If you are looking into memory care, you probably already know that it can cost in the thousands of dollars per month. Many adult children and caregivers wonder how they’ll pay for it when it comes time. What options are available?
Here are some ways to pay for memory care:
- Personal savings
- Medicare
- Medicaid
- Long-term care insurance
- Life insurance
- Bridge loans
- Tax credits
- State programs
- Home equity
- Social Security
- Retirement money
- Veterans’ benefits
The exhaustive list above proves that you have many ways to make memory care affordable and attainable.
This guide will assess your options, including the pros and cons, to help you decide how to fund memory care.
11 Ways To Pay For Memory Care
With skyrocketing dementia care costs, it’s unsurprising that so many adult children and caretakers seek alternative avenues to pay for service.
Let’s review your payment options from the intro, including how each works and the advantages and disadvantages.
1. Personal Savings
Depending on your relationship with the dementia patient, you might be legally permitted to dip into their personal savings to pay for their care.
If not, you might take from your personal savings to do it.
This is a beneficial choice at the moment, but the well will eventually run dry.
Even if you have a full-time job and hire an in-home caregiver for a dementia patient, you’d likely still hit a deficit eventually.
According to ZipRecruiter, the average American in 2023 earns $4,880 a month and $58,563 a year.
As you’ll see further down in this article, in-home dementia care from a professional caregiver costs an average of $4,580 a month.
If you earn the monthly average, you’d have only $300 left per month. That money would have to cover all your expenses, including electricity, cable and internet, water, phone, mortgage or rent, and food.
Even if you’re a super saver, you still can’t stretch $300 to pay for all those expenses.
If you don’t have a full-time job because you’re caring for a dementia patient, your savings will dry up even faster without an income stream.
Using the dementia patient’s personal savings to pay for their care will eventually leave you without funds.
2. Medicaid
If the dementia patient is a candidate for Supplemental Security Income or SSI, they could receive Medicaid.
However, the qualifications vary by state, so check your state’s rules. If a viable option, Medicaid can make paying for dementia care more reasonable.
3. Long-Term Care Insurance
Senior insurance, such as long-term care insurance, can make memory care more affordable. Not all long-term care insurance covers memory care, but many policies do.
The policy might provide the entirety of the monthly fees or some of them, but that should relieve your financial burden.
4. Life Insurance
The dementia patient’s life insurance could be an option to pay for memory care. You can exchange the amount in the policy for a lump sum.
However, you will traditionally receive the money in monthly installments.
You would need access to the dementia patient’s life insurance policy, which usually requires you to be an adult child, partner, or caretaker.
Further, if you use their life insurance money to pay for memory care, there will be little to nothing left after their death.
5. Bridge Loans
A bridge loan requires the dementia patient to apply for it.
The loan is intended to assist with memory care expenses and provide the funds the dementia patient and their caregiver require. However, that comes with two caveats.
First, bridge loans are not intended as a long-term payment option. You also won’t want to take out several bridge loans considering the loans have high interest payments.
You should prioritize paying back these loans as soon as you’re able.
6. Tax Credits
Do you pay for medical expenses, medications, and other treatments the dementia patient receives? You might be eligible for tax deductions and credits.
However, this varies by state, and even if you’re eligible, shifting tax laws mean that might not be the case forever.
Tax credits only apply for the prior year, so if you became a caregiver this year, you would have to wait until next year to receive tax credits.
That can leave you in the lurch figuring out how to pay for memory care now.
7. State Programs
Your state might have a program in place that can help you manage the costs of dementia care.
The program will not likely pay for the entire cost outright, but some financial help is better than none.
State programs might be short-term or long-term and are always susceptible to funding changes influencing how much a program can pay.
8. Home Equity
Home equity can help pay for dementia services. The patient can remortgage their home or rent it out.
They can also sell the property and use the funds to pay for memory care, especially if they plan to live in a facility.
Caretakers can also look into home equity, renting or remortgaging their homes to make dementia care more affordable.
However, this is a riskier position for you, as you’ll likely want to stay in your home, so make sure home equity doesn’t destroy your financials.
9. Social Security
The US Social Security Compassionate Allowance Program for retired seniors helps them unlock their benefits.
This program can cover medical care, disability care, and memory care, among other medical treatments.
Dementia patients may also be eligible for Social Security Disability Insurance or SSDI if they received their diagnosis before they turned 65.
10. Retirement Money
Speaking of retirement, the money a senior socked away for their golden years can go toward paying for memory care.
This might seem unfair at first, but dementia is incurable and will only get more severe.
The senior sadly won’t have the future they envisioned, but the money was set aside by them, for their use, and this is definitely a time that it’s needed.
11. Veterans’ Benefits
If you are a veteran and have a disability rating, you can seek veterans’ benefits, like a VA Dependent Parent Benefit.
According to Benefits.com, a dependent with no children or spouse can get $476.69 to $1,214.68 a month at a rating of 30 to 60 percent.
That’s not enough to cover memory care costs, so you’ll likely have to rely on veterans’ benefits in combination with other financial assistance.
What Is The Monthly Cost Of Caring For A Patient With Dementia?
Dementia care is more than mentally, physically, and emotionally costly. It’s financially expensive as well.
If you opt to take care of a dementia patient at home, you’re responsible for paying for everything.
This includes such things as personal care supplies, prescription medications, safety features and devices, medical equipment, medical treatments, transportation, food, bedding, and other miscellaneous care expenses.
Hiring a professional caregiver will make in-home care even costlier, but moving the dementia patient to a facility is also expensive.
The Alzheimer’s Association estimates that in-home care provided by a non-medical home health aide costs $1,145 a week and $4,580 a month. That’s $54,960 a year.
Assisted living can cost $4,774 per month, the Alzheimer’s Association notes, but the fees can vary depending on where you live.
Using that number as the baseline, you would spend $57,289 per year on assisted living for a dementia patient.
A private room in a nursing home costs $315 a day and $115,007 per year.
If you selected a semi-private room for cost savings, nursing home care for a dementia patient still costs $276 per day. You would spend $100,679 a year.
Read our article, How To Tell Your Parent They Are Going To Memory Care.
Will Medicare Pay For A Person With Dementia?
One popular option for paying for care is Medicare, which applies to dementia patients who are Medicare beneficiaries.
Medicare Part A can pay for up to 100 days of inpatient, nursing home, or in-home hospice.
However, this only applies in limited circumstances.
In-home care outside of hospice isn’t covered, unless the person would require living in a nursing home.
That said, per the Centers for Medicare and Medicaid website, “Medicare will pay for some services during every stage of dementia care, such as:
- cognitive assessments
- home safety evaluations
- planning for care
- hospital stays
- prescription drugs — Medicare Part D
helps you pay for the drugs your doctor
prescribes for dementia”
Keep in mind that a Medicare patient under 65 must have had a Social Security disability for 24 months or longer, while those over 65 must be on Social Security retirement benefits.
Medicare Part B requires you to pay a deductible of at least $200. After paying the deductible, beneficiaries must pay 20 percent of the amount approved by Medicare for Part B insurance.
What Happens To Dementia Patients With No Money?
What if a dementia patient has no money or runs out of funds? Assisted living facilities and nursing homes will evict a patient who cannot pay.
The person may be able to receive Medicaid in this situation. Also the family can seek financial assistance through the other options above.
However, if a senior cannot receive financial help from these sources, they will become a ward of the state.
As a ward of the state, they receive government protection in their state. They will have a conservator who manages their finances.
They might continue living in their home or sometimes be placed in assisted living or memory care in a nursing home through the state.
