want to live with dignity, comfort and happiness.
RAL Home Locator
If you are looking for a RAL home for yourself or a loved one, there is a tool that can help you with your search: the RAL Home Locator.
Instead of simply typing “assisted living facilities near me” into Google and trying to sort through the messy results, the RAL Home Locator is an online directory that allows you to browse and compare RAL homes in your area, or any other location you choose. And not just any assisted living homes, but RAL Academy certified homes.
You can filter your search by various criteria, such as location, price, services, amenities, ratings, reviews, and more. You can also view photos and videos of the homes, contact the owners or managers, and request a tour or a consultation.
The RAL Home Locator is a convenient and reliable way to find the RAL home that suits you best. Whether you are looking for a cozy and comfortable place to live or a high-quality and compassionate care provider, we can help you find it. To start your search today, visit the RAL Home Locator website and explore the possibilities.
RAL Home Tours
Additionally, we have another excellent tool that allows both RAL homeowners and those looking for residential assisted living compare the best options for assisted living.
RAL Home Tours was designed for people who want to open up their own RAL home, but it is also helpful in showing you what to look for in a RAL home, offering an inside view of what goes into a good option for residential assisted living.
Join us for a virtual tour of six amazing and diverse residential assisted living homes across the country. You will get a chance to see how each home caters to the needs and preferences of its residents, from the level of care and support they provide to the style and design of their spaces.
Each home is owned and operated by an experienced and passionate entrepreneur who will share their stories of success and challenge, as well as their tips and tricks for creating a profitable and fulfilling business.
With our RAL Home Tours, you will learn how to transform any property, whether it’s a single-story or a two-story, a four-thousand or a seven-thousand square foot house, into a comfortable and inviting home for seniors who want to enjoy their golden years. You will also discover how to customize your home to suit your vision and your market, from the choice of colors and furniture to the accessibility and safety features.
This is a unique opportunity to get inspired and informed by real-life examples of residential assisted living homes that are making a difference in the lives of seniors and their families.
Don’t miss this chance to explore the possibilities of this rewarding and growing industry from the comfort of your own home.
Start Your Own Residential Assisted Living Business
Finding a suitable place for your aging parent can be a daunting task. You want them to be comfortable, safe, and happy, but you also have to consider the cost, quality, and availability of care. Many people struggle to find a place that meets their expectations and needs.
That was the case for Gene Guarino, which led him to the world of residential assisted living. He first heard about this concept in 1998, when he realized that the baby boomer generation would create a massive demand for senior care. He was intrigued by the idea of residential assisted living, which offers a more comfortable and personalized alternative to traditional nursing homes. However, he did not act on this interest until 2013.
In the 2000s, Gene’s mother was at a point where she could no longer live alone. Gene and his family were not in a position to provide the care his mother needed, and so began the search for a place for mom.
He was not satisfied with the options he found in the market.
Most of them were either too expensive, too crowded, or too impersonal. He wanted his mom to have a home-like environment where she could receive personalized attention and care.
He wanted her to have a better quality of life than what most facilities could offer.
He decided to take matters into his own hands. He leveraged his real estate and business background to build a residential assisted living facility from scratch.
He designed it with his mom in mind, making sure it had all the amenities and features she needed. He also hired qualified staff and caregivers who shared his vision of providing compassionate and quality care. He not only created a place good enough for his mom, but he also opened a profitable business that serves other seniors in his community.
For Gene, residential assisted living was not only a profitable business opportunity but a way to make a positive difference in the lives of seniors and their families.
Gene successfully filled his first home with residents, then opened two more homes with the same model, and then began helping others who wanted to follow in his footsteps.
He taught and coached thousands of investors and entrepreneurs nationwide on how to invest in and operate residential assisted living homes. Gene is the Founder of Residential Assisted Living Academy™, and today, we use his RAL Formula to teach and mentor our students nationwide. You can learn from Gene, step-by-step, how to start, operate, and scale a successful RAL business that provides both income and impact.
You can follow Gene’s example and do the same thing. If you are not happy with the choices you have for your loved one, you can start your own residential assisted living business.
Turn your passion into profit and make a difference in the lives of many seniors. You can also enjoy the benefits of owning a real estate asset that generates passive income and appreciates over time.
You Can Be Part of the Solution to America’s Senior Housing Demand
The escalating shift in our aging population heralds a significant change – it predicts an unprecedented surge in the need for senior housing across the country. With approximately 120,000 individuals reaching 85 each month, according to US Census data, many of these seniors require help with daily activities.
Such a trend translates into a colossal opportunity in Residential Assisted Living, a unique sector that assures seniors of a quality, homely experience. If you’ve been seeking a way out of the conventional employment routine and desire to take charge of your financial journey, this is your moment to rise.
Possessing and managing a residential assisted living home isn’t merely about profits—it’s about creating a lasting legacy and an impressive passive income stream. The RAL Academy has successfully empowered thousands of entrepreneurs to launch, mature, and efficiently run flourishing senior housing businesses.
Start your journey in this prosperous sector with us. We’re committed to guiding you into this thriving field, enabling you to become part of the answer to America’s escalating need for senior housing.
