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Son discussing how to pay for a memory care facility with his elderly father.
A memory care facility is exclusively for people with dementia, Alzheimer’s disease, or other cognitive illnesses. 

Dementia and Alzheimer’s are progressive memory diseases with no definitive time frame. Once the disease starts to progress and people gradually lose their cognitive abilities, further assistance with ADLs (Activities of Daily Living) will become necessary. People with severe dementia usually need assistance with bathing, cleaning, meal preparation, and over time, ambulation as conditions worsen. 

Caring for someone with dementia or Alzheimer’s is both physically and emotionally challenging, not only for the person with dementia but for their families, too. When families receive news of dementia, they will undoubtedly discuss how to pay for memory care. Memory care facilities are expensive because they have high overheads. Around-the-clock care, additional monitoring, and surveillance equipment are all needed to ensure residents are adequately cared for. 

Low-income families struggle to pay for memory care, therefore, opting to keep their loved ones at home rather than admitting them into an assisted living or memory care facility. However, there are several funding resources available that can provide financial assistance. Families should research these options to find the best care option and funding available for their loved ones. 

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What Is the Difference Between Memory Care and a Nursing Home?

It can be confusing for families to understand what is the difference between memory care and a nursing home, mainly because both facility types provide similar services. While both facilities are places for seniors who need help with ADLs, a memory care facility is exclusively for people with dementia, Alzheimer’s disease, or other cognitive illnesses. 

The Nature of a Memory Care Facility

Every feature, program, and service within a memory care facility is focused on managing and preventing aggressive outbursts, a common symptom for people with dementia. Other symptoms include stress or confusion; memory care facilities have subtle design features to create a calming and therapeutic ambiance.

Common areas like TV rooms are painted with bright colors and have lots of natural light, which creates a calming atmosphere. While eating areas may have a fish tank because it is common for people with dementia to lose their appetite, and watching fish is known to stimulate appetites.

Hallways have circular layouts with no dead ends in order to prevent wandering, a common behavioral pattern for dementia patients. Special security locks are installed to prevent residents from leaving in a confused state of mind and monitoring and surveillance within the facility. These facilities also feature specially trained staff with dementia-specific training focusing on communication techniques to minimize anxiety. 

The Nature of a Nursing Home

The care provided at a nursing home is more general, catering to a wide variety of medical conditions and needs. Nursing homes tend to be more clinical-based with residents needing an intermediate level of care for various medical conditions.

Nursing homes usually offer medical or functional care. Medical care can include catheters, IVs, medication management, or wound care. At the same time, functional care includes ADL assistance like bathing, eating, dressing, and housekeeping. The amount of assistance needed depends on the resident and their individual needs. 

Residents in nursing homes can typically function better than residents in memory care units. Therefore, nursing home residents are given more autonomy and freedom; residents can come and go as they please and receive guests. Still, they are not left unattended. Rather, there is also around-the-clock care and supervision, so any medical conditions are appropriately monitored and treated. 

Deciding Between a Memory Care Facility and a Nursing Home

As mentioned earlier, families must seriously consider how to pay for memory care or a nursing home before making a decision, as the cost of such long term care is expensive. Families with elderly relatives living with dementia should start their research by asking, does Medicare or Medicaid pay for memory care?

Medicare pays for eighty percent of nursing home costs for the first one hundred days but not beyond. Unfortunately, Medicare does not cover any memory care costs for memory care. Therefore, most families receiving Medicare support will have to pay out of their own pockets. Seventy percent of the cost is borne by families — either through unpaid care or from long term care expenses. 

On account of the strict eligibility rules under Medicare, many caregivers for people living with dementia experience substantial financial difficulties, as the average price for a one-month stay in a memory care facility costs between $4000-$8000, depending on the state. 

Meanwhile, Medicaid will pay for all nursing home costs for those who are eligible, usually those from low-income backgrounds. And some states do have a Medicaid assisted living waiver that can contribute towards the monthly cost of memory care. Individual states dictate their own eligibility requirements. For example, the assisted living waiver in Mississippi is limited to people aged twenty-one years and older. 

Young woman trying to figure out how to pay for memory care for her elderly parents.
Understanding how to pay for memory care will prevent unnecessary financial strain and stress. 

To qualify for the waiver, all applicable candidates must meet certain clinical eligibility requirements. Take these examples for the state of Mississippi:

  • ADLs
  • Instrumental activities of daily living
  • Cognitive deficits
  • Sensory deficits
  • Client behaviors
  • Medical conditions
  • Medical services

Meanwhile, in Texas, the STAR+PLUS waiver—applicable for the elderly (sixty-five years and older) and disabled Texans who require a high level of care—covers medical and non-medical care, including personal care, adult daycare, home modification assistance, and personal emergency response systems. It also offers the flexibility to choose your own personal caregiver, so friends or family can be hired as caregivers. 

7 Resources on How To Pay for a Memory Care Facility 

We know that dementia and Alzheimer’s disease are expensive for families who bear the brunt of the costs. However, it is also a significant expense for the American government. In 2021, approximately $355 billion was spent on dementia-related expenses, with $239 billion spent through Medicare and Medicaid payments. 

Based on the current trajectory of America’s aging population, by 2050, Alzheimer’s and dementia are estimated to cost more than $1.1 trillion. Undoubtedly, this increase in spending will be a growing concern for the government’s budget plan. At the same time, American citizens with aging parents have the ever-increasing problem of how to pay for a memory care facility. 

There are, however, several funding options that people can pursue in advance or apply for to contribute towards memory care expenses and figuring out how to pay for memory care. These federal and private funding programs can provide the financial help needed for such challenging situations. 

  1. Veterans benefitsThe VA Aid and Attendance program provides a monthly allowance for qualified veterans and survivors. Dementia care, assistance with ADLs, and limited eyesight are grounds that veterans can apply for funding through the U.S. Department of Veterans Affairs. Veterans can apply for the allowance either in person or by completing the VA Form 21-2680
  2. Retirement plansThe Roth IRA or Roth 401(k) are retirement plans to put aside money either independently or through an employer. They are tax-free accounts specifically used to pay for long term care expenses. Depending on how much was put aside, they can pay for the bulk of memory care costs. 
  3. Social securityThe Compassionate Allowance Program is available to people of retirement age who also collect social security benefits. Seniors can apply for compassionate allowances for memory care, disabilities, and other medical conditions. If someone is diagnosed with dementia or Alzheimer’s before retirement age, they can apply for Social Security Disability Insurance (SSDI) benefits to assist with memory care costs. 
  4. Home equity – Seniors’ most significant equity or asset is usually their homes. Therefore, it is common for people to either sell, rent, or remortgage their homes to pay for memory care. 
  5. Bridge loans – These are short-term loans that seniors can apply for to assist with memory care costs. They provide a quick and convenient way to access immediate funds while waiting to liquidate assets or complete a home sale. However, bridge loans typically have high-interest rates. Therefore, people should be wary about the length of time it takes to make the repayments. 
  6. Life insurance policies – Certain life insurance policies can be exchanged for a lump sum to pay for memory care. Depending on the policy, monthly payments are given so seniors can use this money to pay for their monthly memory care costs. 
  7. Long term care insurance – This is specific insurance for senior care only. The coverage usually depends on the policy. However, most long term care insurance covers memory care. If families are still confused about what is the difference between memory care and a nursing home, what type of services the facility provides, and the associated costs, it is advisable to seek further support from a financial planner. 

In some instances, nursing homes with memory care services can be a happy medium provided the dementia symptoms are not too advanced. Therefore, it is worthwhile to research all available options ahead of time to ensure optimum care is given at the lowest cost.   

Why Research on How To Pay for Memory Care Is Important

When someone is diagnosed with dementia or Alzheimer’s, it is only a matter of time before further assistance is needed. Whether families choose to move their elderly relatives to care facilities or become caregivers themselves, they will have to bear a great financial burden, especially with the sharp increase in healthcare costs. 

From 2004 to 2020, the cost for a nursing home facility has increased from 1.88% – 3.80% per year. Annually, that means an increase of $797 and $2,542 for a private room in a nursing home. COVID-19 has resulted in a more rapid rise in costs in the last two years, according to research conducted by Genworth. This is because the pandemic has forced the long term care industry to adopt new health and safety measures. 

With such high prices, there is only so much family members can do to care for their elderly relatives. Therefore, researching the available funding options has never been more critical, especially because understanding how to pay for memory care will prevent unnecessary financial strain and stress. 

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