Ways To Pay For Senior Housing

Once You Are In Assisted Living And Skilled Nursing

If You Are A Veteran

What Happens if You Run Out Of Money?

What To Do If You Can’t Afford Senior Housing


Senior housing options can be simple and inexpensive, all the way up to flat-out luxurious with the price tag to go with it.  Each person has a different financial profile, health needs and tastes, but the bottom line is that everyone needs money to afford living in senior housing, as it is rarely free!

To give you an idea of the kinds of costs you can expect, visit this website,, which shows the average yearly price, by state, for in-home care, assisted living and skilled nursing facilities.

The best plan, of course, is to have a lot of money saved and to carry a generous long-term care insurance policy, but not many people have the funds and foresight to do both. Even if you do "everything right," it is quite possible to outlive your savings.

Here are some ideas to help you afford to make your move, and enjoy your life.


Ways To Pay For Senior Housing

Savings:  The best advice to afford senior living is to save your money through your working years so you have a nest egg to use toward senior housing.  Your savings account, CDs, and stocks can be liquidated to pay for your housing when needed.

401K and IRAs:  If you are the right age to tap into these funds, you may want to use them for paying for the senior housing you desire.

Real Estate:  If you sell your home or vacation home, you can utilize the realized profits toward a purchase of a home in a senior housing community, or use it to pay the month-to-month charges of a rental property.

Long-Term Care Insurance:  This type of insurance will pay a certain amount for assisted living, skilled nursing facilities, and in-home care. The policy will pay a certain benefit amount per day, usually between $50 and $500.

Life Settlement:  You can sell your life insurance policy to a third party for a cash payment. The purchaser then becomes the beneficiary of the policy and is required to pay the premiums. Typically the purchaser is an institutional investor and policies are $250,000 or greater. Life settlements are usually only transacted when the insured person does not have a known life-threatening illness.

Family Contributions and the Gift Tax Exemption:  The IRS offers a gift tax exemption if family members are financially able to make contributions toward senior care.  Consult with your tax professional.

Long-Term Care Annuity: As of 1/1/10, the proceeds from a long-term care annuity are tax-free if you use them to pay for an Assisted Living or Skilled Nursing facility.

Medicaid/MediCal Find your state in this report to determine if and how Medicaid/MediCal reimburses for Assisted Living (RCFE) facility costs.: “State Medicaid Reimbursement Policies and Practices in Assisted Living,” by Robert L. Mollica, Ed.D. prepared for the National Center for Assisted Living, American Health Care Association in September 2009. 

Medicare:  Medicare pays only for short term Skilled Nursing Facility stays, hospice care, and some home health care.


Once You Are In Assisted Living And Skilled Nursing

Tax Deductions:  Some of the costs of living in an Assisted Living or Skilled Nursing facility may be tax deductible if the expenses are more than 7.5% of the resident’s adjusted gross income.  

The requirements are:

  • The resident must be “chronically ill,” and a doctor or nurse must certify that they can’t perform at least 2 activities of daily living, or that the resident requires supervision due to a cognitive impairment like Alzheimer’s or dementia.
  • Personal care services must be provided via a “plan of care” prescribed by a doctor, nurse or social worker (most assisted living facilities prepare these for their residents).

In some cases, adult children can get a tax deduction if their parents or other immediate family members live at an assisted living or SNF facility and qualify as their dependents.

Talk to your tax specialist to determine what portion of your care bills are tax deductible, and look at the IRS information found at


If You Are A Veteran

Veterans Administration:  VA benefits include home loans, and close to 90% of them do not require any down-payment.  In addition to 100% financing, federally guaranteed VA home loans have flexible credit standards to make qualifying easier.  You can apply for a VA loan with any mortgage lender that participates in the VA home loan program. At some point, you will need to get a Certificate of Eligibility from the VA to prove to the lender that you are eligible for a VA loan.

The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit.  Also, a surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for the home loan benefit.  Loan limits vary; if you’re not buying in a high-cost county, the maximum home loan is $417,000, but high-cost county maximums are greater.  Go to for more information.

Additionally, if a spouse of a veteran, or the veteran is in need of assisted living or the services of an in-home care provider, the “Aid and Attendance” benefit can be applied for.  Certain requirements must be met, but this benefit can pay up to $1949 a month.  Go to for more information.


What Happens if You Run out of Money?

In a CCRC:  If you live in a CCRC and are unable to continue monthly payments, you may have lived there long enough that a reduced monthly rate can be worked out for your situation.  The CCRC has your entrance fee, so they may be more flexible with you than in other senior housing types.

In an Assisted Living Facility:  If you run out of money while living in an assisted living facility, you will probably have to move out and rely on family, friends, or the government (social services) for assistance. Before moving in to a facility, look at their policies for this particular situation and see if you agree with them.

In a Skilled Nursing Facility:  If you run out of money while in a skilled nursing facility, you may qualify for a Medicaid/MediCal bed. If the SNF (Skilled Nursing Facility) participates with Medicaid/MediCal, you may be able to stay on in the facility at the much-lower rate. If the SNF does not participate with Medicaid/MediCal, you may have to move to a SNF that does. Before moving in to a SNF, find out if they have Medicaid/MediCal beds for this particular situation.


What To Do If You Can’t Afford Senior Housing

Consider a Roommate:  To save money, a senior can either move in with another senior, or a senior can take a roommate who, in exchange for reduced or no rent, helps the senior with shopping, home and garden maintenance, personal assistance, or anything else that the two parties agree upon. Check with your local senior centers to see if there is a program to connect seniors with roommates in your community.

Consider Moving in with Family or Friends:  If you need to do so, there may be a tax deduction your family or friends can take advantage of.  Find out more in this article:

Consider a Low-Income Senior Apartment:  There are different types of low-income senior apartments available.  Here are three common ones:

  1. Public Housing = low cost housing in multi-unit complexes that require tenants to pay no more than 30% of their monthly income for rent.

  2. Section 8 Rental Certificates = allows very low income people to choose where they want to live, subject to HUD standards, by providing rental certificates that limit tenants’ rent to 30% of their monthly income.  You must have an income not over 50% of the median income for your area.

  3. Section 202 Housing = this type is for senior citizens, only, and usually provides services such as meals, transportation and accommodations for the disabled. These can be run by private, non-profit organizations or consumer cooperatives. One person in a household must be 62 years old or older.


There are often waitlists for low-income senior housing, which means there is a list of people who will be contacted, in order, when an apartment becomes available.  Your name will be put at the end of a waitlist.  Sometimes waitlists are closed, which means that you cannot even leave your contact information with the apartment complex at all.  It is important to realize that obtaining low-income senior housing can be time-consuming and can take years to complete, so give yourself plenty of time.

Each apartment may do things differently, so it is advisable to contact each directly by phone for availability and application details.

Be prepared so that your application process is as seamless as possible:

  • There will be fees to pay to process your applications.

  • Your credit, as well as a criminal background check, will be conducted on each applicant.

  • If you are applying as a one-person household, be sure to indicate you are the “head of household.”

  • You will be rejected if you cannot pay the full security deposit.  

  • Apply to many different places to improve your chances.

  • Call the apartment contact every 4-6 months to let them know that you are still interested in an apartment, and let them know of any changes to your personal contact information so there is no delay in reaching you, when an apartment becomes available.


If you need Assisted Living:  When looking at Independent/Assisted Living Facilities (also called Residential Care For  the Elderly, or RCFEs), ask if they have any below market rate or subsidized rooms.  When planning and building these communities, often the owners are required by their city government to include low-income, below market rate, or subsidized units along with market-rate units.  Often these units are not advertised.  It doesn’t hurt to ask!