Memory Care Costs and Ways to Pay

An alternative to at-home care for someone with dementia is a residential community that specializes in dementia care. Known as “memory care,” such housing is increasingly under development as cases of Alzheimer’s disease and other forms of dementia rise.

Demand still outpaces supply, which can make memory care hard to find and get into, especially outside of larger cities. Memory care also costs more than most forms of eldercare because it’s specialized, long term, and residential. On the upside, families find peace of mind in a housing setting tailored to the unique needs of someone with a progressive cognitive disorder — which has made it an increasingly popular option.

Here’s what to know about paying for memory care:

As of 2010, about 17 percent of residential care communities had dementia special care units, with 6 percent serving adults with dementia exclusively and another 11 percent having a distinct unit, wing, or floor designated as a dementia special care unit, according to the National Center for Health Statistics. Just over half of all nursing homes have a special Alzheimer’s unit, according to the Alzheimer’s Association’s 2014 report.

In a memory care unit (also called a special care unit), you can expect to find:

• An understanding of the special needs of those with dementia and how they change over time
• A secure physical environment that keeps residents safe (such as secure doors with alarms, an enclosed courtyard, or special monitoring)
• Staff with special training in dealing with dementia (who can provide more respectful communication and reduce reliance on medications)
• Activities tailored to the needs of those with dementia (such as arts or sensory programs) to enhance quality of life and functioning
• A private or semi-private room, meals, and personal help, with a lower staff-to-resident ratio

Because it’s specialized, memory care tends to cost more than regular care, requiring more training, more hands-on care, and more personnel (a lower staff-to-resident ratio). Assisted living settings usually cost less than nursing homes (where residents require more intensive care). According to the Alzheimer’s Association the average cost of memory care is at least $48,000 per year ($4,000 per month) in assisted living settings.

To cover these costs, it helps to form a plan with the input of other family members as well as professionals. Remember that someone with Alzheimer’s can live for many years. Consulting an elder-law attorney or financial planner familiar with eldercare as you map a plan can save you money in the end.

Obvious sources of funds to explore include the person’s personal savings, stocks, bonds, other investments, and pensions. Don’t overlook the liquidation of jewelry, artwork, antiques, collections, or cars, all of which might benefit the owner more as cash than as “stuff.” Many families trade the prospect of heirlooms and inheritance for equally valuable peace of mind now.

If the person with dementia served in the active military, naval, or air service with an honorable discharge, veteran’s (VA) benefits from the U.S. Department of Veteran’s Affairs may apply toward housing costs. Aid may come from the VA’s Community Residential Care program, which is group care in about 1,300 facilities nationwide, or from VA Aid and Attendance, which provides funds for disabled vets who require extra help. (The disability didn’t have to happen during active duty, so Alzheimer’s in the retirement years would apply.)

Medicaid, the joint federal-state program for very low-income elders, covers some long-term costs if the facility accepts Medicaid. Facilities aren’t required to do so, however; according to a 2013 NCHS survey on dementia care, places offering memory care accept Medicaid less often than those without such units. Some locations set aside a limited number of beds for Medicaid patients. Coverage varies by state. (Medicare doesn’t cover residential memory care.) Also, check the federal Benefits.gov or Eldercare Locator for benefit information.

If a life insurance policy provides for “accelerated” or “living” benefits, you may be able to recoup half or more of the face value of the policy. Or the policy may offer a “life assurance” benefit, which pays directly for long-term care, although at a much lower cost than the value of the policy.

If the person in need of residential memory care still owns a home, selling or renting the property can be a way to pay for care. This financial product taps equity in your home to provide funds that are repaid when the house is sold. Spouses who remain in the home or adult children should beware of using a reverse mortgage on their home to pay for another’s care, however. You may need these funds for yourself down the road, and you have no way of knowing how long you’ll need to pay the memory care bills. Always consult a financial planner in advance, since reverse mortgages are more complex than they might seem.

• What percentage of memory care cost is medications?
• Does Medicare cover memory care?
• Does Medicaid cover memory care?
• How much does Medicare pay for memory care facilities?
• How much does Medicaid pay for memory care?
• Are there any additional charges in memory care facilities on top of Medicaid?
• Does insurance cover memory care?
• Does the VA pay for memory care facilities?
• Does Blue Cross Blue Shield cover memory care?
• Will a medical spending account cover a memory care facility?
• How do you pay for memory care?
• Does Social Security pay for memory care?
• What do you do when you can’t afford memory care?
• How do you pay for memory care without selling your house?