8 Ways to Afford Memory Care (Even Without Savings)
Memory care in the United States costs an average of $6,500 per month in 2025, or approximately $78,000 annually. The typical American family approaching retirement has median savings of roughly $87,000. Simple math reveals the problem: one year of memory care can consume nearly all of a family's retirement nest egg.
These numbers explain why "how to pay for memory care" ranks among the most searched questions by families facing dementia diagnoses. The financial reality is stark, but not hopeless. Most families successfully funding memory care use not one payment source but several, strategically layered over time. This comprehensive guide breaks down eight proven payment methods and shows how to combine them effectively, even when you're starting with limited savings.
Understanding the True Cost of Memory Care
Before exploring payment options, understanding what you're paying for helps clarify the financial challenge. Memory care costs $1,000 to $2,500 more per month than standard assisted living, with national averages ranging from $5,400 to $7,800 monthly depending on location and source data.
These costs typically cover 24-hour supervision, specialized staff training in dementia care, secure environments to prevent wandering, structured daily activities designed for cognitive impairment, medication management, help with all activities of daily living, three meals plus snacks, housekeeping and laundry, and
utilities. Most communities use all-inclusive pricing, though some charge separately for higher levels of care or specialized services.
Geographic variation is substantial. Memory care in rural areas or lower cost-of-living states might run $4,000 to $5,000 monthly, while urban markets and higher-cost states routinely exceed $8,000 to $10,000 per month. Washington D.C., California, New York, and Massachusetts consistently rank among the most expensive locations.
1. Private Pay Through Personal Savings and Income
Most families begin paying for memory care using personal resources: retirement accounts, savings, Social Security benefits, pensions, or other income. This represents the most straightforward payment method but requires substantial assets.
For 2025, a single person receiving average Social Security benefits of approximately $1,900 monthly would need an additional $4,600 from savings or other sources to cover $6,500 in monthly memory care costs. Over three years, this totals $166,000 beyond Social Security income.
Retirement account withdrawals require careful planning. Taking large distributions can push you into higher tax brackets, and required minimum distributions at age 73 may already be taxing your income. Consider spreading withdrawals across multiple years or accounts where possible to manage tax liability. Some families find it beneficial to work with a financial planner who specializes in senior care costs to optimize withdrawal strategies.
Investment income from dividends, bonds, or rental properties can supplement memory care costs without depleting principal, though this requires substantial initial investment. Selling a primary residence after a parent moves to memory care represents another common funding source, potentially providing hundreds of thousands of dollars depending on home value and equity.
2. Long-Term Care Insurance
Long-term care insurance purchased years before care is needed can cover significant memory care expenses. Policies typically pay a daily or monthly benefit amount toward covered care services, with benefit periods ranging from two years to lifetime coverage.
In 2025, policy benefits typically range from $150 to $350 daily ($4,500 to $10,500 monthly), depending on the policy purchased. A policy with $200 daily benefits would provide $6,000 monthly toward memory care costs. Most policies include inflation protection that increases benefits annually, crucial for policies purchased decades before use.
The catch: long-term care insurance must be purchased while you're relatively young and healthy. Average annual premiums for a 55-year-old purchasing $165,000 in initial benefits with 3% compound inflation protection run approximately $2,100 for men and $3,700 for women. By age 65, these premiums increase to $2,600 for men and $4,200 for women. Many people find these premiums unaffordable, and nearly half of applicants in their early 70s face denial due to health conditions.
If your parent already has long-term care insurance, review the policy carefully. Some policies require specific care settings, have waiting periods before benefits begin (typically 30 to 90 days), or limit coverage to certain types of facilities. Understanding these details prevents unpleasant surprises when submitting claims.
3. Veterans Benefits (VA Aid & Attendance)
The VA Aid & Attendance benefit provides tax-free monthly income to qualifying veterans and surviving spouses who need help with activities of daily living, making it valuable for memory care funding.
For 2025, maximum monthly benefits are $2,358 for single veterans, $2,795 for married veterans, and $1,515 for surviving spouses. These amounts represent the maximum annual pension rate (MAPR) for those requiring aid and attendance. Actual benefits depend on income, as the VA calculates monthly payments by subtracting countable income from the MAPR.
Eligibility requires wartime service (specific dates apply), a minimum service period, honorable discharge, income below the MAPR, net worth under $163,699 as of 2025, and a need for assistance with activities of daily living. Many families assume they won't qualify due to income, but unreimbursed medical expenses including memory care costs can be deducted from income, often making previously ineligible veterans eligible.
What families often underestimate is the timeline to access certain benefits. VA Aid & Attendance applications typically take six months to one year for approval, sometimes longer. Starting the application process immediately upon diagnosis rather than waiting until care is needed prevents gaps in funding. Working with an accredited VA claims agent or veterans service organization can expedite the process and improve approval odds.
The benefit continues as long as eligibility requirements are met, providing ongoing monthly support that can cover 30-45% of memory care costs depending on facility pricing. When combined with other payment sources, Aid & Attendance significantly extends how long families can afford care.
4. Medicaid
Medicaid covers long-term care for eligible low-income individuals, including memory care services, though coverage specifics vary substantially by state. Unlike Medicare, which doesn't cover long-term residential care, Medicaid is designed to help with custodial care costs.
Medicaid typically covers nursing home care including memory care units in nursing homes for all eligible individuals nationwide. For memory care in assisted living settings, coverage depends on state-specific Home and Community-Based Services (HCBS) waivers. These waiver programs generally cover personal care services, medication management, and specialized memory care programming but not room and board costs.
Financial eligibility requires meeting both income and asset limits. In 2025, monthly income limits for HCBS waivers typically cap at approximately $2,901 (300% of the Federal Benefit Rate), though this varies by state. Asset limits generally restrict countable assets to $2,000 for individuals. "Countable" assets exclude your primary residence (in most cases), one vehicle, personal belongings, and certain other items.
Many families assume they don't qualify for Medicaid due to home ownership or retirement accounts. Medicaid planning strategies including spend-down approaches, qualified income trusts, and proper asset structuring can help families meet eligibility requirements legally. However, Medicaid has a five-year look-back period for asset transfers, meaning gifts or sales below fair market value made within five years of application can result in penalty periods.
The Medicaid application process typically takes 45 to 90 days after submitting complete documentation. Many memory care communities have limited Medicaid beds or waitlists for Medicaid residents, making private pay often necessary initially. Some facilities require one to two years of private pay before accepting Medicaid, so verify admission policies before making placement decisions.
5. Reverse Mortgages and Home Equity Options
For families with substantial home equity but limited liquid assets, tapping home value can fund memory care costs. Several approaches exist, each with different financial implications.
Reverse mortgages allow homeowners age 62 and older to borrow against home equity without monthly payments. The loan is repaid when the home is sold or the borrower passes away. In 2025, FHA-insured Home Equity Conversion Mortgages (HECMs) have a maximum lending limit of $1,209,750. Actual proceeds typically range from 40-60% of home value depending on age, interest rates, and home value.
For a $400,000 home, a 70-year-old might access approximately $200,000 to $240,000 through a reverse mortgage. This amount can be taken as a lump sum, monthly payments, a line of credit, or a combination. Interest rates in 2025 range from approximately 6.75% to 7.5%, with interest and fees adding to the loan balance over time.
Closing costs for reverse mortgages include origination fees (capped at $6,000), mortgage insurance premiums, appraisal fees, and other charges, typically totaling $10,000 to $15,000. These costs can be rolled into the loan amount. Borrowers must continue paying property taxes, homeowners insurance, and home maintenance. Failure to meet these obligations can trigger foreclosure.
Home equity loans or lines of credit offer another option for homeowners who can qualify based on income and credit. These require monthly payments but typically have lower interest rates than reverse mortgages. Monthly payments of $1,200 to $2,000 on a $150,000 home equity loan can be challenging on fixed incomes, making this option work best when combined with other income sources.
Selling the home provides maximum proceeds but eliminates the asset from the estate. Proceeds can be invested conservatively to generate income supporting memory care costs. A $350,000 home sale generating 4% annual returns would produce approximately $14,000 yearly, covering roughly $1,200 monthly toward care.
6. Life Insurance Conversions and Viatical Settlements
Existing life insurance policies represent another potential funding source through several conversion options.
Accelerated death benefits allow terminally ill policyholders to access a portion of their death benefit while living. Many policies include this rider at no additional cost. Eligibility typically requires a life expectancy of 12 to 24 months or less. Benefits generally provide 50-90% of the death benefit, with the remainder paid to beneficiaries upon death.
Viatical settlements involve selling a life insurance policy to a third party for a lump sum cash payment, typically 50-80% of the death benefit depending on life expectancy. The buyer takes over premium payments and receives the death benefit when the insured passes away. Proceeds from viatical settlements are generally tax-free if the insured has a life expectancy of 24 months or less.
Life settlements work similarly for seniors not terminally ill but with life expectancies under 10-15 years. These typically pay less than viatical settlements, often 20-40% of death benefit value. Life settlement proceeds may be partially taxable depending on policy basis and proceeds received.
Policy loans allow borrowing against cash value in permanent life insurance policies without selling the policy. Loan amounts typically max at 90% of cash value. Interest accrues on the loan balance, reducing the eventual death benefit if not repaid. This option works only for whole life, universal life, or variable life policies that have built cash value, not term life insurance.
Converting life insurance requires careful analysis of tax implications, impact on beneficiaries, and comparison to other funding options. A $100,000 policy converting to a $65,000 viatical settlement provides immediate funds but eliminates the larger death benefit family members might otherwise receive.
7. Family Contributions and Resource Pooling
Multiple family members sharing memory care costs represents an increasingly common approach, particularly when no single person can afford full expenses.
Sibling cost-sharing agreements can divide monthly expenses proportionally based on income or equally. A family with three adult children might each contribute $2,000 monthly to cover $6,000 in memory care costs, making an individually unaffordable expense manageable collectively. Written agreements help prevent misunderstandings about contributions, duration, and responsibilities.
Some families structure contributions as loans to be repaid from the parent's estate, documented through formal promissory notes. Others consider contributions as advances on inheritance, reducing estate distributions proportionally. Clear documentation and preferably attorney guidance prevents family conflicts later.
Extended family members including grandchildren sometimes contribute smaller amounts. Five grandchildren each contributing $200 monthly adds $1,000 toward care costs. While no single contribution is large, aggregate support provides meaningful assistance.
Crowdfunding through platforms like GoFundMe has funded memory care in some cases, though ongoing monthly expenses prove more challenging than one-time needs. Community fundraisers work better for short-term gaps than sustained long-term care costs.
8. Community Programs, Nonprofit Assistance, and Employer Benefits
Less common but valuable resources exist through various organizations and programs.
Some nonprofit memory care communities offer charitable care programs or reduced rates for qualifying low-income individuals. Religious-affiliated facilities may provide discounts to members or offer financial assistance based on need. Availability is extremely limited, with long waitlists common.
Alzheimer's Association chapters, Area Agencies on Aging, and local senior services organizations sometimes have small emergency assistance funds or know of local charitable resources. These typically provide short-term help rather than ongoing support.
Some employers offer long-term care insurance as an employee benefit, often at group rates lower than individual policies. A few companies even provide caregiving stipends or emergency care assistance as part of benefit packages. If your parent worked for a large employer or union, investigate whether retiree benefits include any long-term care support.
Adult day programs, often covered by Medicaid or offered on sliding fee scales, can defer memory care placement by providing daytime supervision and programming at lower cost. Average costs run $75 to $100 daily versus $215 for full-time residential memory care.
Combining Multiple Payment Sources: The Real-World Strategy
Here's what families often underestimate: almost no one pays for memory care using a single source from start to finish. The most successful funding strategies layer multiple resources, transitioning from one to another as circumstances change. Understanding how to combine payment sources strategically makes the difference between two years of care coverage and five or more years.
Early stages: Private pay plus VA benefits. Most families begin with private savings supplemented by any available VA Aid & Attendance benefits. Consider a scenario where monthly memory care costs $6,500. The family uses $4,500 from the parent's Social Security and pension, plus $2,795 from VA Aid & Attendance (married veteran rate). This combination covers nearly all monthly costs with minimal savings depletion.
During this phase, families should simultaneously pursue long-term care insurance claims if policies exist and begin Medicaid planning if assets will eventually fall below eligibility thresholds. Starting Medicaid applications before reaching spend-down requirements prevents coverage gaps. The five-year look-back period means gifting assets to family members now creates future Medicaid ineligibility periods, while properly structured Medicaid planning preserves more assets legally.
Transition period: Adding home equity. When savings decline to $50,000-$100,000, many families tap home equity. If the parent no longer lives in the family home, selling provides substantial funds. A $300,000 home sale after paying off a $50,000 mortgage nets approximately $250,000 (after selling costs). Combined with remaining savings, VA benefits, and Social Security, this extends care funding significantly.
Alternatively, if heirs want to preserve the home, a reverse mortgage accessed as a line of credit provides funds without immediate sale. Draw $30,000 annually from reverse mortgage proceeds combined with $28,000 from Social Security and $33,500 from VA benefits totals $91,500 annually, exceeding the $78,000 average yearly memory care cost. The home remains in the family until the parent passes or permanently moves, at which point the reverse mortgage is repaid from home sale proceeds.
Long-term phase: Medicaid plus other sources. Once countable assets fall below $2,000, Medicaid becomes the primary payer. However, even on Medicaid, most families continue using other resources. VA Aid & Attendance can supplement Medicaid coverage since the VA benefit isn't counted as income for Medicaid purposes in many states. Social Security continues providing personal needs allowance funds.
In states where Medicaid HCBS waivers don't cover room and board in memory care facilities, families might pay $2,000 monthly for room and board while Medicaid covers $4,500 in care services. The family needs to fund only the uncovered portion, a much smaller amount than full private pay.
Strategic timing considerations. The order in which you use different funding sources matters significantly. Life insurance conversions provide immediate lump sums but eliminate future death benefits. Using these early means losing that resource when other options might still be available. Conversely, waiting too long to apply for VA benefits or Medicaid means missing months of potential coverage due to application processing times.
A strategic sequence might look like this: Start with Social Security and pension income plus savings withdrawals for the first 12 months while simultaneously applying for VA benefits and beginning Medicaid planning. When VA approval comes through in month 7-12, redirect those funds to replace savings withdrawals, preserving principal. If long-term care insurance exists, file claims during year one, using any benefit payments to replenish depleted savings.
By year two or three, consider home equity options if savings have declined substantially. Year three to five, transition to Medicaid once spend-down requirements are met, supplemented by VA benefits and Social Security. Life insurance conversions serve as emergency backup if unexpected costs arise or other funding sources fall through.
Real example: The Johnson family approach. Mrs. Johnson needs memory care costing $6,800 monthly. Her resources include $120,000 in savings, $1,800 monthly Social Security, a $250,000 home, a $50,000 cash value life insurance policy, and potential VA surviving spouse benefits since her deceased husband served in Vietnam.
Year one strategy: Apply immediately for VA surviving spouse Aid & Attendance. Use $1,800 Social Security plus $5,000 monthly from savings ($60,000 annually). Begin Medicaid planning and review whether home equity access or life insurance conversion offers better terms. Total year one cost: $60,000 from savings.
Year two: VA benefits approved at $1,515 monthly. Reduce savings withdrawals to $3,485 monthly since Social Security plus VA now covers $3,315. Year two savings use: $41,820. Remaining savings: $18,180.
Year three: With savings nearly exhausted, take a $75,000 life insurance viatical settlement. Invest conservatively to generate monthly distributions. Use $4,500 monthly from viatical proceeds plus $3,315 from Social Security and VA. Apply for Medicaid as assets now below threshold.
Year four: Medicaid approved. State HCBS waiver covers $5,000 monthly in care services but not room and board. Pay $1,800 from remaining viatical funds for room and board. Social Security and VA benefits cover personal needs with remainder supplementing room and board costs.
This layered approach turned limited resources into four-plus years of quality care, with Medicaid continuing coverage indefinitely thereafter. Without strategic planning, Mrs. Johnson's $120,000 savings alone would have lasted under two years, forcing crisis-driven placement changes or inadequate care.
Common mistakes in combining funding sources. Families frequently deplete savings entirely before applying for Medicaid, thinking they must be "broke" first. This creates stressful gaps between savings exhaustion and Medicaid approval. Apply when assets reach $20,000-$30,000 above the threshold, allowing time for processing.
Another error involves using home equity too early without considering Medicaid's asset exemptions. In many states, a primary residence is exempt from Medicaid asset calculations up to certain equity limits. Selling the home to pay for care converts an exempt asset into countable cash, potentially delaying Medicaid eligibility. Consulting an elder law attorney prevents these costly mistakes.
Finally, families often fail to apply for all benefits simultaneously. VA benefits, long-term care insurance claims, and Medicaid applications can proceed in parallel. Don't wait for one denial before pursuing another option. Cast a wide net early.
Practical Steps to Start Now
Regardless of your current financial situation, taking these actions immediately improves your ability to afford memory care when needed:
Document everything. Gather all financial information including bank statements, retirement account statements, Social Security award letters, pension information, life insurance policies, property deeds, and vehicle titles. This documentation is required for virtually every application and having it organized saves months.
Get professional guidance early. Consult an elder law attorney specializing in Medicaid planning before spending down assets. Initial consultations often cost $300-$500 and can save tens of thousands through proper asset structuring. Certified Financial Planners with senior care specializations can model different spending scenarios.
Start applications before you need them. If your parent is a wartime veteran or surviving spouse, apply for VA Aid & Attendance at diagnosis, not when savings run low. The six-month to one-year approval timeline means benefits might arrive just as savings deplete. Long-term care insurance claim filing should begin immediately when care starts to avoid running into policy claim deadlines.
Explore facilities' financial options. Some memory care communities offer entry fee models where a large upfront payment reduces monthly costs. Others provide "founder's rates" for early move-ins. A few communities have charitable funds for residents who deplete resources while living there. Ask directly about all financial options and flexibility.
Consider care setting alternatives. In-home memory care using private caregivers or agency staff typically costs $5,000-$8,000 monthly for full-time support, potentially less than residential memory care. Adult family homes or small group homes may cost less than large memory care communities. Licensed residential care homes (6-12 residents) often charge $4,000-$6,000 monthly. These alternatives work best in earlier dementia stages.
The Bottom Line
Affording memory care without substantial savings requires planning, persistence, and creative use of available resources. Most families successfully funding long-term memory care use three to five different payment sources over time, not just one.
Start with realistic cost projections for your specific area. Investigate all eight payment methods described here to determine which apply to your situation. Layer resources strategically rather than exhausting each one completely before moving to the next. Seek professional guidance from elder law attorneys, VA-accredited claims agents, and financial planners experienced with senior care costs.
The average memory care stay lasts three to five years, though some individuals require care for a decade or more. Early planning, aggressive pursuit of all applicable benefits, and strategic timing of different funding sources can stretch limited resources to cover needed care. Families who plan proactively maintain more choices and better outcomes than those forced into crisis-driven decisions when savings run out.
Memory care represents one of the largest expenses most families will ever face, but it's not insurmountable. With the right information and strategic approach, quality care remains achievable even when savings alone fall short.