How to Pay for Assisted Living: 7 Funding Options Explained

Understanding Assisted Living Costs

The average cost of assisted living in Ohio is $4,500-$5,500 per month, though this varies significantly by location, room type, and level of care needed. Here are seven ways families cover these costs.

Option 1: Private Pay (Personal Savings)

How it works:

Most families start by using personal savings, retirement accounts, and income.

Sources include:

• Social Security income
• Pension payments
• Retirement account withdrawals (401k, IRA)
• Savings and investments
• Real estate sale proceeds

Considerations:

• Create a realistic budget for how long savings will last
• Plan for increasing care needs (and costs) over time

Option 2: Long-Term Care Insurance

How it works:

If your loved one purchased long-term care insurance, it may cover:

• Daily benefit amount (often $150-$300/day)
• Coverage period (typically 2-5 years)
• Various care settings including assisted living

Key questions:

• What's the elimination period (waiting period)?
• Does the policy cover assisted living?
• What triggers benefit payments?
• Is there inflation protection?

Action step: Review the policy carefully or consult with an insurance specialist.

Option 3: Veterans Benefits (Aid & Attendance)

How it works:

The VA's Aid & Attendance pension provides up to:

• Veteran: $2,424/month (2026)
• Surviving spouse: $1,558/month
• Veteran with dependent: $2,874/month

Eligibility requirements:

• Wartime veteran or surviving spouse
• Medical need for assistance with daily activities
• Limited income and assets

Timeline: Applications typically take 6-12 months to process.

Option 4: Life Insurance Conversion

How it works:

Several strategies can unlock life insurance value:

Life settlement:

Sell the policy to a third party for a lump sum (typically 20-30% of face value)

Accelerated death benefit:

Some policies allow early access if terminally or chronically ill

Policy loan:

Borrow against cash value (if whole life)

Option 5: Reverse Mortgage

How it works:

Homeowners 62+ can convert home equity into:

• Lump sum payment
• Monthly payments
• Line of credit

Considerations:

• Home must remain primary residence (complex if moving to assisted living)
• Loan becomes due when homeowner moves or passes
• Significant fees involved
• May affect Medicaid eligibility

Option 6: Bridge Loans

How it works:

Short-term loans to cover care costs while waiting for:

• Home to sell
• VA benefits approval
• Medicaid application processing

Typical terms:

• 12-24 month terms
• Higher interest rates
• Collateral often required

Option 7: Medicaid Waiver Programs

How it works:

While Medicaid doesn't directly cover assisted living, Ohio's waiver programs can help:

PASSPORT Waiver:

• Covers home and community-based services
• May cover some assisted living costs in participating communities

Assisted Living Waiver:

• Limited availability
• Waiting lists common

Important: Most assisted living facilities require private pay for a period before accepting Medicaid waivers.

Creating a Funding Strategy

Most families use a combination of sources:

Example strategy:

1. Private pay from income + savings (Year 1-2)
2. Apply for VA benefits (supplement starting Month 6-12)
3. Sell home (lump sum for continued care)
4. Plan for Medicaid transition (if funds deplete)

Get Professional Guidance

Navigating care financing is complex. Connect with an elder care financial specialist who can analyze your specific situation.

Related Resources:

• Ohio Medicaid Eligibility Guide
• VA Aid & Attendance Application Tips
• Financial Planning Services