Most seniors and their families initially pay for assisted living using funds from savings, pensions, and investments, and from programs such as veterans benefits and Social Security retirement benefits. Seniors who have little to no income often pay using publicly funded benefit programs such as Medicaid and Supplemental Security Insurance (SSI). Regardless of how someone pays for assisted living, planning isn’t just empowering. It helps ensure there’s money available when it’s needed and makes it more likely that you’ll have a range of safe, supportive care options. An important first step is to make a budget.
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In addition to income from sources such as retirement funds, pensions, and savings, most seniors initially pay for assisted living using Social Security retirement benefits, veterans benefits, insurance policies, home equity, and the sale of personal assets.
Many people use Social Security retirement and disability benefits to pay for assisted living. While these benefits may not be enough to pay the entire bill, they can make assisted living more affordable.
For eligible wartime veterans and their surviving spouses, veterans benefits can be used to pay for assisted living. Denise Lettau, an elder law attorney in Florida, says a surprising number of her clients forget about the many veterans benefit programs that are available.
While health insurance may cover the cost of some medical services that residents receive in assisted living, long-term care insurance and proceeds from the sale or surrender of life insurance policies may also be used to cover some of these costs.
Tapping into home equity can be another way to help pay for assisted living. If your loved one owns a home or other property, consult with a financial advisor before selling their home, taking out a home equity line of credit, or refinancing the mortgage. Other personal assets that families sometimes sell to cover the cost of senior care include jewelry, cars that are no longer needed, and collections.
“Most families start with private sources of funding to cover the cost of assisted living and move to public programs when care needs outpace their available funds,” Lettau says.
Can you afford assisted living?
Let our free assessment guide you to the best senior living options, tailored to your budget.
For eligible seniors, funds from Medicaid and SSI may be used to cover some assisted living expenses. Each state designs its own Medicaid program, so application processes, eligibility criteria, and coverage vary.
It’s a common misconception that Medicare pays for assisted living. While it may pay for medically necessary services that are provided to eligible residents of assisted living communities, Medicare won’t pay for assisted living or long-term nursing home or custodial care.
More than 7 million elderly people in the United States are receiving Medicaid.[01] While Medicaid won’t pay room and board in an assisted living community, it does help pay for assisted living in two ways: through a state’s regular Medicaid program or through home- and community-based services waivers. In 2025, 47 states provide some type of assistance to people who receive Medicaid and who live in assisted living communities.[02]
Often, seniors who qualify for Medicaid also qualify for SSI and OSS. This money can be used to pay for assisted living, although it’s not enough to cover the full cost.
To ensure there’s money available when it’s needed, Lettau says she encourages people to “start planning in their 60s, when they’re still healthy. If there are health issues, even before 60. Because planning early can help families avoid a crisis,” Lettau says.
“Nobody knows how long they’re going to live or when they’re going to need help,” Lettau says. And making a plan – talking with your loved ones about what matters to them, learning about the types of care and support that are available, and understanding payment options – does more than empower the people who’re planning.
“Having a plan increases the likelihood that you’ll be able to protect some of your loved ones’ assets and that you’ll be able to find safe care options for them when the time comes,” Lettau says.
Lettau advises families that most people will need some kind of care by the time they’re 85. “Physical decline often starts before that,” she says, “but by age 85, most people have some kind of cognitive decline as well.”
Expert advice for affordable assisted living
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An essential part of planning for assisted living is making a budget – understanding the costs associated with assisted living and making decisions about how to pay for them. For an accurate idea of how your loved one’s current expenses compare to assisted living, try using our senior living cost calculator.
When creating a budget, keep in mind how long your loved one might be in their chosen community. Most people stay in assisted living for two to three years.[03]
The median monthly cost of an assisted living community in the United States is $5,190 in 2025,[04] but there are a handful of ways that families can make that cost more affordable.
Lettau says that many assisted living communities are willing to offer discounts or negotiate a lower monthly rate. “Many family-owned facilities, and even corporate facilities, are willing to negotiate. Taking less money for a room is better for the community than letting the room stay vacant,” she says.
Ask these questions during your tour:
When you’re making your assisted living budget, it’s important to understand the price structure a community uses. Some assisted living communities let families choose between an all-inclusive rent fee and paying for services individually based on need.
According to Lettau, one pricing approach isn’t necessarily better or less expensive than the other. The key is to understand which option will help you plan and budget more efficiently.
In many senior living communities, a shared room is cheaper than a private room or apartment. Besides saving money, sharing a room can be safer and prevent loneliness, a common problem among seniors.
Be sure to consider your loved one’s personality, as many residents do look forward to their own private space.
“There are people who simply won’t accept a roommate,” says Lettau. But if your loved one is open to the idea, having a roommate can make assisted living much more affordable.
Your loved one may qualify for senior benefit programs that help them save money. The National Council on Aging (NCOA) Benefits Checkup tool lists several benefit programs for seniors to save on:
To save on moving costs, consider:
One way to recoup assisted living costs is through senior and caregiver tax credits. If your loved one meets the IRS’s definition of “chronically ill” or needs help with two or more ADLs, they may qualify for medical tax deductions.[05] Relatives who pay for at least 50% of a loved one’s care may also be eligible for caregiver tax credits.
Also, some assisted living expenses are tax deductible.
A Place for Mom’s Senior Living Advisors have experience helping families find affordable senior living. They can offer you community suggestions to fit your budget while providing your loved one with an enriching community to live in at no cost to your family.
You can also visit AgingCare’s Caregiver Forum to find out how other caregivers have handled care for their loved one. Sometimes, your best support can come from a group of others who are making the same decisions you are.
Many elderly people are eligible for Medicaid, which does cover the cost of many care services. Each state’s Medicaid program is different, but applying for benefits is the first step to understanding how your loved one’s state can help. A Place for Mom’s Low-Income Assisted Living Guide explores other options for getting care.
Most employer benefits won’t cover assisted living, but some programs can be used to pay for certain services. Health savings accounts, or HSAs, in particular can be used to pay for long-term care insurance premiums and for medically necessary services.
Centers for Medicare and Medicaid Services. Seniors & Medicare and Medicaid enrollees. Medicare.gov.
KFF. (2025, March 14). What services does Medicaid cover in assisted living facilities?
ConsumerAffairs. (2024, January 25). Assisted living statistics.
A Place for Mom. (2025). A Place for Mom proprietary data.
IRS. (2024, Nov. 18). Publication 502. Medical and Dental Expenses.
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