Maybe you’re noticing signs that your parent’s health is changing. Maybe their memory is just a little fuzzier, or maybe they need more help with chores, home maintenance, and the like. If you can’t visit or help as often as you want, you might wonder if assisted living could be a fit for them. And you might then wonder how you or they will pay for it. Long-term care insurance is one way to cover the costs of assisted living while helping your loved one maintain some independence for as long as possible. Read on to learn more about insurance for assisted living facilities and how these policies work.

Key Takeaways

Regular health insurance will not pay for assisted living. However, a long-term care insurance policy is designed to pay for help with activities of daily living (ADLs) and can, by extension, cover assisted living care.
Certain criteria must be met before a long-term care policy pays out. A person must be deemed eligible for payout, and they must need help with two or more ADLs.
A long-term care policy will not pay an assisted living community directly. Instead, the policy reimburses the policyholder for approved expenses.
If your loved one has a policy and plans to use it for assisted living, tell prospective communities. This way, they will be better able to propose best-fit services and amenities.

Does insurance cover assisted living?

No, traditional health insurance doesn’t cover assisted living expenses. Though your loved one’s health insurance would cover medical expenses that may occur during a stay in an assisted-living-like setting, health insurance does not pay out for general assisted living expenses. However, there are plans that are designed for just this kind of need. These plans fall under the category of long-term care insurance.

Does long-term care insurance pay for assisted living?

Yes, you can use a long-term care insurance policy to cover the nonmedical costs of assisted living. Long-term care insurance policies pay for help with activities of daily living (or ADLs) in several different settings, including assisted living communities. ADLs include bathing, eating, dressing, and more. There is a lot of variation in the kinds of policies available, but, as noted above, these policies are designed to cover personal care, such as help with activities of daily living.^[01] In concert with health insurance, a long-term care policy can ensure most of your parent’s needs are met.

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When is long-term care insurance worth it for assisted living costs?

The best time for your loved one to buy long-term care insurance is in their 50s and before they have any major health complications. But it’s also best to buy one of these policies if they do anticipate needing involved care later in life. This is the challenge: determining your loved one’s future needs when, in the present, they may be in decent health.

Since assisted living is for a wide range of seniors — those needing almost no help with ADLs and those needing a fair amount of help — those seniors who need help with several ADLs and who have potentially serious health issues likely would benefit from this kind of insurance.

However, seniors with a sudden need for long-term care due to an illness or injury may find it hard to secure coverage or afford it. This is because insurers are less likely to cover those with significant health issues. If they do cover these individuals, they will charge more for the coverage.

Long-term care insurance usually works by paying up to a daily maximum set by the terms of the policy. Polices can pay out as little as $50 a day and as much as $500 or more. However, a plan with a high daily maximum will cost much more than one with a low maximum.

The 2021 Genworth Cost of Care Survey notes that the national median monthly cost of an assisted living facility was $4,500.^[02] This breaks down to a cost of $150 a day per 30 days. However, annual premiums can range significantly. The table below offers a glimpse of this based on 2022 data gathered by the American Association for Long-Term Care Insurance:

Annual premiums, $165,000 policy, adjusted for 3% inflation
Status	Age	Premium
Single Male	55	$2,220
Single Female	55	$3,700
Couple	55	$5,025

^[03]

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How does long-term care insurance work?

A person may use their long-term care insurance policy once two things happen:

The benefit trigger occurs
The elimination period ends ^[01]

What is a benefit trigger?

A benefit trigger is the point at which the insurer determines that your parent may use their policy’s benefits. Benefits are usually “triggered” when your parent needs help with two or more ADLs; it is widely accepted that there are six: bathing, dressing, toileting, transferring to or from a bed or chair, eating, and continence.^[04]

An insurance company will contract with a specialty nursing agency to determine whether your parent qualifies for benefits.

What is an elimination period?

Almost every policy will have an “elimination period,” a period in which the policyholder must pay for their own care without reimbursement. Once the policyholder clears this period, they may submit expenses for reimbursement.^[05]

How can you use long-term care insurance to pay for assisted living?

A long-term care insurance policy will not pay an assisted living community directly. Instead, a senior pays for their care and is reimbursed by the company underwriting the policy. This means that your loved one will likely need to be able to fund assisted living on their own before their long-term care policy benefit kicks in.

Next steps: Coordinating with an assisted living community

If you and your parent feel assisted living is right for them, and if they have a long-term care policy, they should tell prospective communities they intend to use the policy’s benefits to help pay for their care. This way, the communities can show your loved one best-fit options.

No matter where you or your parent are in your search for an assisted living community, our Senior Care Advisors understand the challenges and can offer you personalized guidance based on your personal needs, circumstances, and budget. The early stages of a journey can be frustrating and full of uncertainty. Whether you’re just beginning or are further along, our advisors are ready to offer their guidance at no cost to you.

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References

Administration for Community Living. (2020, February 18). What is long-term care insurance?
Genworth. (2022, June 6). Cost of Care Survey.
American Association for Long-Term Care Insurance. (2022). Long-term care insurance facts – Data – Statistics – 2022 Reports.
Law Insider. Benefit trigger definition.
Morah, C. (2021, September 21). Elimination periods in disability insurance: How they work. Investopedia.

Meet the Author

Haines Eason

Haines Eason is a sandwich generation caregiver and senior copywriter at OurParents. He’s served as senior and managing editor with the company and has covered nearly all senior-relevant topics. He holds bachelor’s and master’s degrees from the University of Montana and Washington University in St. Louis, respectively.

The information contained in this article is for informational purposes only and is not intended to constitute medical, legal or financial advice or create a professional relationship between A Place for Mom (of which OurParents is a trademark) and the reader. Always seek the advice of your health care provider, attorney or financial advisor with respect to any particular matter and do not act or refrain from acting on the basis of anything you have read on this site. Links to third-party websites are only for the convenience of the reader; A Place for Mom does not recommend or endorse the contents of the third-party sites.

Does Long-Term Care Insurance Cover Assisted Living?