[Last updated May 12, 2025]
Finding the right senior care community is a big decision — and so is figuring out how to pay for it. Many families are surprised to learn just how expensive senior living can be and that Medicare typically does not cover it on a long-term basis. The good news is that there are several options available that can help cover the cost, from personal savings to special benefit programs.
Whether you’re just starting to explore senior care or already comparing communities, understanding your payment options can help you make the best decision for your needs and budget. Here are seven ways families commonly pay for senior care.
Private pay (savings and income)
Many seniors use private pay, such as personal savings, remaining retirement income, or investments, to pay for senior care. We mention this option first because it might be the first option that comes to mind.
How it works: The senior uses existing funds — such as money from a savings account or pension, Social Security benefits, or investment dividends — to cover the monthly cost of care.
Why families choose this option: Private pay offers flexibility and immediate access to the community of your choice without needing to meet eligibility requirements for public programs.
Selling a home
In this situation, the senior who moves into a senior living community sells their home and uses the proceeds of the home sale to pay for monthly senior care expenses. Depending on the type of senior care community and level of care the senior needs, this sum of money can fund months or years of living there.
How it works: Once the home is sold, the proceeds can provide a nest egg that helps pay for care over time. Some families also explore bridge loans if a house hasn’t sold yet but funds are needed immediately: These loans provide quick funding for immediate move-in costs while the senior waits for the more permanent funding that can come from a home sale.
Why families choose to sell: Selling a home can free up a large amount of money at once, removing the burden of home maintenance and allowing seniors to move comfortably into their next chapter.
Long-term care insurance
Long-term care insurance (LTCi) is a special type of insurance designed to help pay for services like assisted living care, memory care, and skilled nursing care. Seniors who have this type of insurance and meet the policy’s criteria to file claims can find that using their long-term care insurance policy can reimburse up to hundreds of dollars per day in senior care expenses.
How it works: A senior with a policy can file a claim to begin receiving benefits once they meet the policy’s conditions (such as needing assistance with two or more activities of daily living). Each policy is different, so review it carefully to understand the benefits, elimination periods, and daily or monthly maximum payouts.
If you’re not sure if you meet the requirements, review the fine print of your policy, reach out to your provider, or talk with a third-party company that offers a specialized service in reviewing policies to read the fine print for you. Some companies will also file the claim on your behalf, which the senior must do to continue claiming on the policy.
Why families use LTCi: This product can significantly offset the cost of care, preserving more of a senior’s savings and assets.
Veterans Aid and Attendance benefit
The U.S. Department of Veterans Affairs (VA) offers the Aid and Attendance (A&A) benefit for eligible Veterans and surviving spouses who meet military service, financial, and health requirements. This benefit provides additional income that can help cover the cost of senior care.
How it works: Veterans and spouses who qualify can receive additional monthly payments in addition to their regular VA pension. This money can be used toward assisted living, memory care, or home care.
Why families consider A&A: It’s a valuable and often overlooked benefit that can provide over $2,000 per month to help cover care costs.
Reverse mortgage
For seniors who want to remain in their home a bit longer or who aren’t ready to sell, a reverse mortgage may offer another way to access home equity.
How it works: A reverse mortgage allows homeowners aged 62 and older to borrow against the value of their home. They receive the funds as a lump sum, a line of credit, or monthly payments, and the loan is repaid when the home is sold or the owner moves out.
When it makes sense: This option can help fund in-home care to delay a move to a senior community. However, it’s important to carefully review the terms and understand that the home will likely need to be sold later to repay the loan. It’s also important to note that at least one homeowner must remain living in the home. Once they move out, the loan must be repaid.
Life insurance conversion
Some seniors can convert a life insurance policy into cash to pay for senior care.
How it works: Instead of surrendering a policy for its cash value, you can convert it into a “long-term care benefit plan,” which provides monthly payments to help cover care costs. Another option is to sell the policy in a life settlement for a lump sum.
Why families consider it: It offers a way to tap into an asset that might otherwise go unused, helping cover costs without draining savings.
Medicaid (for low-income seniors)
Medicaid is a state- and federally funded program that can help pay for certain types of senior care, especially nursing home care. Some states also offer Medicaid waiver programs that help cover assisted living or home care.
How it works: Eligibility is based on income and asset limits. Seniors who qualify can have much, if not all, of their care costs covered. However, not all communities accept Medicaid, so it’s important to confirm availability when choosing a community.
What is important to know: Medicaid rules vary by state, and applying can be complex. Some families work with elder law attorneys or financial planners to navigate the process.
There are options to pay for senior care
If an older adult needs the help of a senior living community, a number of solutions are available to help them pay for senior care. While some older adults can tap into their retirement savings or sell assets they no longer need, many need extra help in paying for the cost of this necessary care. Among solutions like the Aid and Attendance benefit, long-term care insurance, a reverse mortgage, and Medicaid, older adults can find ways to pay for their residency and care at a senior living community.
