Does Long-Term Care Insurance Cover Assisted Living?

It’s normal for seniors to need more help as they age. When those needs go beyond what they can reasonably get living on their own, assisted living becomes an attractive option for long-term residential care. Paying for assisted living can be a challenge for seniors, which leads many to look for alternative ways to pay the monthly costs of board and care. Long-term care insurance can be part of the solution, but how much help is available depends on the state you’re in, the type of insurance you carry and the details of each individual policy.

Assisted living is a common form of long-term residential senior care. Offering professional caregiver help with routine personal and household tasks, including assistance with the activities of daily living and some transportation, assisted living communities can create a safe, comfortable environment for seniors who need more help than they can get living on their own. Assisted living facilities are not nursing homes, where residents typically have specific medical needs that require 24-hour access to nursing services and which are usually included in seniors’ health insurance plans. Instead, much of the cost for assisted living is the responsibility of the residents and their families.

The average national cost for assisted living is $4,300 a month, according to Genworth’s Cost of Care Survey. This cost varies by location and by the amenities each community offers. In most facilities, the monthly cost pays for a room, meal service, caregiver assistance and some extras, such as basic cable and access to gym or other routine health services. Laundry, housekeeping and transportation costs may be included, or they may cost more, depending on the facility.

The simplest way for people to pay for assisted living is out of pocket. This arrangement is much like paying rent on a normal apartment, as the person who handles the expense just writes a check every month. The relatively high cost of assisted living makes this difficult for many families, however, and even seniors with large retirement incomes may struggle to keep up with the cost.

Unfortunately, Medicare does not pay for the cost of assisted living. Medicaid may offer some help, though the details of how much help you can get and what services are covered varies between states. In almost all cases, Medicaid coverage for assisted living is significantly less than the total cost, and there are usually limits to the care provided. Many states do operate a Medicaid assisted living waiver that can pay room and care costs for beneficiaries who would otherwise be placed in a nursing home. Speak with a Medicaid worker for details about how this works in your state.

Some long-term care insurance policies include support for seniors who move into assisted living facilities. While every policy is different, most plans with assisted living coverage reimburse beneficiaries for costs they’ve already paid out of pocket. Most policies of this type come with a hard cap on the amount they can pay in a year. This limit is in the $2,500 to $3,000 a year range, which can leave seniors with roughly 90% of their assisted living costs unpaid.

While long-term care insurance does not usually offer comprehensive payment coverage for assisted living, the limited support that most policies include can reduce the expense of nonmedical long-term care. Together with other options, such as Medicaid waivers and reduced fees for residents with limited income, long-term care insurance can help many seniors manage the cost of the care they need.