Assisted living is a common choice for older adults who need care, want social opportunities, and can afford to live there. Although most people understandably want to age at home, that sometimes becomes too challenging and expensive to manage over time. Hiring in-home care to meet a loved one’s needs can also be costly, and paying for an assisted living facility makes more financial sense.
Jump ahead to these sections:
- Typical Assisted Living Requirements for Admission
- Medicaid Requirements to Cover Assisted Living
- Alternative Financial Resources for Assisted Living
You can think of qualifying for assisted living in several different ways, depending on your situation. The two broad categories of qualifications are how to pay for assisted living and how much care you need.
Every assisted living community has different pricing, levels of care, and varying admissions processes. Assisted living communities are loosely regulated (unlike nursing homes), and each state establishes and enforces licensing and certification requirements. Misunderstandings about paying for assisted living can prevent families from long-range financial planning. In this guide, we clarify and explain how to qualify and pay for assisted living with or without Medicaid.
Typical Assisted Living Requirements for Admission
Assisted living requirements for admission across the country are generally the same. Over time, as older adults' needs have become more complex, assisted living communities have adjusted their requirements for admission. Overall, assisted living is a for-profit venture, and attracting residents means growing flexibility in admission requirements while still complying with state regulations.
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1. Assisted living assessment and admission paperwork
Just because you can pay for an assisted living doesn’t mean the community will accept you for admission. Admission paperwork explains the fees, rules, and responsibilities of living in assisted living.
Additionally, the assisted living nurse usually assesses anyone who wants to move to the community. The initial assessment also includes a recent history and physical from your loved one’s primary care physician, all required vaccines, and a current medication list.
2. Medical needs
The primary focus and purpose of assessing medical needs are to ensure that the assisted living staff can safely care for your loved one. Some assisted living communities offer different levels of care all the way up to round-the-clock checks. However, attending to complex medical needs is not what most assisted living communities provide.
Typically assisted living will have a nurse on duty but for limited times during the week. The nurse's role is to oversee the care and med-tech staff, not to attend to your loved one’s medical condition. If someone’s medical needs are too complex for assisted living to handle, they may request that you put additional support into place before they accept your loved one. They could also suggest nursing home care.
3. Cognition and behavior
Most assisted living communities have some residents with mild to moderate cognitive impairment. Assisted living may not accept someone who has severe memory loss, aggressive behavior, or difficulty attending to daily activities of daily living without significant help.
In these cases, assisted living might recommend memory care or advise stabilizing behavior before admission. Assisted living communities are responsible for protecting their residents from abusive, aggressive behavior that might harm someone.
4. Activities of daily living
The initial assessment requirements include examining what exact daily activities your loved one needs help with. Possibilities include help with bathing, dressing, getting to the dining room, hygiene, and assistance with transferring.
The expectation is that assistance with these functional needs is likely to change, increasing care needs and, therefore, the cost. The more daily living care an individual needs, the more expensive.
5. Develop a care plan
The care plan describes the level of care your loved one needs. It includes nursing responsibilities, how often aides come to assist your loved one, the number of medications and times of day for administration, special dietary requests, and all of your personal information and emergency contacts.
Also included in this step are the individual’s advance directive and living will. The monthly cost of assisted living will depend on the level of care that the care plan recommends. This care plan isn’t set in stone, and it’s likely to change over time.
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6. Financial responsibilities and plan
Most assisted living communities assess a one-time admission fee that is non-refundable after you move in. Other expenses could include extras such as personal laundry or deep cleaning of the apartment.
When you sign the financial agreement for assisted living, you are committing to costs outlined in the contract and any yearly increases in addition to costs associated with increased care needs. If you exhaust your financial reserves while in assisted living and can’t access any of the Medicaid Waiver programs, you may be asked to leave.
Medicaid Requirements to Cover Assisted Living
Medicaid requirements to cover assisted living are enormously complicated due to all of the various state programs. Each state decides how it uses Medicaid funding for assisted living.
The program in most states that deals with assisted living is called Home and Community Based Services Medicaid Waivers (1915(c) Waivers), which allow someone to live at home or in assisted living rather than go to a nursing home. A team of medical professionals and care staff care for the person wherever they live.
Unfortunately, Medicare does not cover the cost of assisted living. Even with a Medicare Advantage plan, you may get some reimbursement for personal care but nothing towards room and board. Medicare is a medical plan and will only cover short-term skilled nursing rehab, home health, and hospice. Home health care offers some support while in assisted living but is unlikely to affect the bottom line cost.
Regular state Medicaid is an entitlement program for low-income seniors, disabled adults, and children that provides health benefits based on income and assets. Medicaid is the primary source of payment for long-term care in nursing homes. Below, we’ll share the Medicaid requirements used to determine if any additional care is covered.
1. Financial criteria
First, financial criteria depend on what program you apply for, whether it is for the state Medicaid program vs. the HCBS Medicaid Waiver program. For assisted living purposes, your income and asset level will have to be very low to qualify for any reimbursement of assisted living costs.
Additionally, not every assisted living will accept Medicaid reimbursement. If you think you may need to apply to a Medicaid program, make sure you choose a community that accepts Medicaid. Some communities may designate a certain number of beds for Medicaid reimbursement.
2. Functional criteria
For most Medicaid programs, you need to meet what is called the “nursing home level of care.” Each state has functional assessment tools to verify that a person applying for a Medicaid program meets that level of care. In general, these are the areas of function that Medicaid programs will review:
- Activities of Daily Living (ADLs): This includes the ability to dress and undress, bathe, transfer, attend to hygiene, use the toilet, and clean up after oneself.
- Instrumental Activities of Daily Living (IADLs): These are activities such as shopping for groceries, making meals, paying bills, and maintaining a household.
- Medical Needs: This refers to catheter care, injections, or any other needs that require a nurse.
- Cognitive Impairment: Finally, this impairment can be from dementia, Alzheimer’s, neurological, or mental health conditions that impair judgment and decision making. Having only cognitive impairment without the need for other assistance may make you ineligible for services.
Some states will require meeting more of these functional criteria than others to justify Medicaid reimbursement. It’s important to check with your state’s specific requirements when exploring options for yourself or a loved one.
Alternative Financial Resources for Assisted Living
Most people will not qualify for Medicaid assistance for assisted living. That leaves families with no other option but to pay out of pocket for assisted living. However, there are some alternatives to assisted living that could be more affordable. Regardless of what type of senior living you choose, there are creative ways to pay for it.
1. Leverage your home
If you own a home, you can either sell it to finance assisted living or pull equity out to supplement the cost. Meet with a financial advisor to discuss a home equity line of credit or other ways to use your home to help pay for assisted living.
2. Long-term care insurance
If you have a long-term care insurance plan, now may be the time to apply for benefits. Many plans have a 90-day waiting period, but you can start the clock ticking. Depending on your policy’s daily amount, you can use this benefit to offset the cost of assisted living.
3. Veterans Benefits
For veterans who meet the right criteria, there are programs (such as the VA Aid and Attendance program) that pay a cash benefit or give a monthly stipend for providing care. Some costs could be offset in assisted living by the VA paying family members providing care instead of assisted living staff. This is called the Program for Comprehensive Assistance for Caregivers.
4. Transfer of assets
Medicaid has a five-year look-back period. If you transfer assets to someone else or a trust hoping to do so to qualify for Medicaid five years later, that money will not be counted towards Medicaid eligibility. Consult an attorney to make these arrangements in advance so you're protected.
Who Qualifies for Assisted Living?
Qualifying for assisted living is one thing, but paying for it is another entirely. Financial and long-range planning for your loved one is the most reliable way to ensure their care for the future.
If you think they may need Medicaid financing, meet with an estate planning attorney to consider your options. Medicaid may or may not be the best option, so consider all the creative ways to pay for assisted living.