How to Pay for Assisted Living: Options Beyond Medicaid
For most families, the question comes up quickly once assisted living enters the conversation: how do we pay for this?
Medicaid does cover assisted living in Wisconsin for those who qualify, but many families either do not qualify or have assets that put them above the income thresholds. The good news is that there are more options than most people realize, and most families use a combination of several.
Here is a plain-language guide to the most common ways families pay for assisted living care.
Private Pay: The Starting Point for Most Families
The majority of assisted living residents start out as private-pay residents, meaning they pay out of pocket using a mix of savings, retirement accounts, Social Security income, and proceeds from selling a home.
Costs vary significantly depending on the community and the level of care needed. Smaller, residential-style communities often cost less than large institutional facilities, and may offer a more personal experience as well.
The key planning move is to calculate your loved one’s monthly income sources (Social Security, pension, investment withdrawals) and compare that to the monthly cost. The gap, if any, comes from savings or other strategies below.
Long-Term Care Insurance
If your parent purchased a long-term care insurance policy, now is the time to use it. These policies typically activate once a person needs help with two or more Activities of Daily Living (ADLs), such as bathing, dressing, or eating.
Look for the original policy documents or call the issuing company. The insurer will send a claim packet and may require an assessment from a nurse or physician to confirm eligibility. Once approved, benefits are usually paid monthly directly to the family or to the care community.
Many families are surprised to learn they have this coverage. Check files, safe deposit boxes, or contact an insurance agent who can help search for lost policies.
VA Aid and Attendance Benefit
If your loved one or their spouse served in the military, they may qualify for the VA’s Aid and Attendance benefit, one of the most underused financial resources for senior care.
This benefit can pay up to several thousand dollars per month toward assisted living costs for qualifying veterans or surviving spouses. The application process takes time, so starting early matters.
A VA-accredited claims agent can help with the application at no cost. Veterans Service Organizations like the VFW or American Legion are a good starting point.
Life Insurance Conversion Options
An existing life insurance policy may be worth more right now than its death benefit suggests.
Life settlement: Sell the policy to a third party for a lump sum, typically 20-60% of the face value. The buyer keeps the policy and eventually receives the death benefit.
Accelerated death benefit: Many policies include a rider that allows the policyholder to access a portion of the death benefit while still alive if they have a qualifying health condition. Check the policy documents or call the insurer.
Policy surrender: If the other options do not apply, surrendering the policy for its cash value provides immediate funds, though typically less than a settlement.
Bridge Loans for Senior Care
If a parent is moving into assisted living and plans to sell a home to cover costs, there can be a gap of several weeks or months between care starts and when the home sale closes.
Senior care bridge loans are short-term loans designed specifically for this situation. They cover the cost of care during the gap and are repaid from the home sale proceeds. Interest rates are higher than traditional mortgages, so they work best as a short-term solution rather than a long-term strategy.
Ask the assisted living community if they have relationships with bridge loan providers, as many have referrals available.
Reverse Mortgages (for Couples)
If one spouse is moving to assisted living and the other remains in the home, a reverse mortgage can convert home equity into monthly payments or a line of credit without requiring a sale.
This only works if at least one borrower continues living in the home as a primary residence. Once the home is vacated by both parties, the loan becomes due.
Combining Sources: What Most Families Actually Do
It is rare for any single source to cover the full cost of assisted living over time. The typical approach is to combine sources: Social Security and pension income cover a portion, personal savings cover the rest month-to-month, and long-term care insurance or VA benefits offset a significant share if available.
Working with a financial planner or elder law attorney who specializes in senior care can help you build a plan that extends resources as long as possible.
If you are beginning this process and looking at options in Milwaukee, the team at assisted living in Milwaukee can walk you through what to expect in terms of costs and levels of care.
For families in the north Milwaukee area, Magnolia House near Brown Deer is a smaller residential community where staff can discuss care costs in detail.
Starting the Conversation Early
The families who feel most prepared tend to be the ones who started these conversations before a crisis forced the issue. Knowing what resources exist, where the policy documents are, and what a realistic monthly budget looks like takes the pressure off when the time comes.
Assisted living is a significant commitment, and the financial piece is just one part of a larger planning process. The care team at any community you visit should be willing to walk through costs transparently, help you understand what is included, and point you toward community resources if needed.