What are my financial aid options?

Helping a parent transition to assisted living can be both emotionally and financially taxing. In the U.S., most assisted living is paid for out-of-pocket, but there are several specific programs and strategies—ranging from federal benefits to tax breaks—that can help bridge the gap.

1. Government Assistance Programs

While Medicare does not pay for the room and board (rent) of assisted living, other government avenues exist:

• Medicaid Waivers: Many states offer Home and Community-Based Services (HCBS) waivers. These programs pay for the "care" portion (bathing, medication management) but usually not the rent. Eligibility is based on low income and limited assets.

• Veterans Benefits (Aid and Attendance): If your parent (or their spouse) was a wartime veteran, they may qualify for the Aid and Attendance pension. This is a monthly, tax-free payment added to their VA pension to help cover the cost of care.

  • Max benefit (2025/2026 approximate): Up to ~$2,400+ per month for a single veteran and ~$1,500+ for a surviving spouse.

• Social Security & SSI: Supplemental Security Income (SSI) can sometimes be used to pay for room and board in some states, though the monthly amount is often much lower than the actual cost of a private facility.

2. State-Specific Programs

Some states have "State-Funded Care Programs" that aren't Medicaid but are designed for seniors who are just above the Medicaid income limit but still cannot afford a private facility.

3. Utilizing Parental Assets

Before using your own savings, check if these common "asset-to-cash" conversions are possible:

• Long-Term Care Insurance: Check if your parent bought a policy years ago. These often have a "daily benefit" that triggers once a person needs help with two or more "Activities of Daily Living" (ADLs) like dressing or eating.

• Life Insurance Conversions: Some life insurance policies allow "accelerated death benefits" or can be sold in a "life settlement" to pay for immediate care.

• Reverse Mortgages: If they still own a home but only one parent is moving to assisted living, a reverse mortgage can provide a lump sum or monthly income. If both move out, the home is typically sold to fund the care.

Wait, what about taxes?

4. Tax Benefits for Adult Children

If you are personally paying for your parent's care, you might be able to recoup some of those costs through the IRS:

• Claiming a Parent as a Dependent: You may be able to claim your parent as a dependent if you provide more than half of their financial support and their gross income is below a certain threshold ($5,200 in 2025).

• Medical Expense Deduction: You can deduct "unreimbursed medical expenses" that exceed 7.5% of your Adjusted Gross Income (AGI). This can include the care portion of an assisted living bill (and sometimes the entire bill if the parent is there primarily for medical care).

• Dependent Care Credit: If your parent lives with you but attends an adult day care center while you work, you may qualify for the Child and Dependent Care Credit.

Book an appointment with our financial advisor to discuss your options.