If your parent is starting to experience symptoms of Alzheimer’s disease or another type of dementia, you may be wondering about next steps. Memory care communities are safe, residential environments that allow seniors to age in comfort with the amenities, activities, and therapies needed to slow cognitive decline. However, the benefits of memory care often come with a steep price tag. Understanding how to pay for memory care can help you secure your loved one the care they need.

Key Takeaways

If your parent is starting to experience symptoms of Alzheimer’s disease or another type of dementia, you may be wondering about next steps. However, the benefits of memory care often come with a steep price tag. Understanding how to pay for memory care can help you secure your loved one the care they need.
Medicare, Medicaid, and VA benefits help cover the medical costs of memory care. If your loved one qualifies for these programs, they can greatly reduce the costs of dementia care.
Most families pay for memory care with personal assets. Savings, pensions, and home equity can cover dementia care costs.
There are ways to save money on memory care. Tips about location, move-in dates, and tax credits can save your family money.

How much does memory care cost?

The price of memory care varies greatly depending on the location of a community, the amenities it offers, the apartment floor plan you choose, and more. In some states, you may be able to find memory care for as low as $2,500 a month, while luxury communities in other locations may charge as much as $10,000 a month.

With such a wide price range, it can be helpful to consider the median cost of memory care across the United States is $5,430 a month.^[01]

Depending on your family’s financial situation, over $5,000 a month may seem like a lot to spend on a memory care community. However, with the right resources and information, you can offset some costs for a more reasonable rate.

Memory care payment options

Knowing which resources your loved one can use to offset the costs of memory care can reduce your family’s financial burden. It’s worth noting that while some of these options can be used to pay for a memory care community directly, others can pay for dementia care in other residential settings or at home, if that’s what your relative prefers.

Below, we’ll explore the following resources, as well as some lesser-known perks they provide:

Medicare
Personal assets and savings
VA benefits
Medicaid and other state-funded programs
Home equity
Life insurance

Let our care assessment guide you

Our free tool provides options, advice, and next steps based on your unique situation.

Medicare

Medicare is a federally funded health insurance program available to all adults over the age of 65 in the United States, as well as to younger people with certain disabilities, end-stage renal disease, and ALS. As of September 2022, the number of seniors enrolled in some type of Medicare program exceeded 65 million.^[02]

Medicare will pay for some aspects of memory care, but not rent or assistance with daily personal care tasks. The benefits apply exclusively to medical needs. This means that help with activities of daily living (ADLs), such as dressing, bathing, eating, and using the toilet are not covered, since they’re classified as nonmedical services.

Some medical services that may be offered in memory care communities and are covered by Medicare include:

Purchase and use of durable medical equipment (DME)
Inpatient care for clinical research studies
Annual wellness visits 12 months after enrollment
Inpatient hospitalization for an injury or illness
Hospice care costs for pain management and relief in end-stage dementia
Up to 100 days of skilled nursing care that meets
Medicare requirements
Cognitive impairment assessment and diagnosis ^[03]

Medicare Advantage plans

Medicare Advantage plans cover the same benefits listed above, plus other potentially helpful services for seniors with Alzheimer’s disease or other types of dementia. These plans are offered through private, Medicare-approved companies. The cost of a Medicare Advantage plan varies significantly from one state to another, but you can expect to pay a separate premium for these extra benefits.^[04]

These potential benefits may cover or provide prescription drug coverage for dementia medication, in-home memory care beyond 35 hours a week, and other medical supplies and services with an annual cap on out-of-pocket expenses.

Medicare Advantage plans include special needs plans (SNPs). These offer benefits for seniors enrolled in Medicare who have specific chronic conditions or medical concerns, including diagnosed dementia and other memory-related neurological disorders.^[05]

Personal assets and savings

The majority of families pay for memory care using personal assets and savings. Some seniors may have pensions or other retirement savings, while others rely on their adult children or other relatives to cover memory care costs.

Assets frequently used to pay for memory care include pensions, 401(k) or IRA plans, savings accounts, stocks, and bonds.

VA benefits

The Department of Veterans Affairs (VA) sponsors many benefits that can help senior veterans and their families cover the cost of memory care. Depending on the program, the VA may offer benefits that cover both medical and personal care for veterans with dementia. The VA covers memory care costs for eligible veterans through programs and pensions. These include the VA pension, Aid and Attendance benefits, and the Veteran-Directed Care program. If your loved one is a veteran, you can on learn more about these programs the VA’s website.

Medicaid

Medicaid is a public health insurance plan for people with limited income and financial resources. Qualifying seniors with Alzheimer’s or another type of dementia may receive different benefits based on their state of residence. In some states, Medicaid will cover dementia care in your loved one’s home. In other states, memory care services must be provided in a Medicaid-certified care home.

Medicaid offers broader benefits than Medicare for people diagnosed with dementia. In some cases, Medicaid may cover the cost of personal care. Plans may also pay for the following for a person with dementia:

Physician services
Prescription drugs designed to offset cognitive decline
Inpatient and outpatient hospital services
Transportation to medical and neurological appointments
Laboratory and X-ray services ^[06]

Seniors must select an assisted living or memory care community that’s Medicaid-certified in order to receive covered dementia care and other medical benefits within the facility. Only about 50% of assisted living and memory care providers are approved by Medicaid, so make sure to narrow your search to qualifying communities if your loved one plans to pay for dementia care with Medicaid benefits.^[07]

Institutional long-term care

Institutional long-term care is a Medicaid-sponsored program for seniors who need nursing or long-term care in a residential facility. These facilities must be licensed and certified by the state, and they should offer long-term care, skilled nursing, and rehabilitation. This is an ideal plan for someone who has Medicaid if they need both memory care for dementia and significant health care assistance. Benefits will cover room and board, memory care, personal care, nursing, and therapy services.

Talk with a Senior Care Advisor

Our advisors help 300,000 families each year find the right senior care for their loved ones.

Home equity

If your parent owns their home, the value of this asset can be used to pay for memory care. Selling the house can provide a lump sum to cover the costs of a memory care community, while renting the home can cover mortgage payments and provide additional income to put toward memory care costs.

In some situations, seniors may qualify for a reverse mortgage, which allows them to convert equity in their home into tax-free income. However, certain stipulations may apply.

Life insurance

Many people are surprised to learn that life insurance benefits can be used to pay for care prior to a senior’s death. If a policyholder is diagnosed with a terminal illness, they may qualify for accelerated benefits, also called living benefits. This means they can borrow funds from their life insurance policy to pay for memory care. The amount they borrowed, plus additional fees, will be deducted from their death benefit.

Your loved one may also be able to surrender or sell their life insurance policy to a third-party for a lump sum payment. In this situation, policy beneficiaries will not receive a payout upon death, and the insured will only be paid a fraction of their policy amount.

How to save money on memory care

As mentioned above, memory care costs can vary greatly depending on your parent’s circumstances. If you hope to help your parent save money on memory care, consider the following tips.

Look for deals and move-in incentives

When you and your loved one tour memory care communities, ask if they offer any specials or incentives. Sometimes you can save money by paying for a number of months up front or by selecting a specific floor plan.

Find a roommate

A roommate may provide additional companionship and comfort, and splitting the cost of a two-bedroom apartment can be less expensive than paying in full for a studio or one-bedroom.

Move in at the end of the year

If your parent doesn’t need memory care urgently, they may be able to save money by moving in November or December. Prices often go up at the beginning of each calendar year, and communities often wish to increase occupancy for end-of-year reports. They may reduce costs to do so.

Select a less expensive location

If your family is flexible and able to travel, consider communities in less expensive locations. For example, if your loved one lives in a large metropolitan area, a community in the suburbs or a nearby small town may cut down on costs.

Use tax credits for dementia care

Tax credits, such as the Credit for the Elderly or the Disabled, can be claimed by an adult child supporting a parent with dementia if they cover at least half of the financial assistance their parent needs. While this specific credit helps offset federal taxes, some states have their own credits available as well.

How to find the right memory care community

If your loved one is experiencing cognitive decline or if they’ve received a dementia diagnosis, it may be time for memory care. If you and your family determine that your loved one with dementia needs extra care in a community or at home, OurParents can help you find the right fit.

Our Senior Care Advisors can answer any questions you may have, discuss your loved one’s budget and needs, and help schedule tours with local communities, all at no cost to you.

SHARE THE ARTICLE

References

A Place for Mom. (2023). Senior Living Price Index.
Center for Medicare Advocacy. (2023, January 12). Medicare enrollment numbers.
United Healthcare. (2023). Does Medicare cover Alzheimer’s care?
Medicare.gov. Compare Original Medicare & Medicare Advantage.
Centers for Medicare and Medicaid Services. (2022, November 15). Medicare special needs plans.
Centers for Medicare and Medicaid Services. Medicaid. Medicaid.gov.
American Health Care Association. Facts & figures.
Centers for Medicare and Medicaid Services. Institutional long term care. Medicaid.gov.

Meet the Author

Claire Samuels

Claire Samuels is a senior copywriter at OurParents, where she helps guide families through the dementia and memory care journey. Before transitioning to writing, she gained industry insight as an account executive for senior living communities across the Midwest. She holds a degree from Davidson College.

Reviewed byDenise Lettau

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.

How to Pay for Memory Care: Insurance, Resources, and Tips