Can Medicare and Medicaid Help Offset Assisted Living Costs?

Assisted living communities offer a safe and supportive lifestyle that brings real peace of mind. Yet, for many seniors and their families, the cost – on average $5,900 per month, according to a recent report by CareScout – is a major concern and sometimes even a barrier to accessing the quality of life these communities offer.

Although there are ways to help offset the cost of assisted living, many people are surprised to learn that it is typically paid out of pocket.

“One of the most common questions we hear is, ‘Can Medicare or Medicaid help cover these expenses?’” says David Schless, President and CEO of the American Seniors Housing Association (ASHA). “The short answer is—maybe. Medicare generally offers limited support, while Medicaid may provide more assistance, depending on eligibility and state-specific programs.”

If you’re exploring options to help manage the cost of assisted living, it’s important to understand how Medicare and Medicaid work, how they can contribute and where their limits lie.

Here, we answer some of the most frequently asked questions about how Medicare and Medicaid apply to senior living:

What Does Medicare Cover in Assisted Living?

While Medicare is invaluable for medical expenses, it does not cover long-term assisted living costs such as rent, meals, and most personal care services.

If a resident in an assisted living community needs medical treatment, however, Medicare may cover the treatment, but not the cost of living in the community itself. Here’s a look at what Medicare can cover:

• Short-term skilled nursing care after hospitalization (up to 100 days under certain conditions)
• Limited home health services 
• Some outpatient therapy and durable medical equipment
• Prescription drug coverage through Part D or Medicare Advantage plans

Does Medicaid Pay for Assisted Living Costs?

Medicaid, on the other hand, can be a source of more financial support for many families. Unlike Medicare, Medicaid can offer long-term care coverage for those with limited income and resources. While Medicaid does not typically cover room and board in an assisted living community, it may help offset service-related costs for low-income seniors.

How Medicaid can help:

• Many states offer Home and Community-Based Services (HCBS) waivers or state plan options that pay for services like personal care (bathing, dressing, mobility), skilled nursing services, case management, medication management and sometimes even meals and housekeeping. Each state sets its own rules, benefits, and eligibility criteria. Some states may have waiting lists for waiver programs.
• State Supplementary Programs (SSPs) provide cash assistance—often alongside Supplementary Security Income (SSI) —that can be used toward rent in licensed communities.
• In certain states, Medicaid-approved assisted living communities may offer bundled rates that include a portion of room and board, with support from housing subsidies or state grants.
• “Medically needy” programs may allow individuals who exceed income limits to spend down on care costs, potentially including housing-related expenses.

You can learn more about Medicaid coverage for assisted living here.

Medicaid Nursing Home Coverage Explained

Medicaid is the primary payer for long-term care in nursing homes for seniors who meet income and asset eligibility requirements. Unlike Medicare, Medicaid does cover both medical care and room and board in a certified nursing facility. Coverage includes 24/7 nursing care, meals, personal care assistance, medications and therapies.

To qualify, residents typically must demonstrate both financial need and a medical necessity for nursing home-level care. Many nursing homes accept Medicaid, but not all, so it’s important to confirm the center’s participation in the Medicaid program.

Do Medicare and Medicaid Cover Any of the Costs in an Independent Living Community?

Some healthcare services may still be covered, but housing, meals and lifestyle services are considered private-pay expenses.

How Do I Determine Eligibility?

Both Medicare and Medicaid have specific criteria. Put simply:

• Medicare Assisted Living: Available to adults age 65+ or younger people with qualifying disabilities.
• Medicaid Assisted Living: Requires meeting state-level income and asset limits. Some states allow higher income levels if care needs are high enough.
  If you qualify for both, you may be considered “dually eligible.” Special programs are available that combine benefits and may improve access to care. See if you’re eligible here.

Are Assisted Living Expenses Still Tax Deductible With Medicare or Medicaid?
Being on Medicare or Medicaid doesn’t prevent you from claiming eligible tax deductions, but:

• You can only deduct out-of-pocket costs (not amounts paid by insurance or Medicaid).
• If Medicaid covers most of your care, your eligible deduction may be minimal.

See what assisted living deductions are tax-deductible here.
See IRS guidance on deductible long-term care expenses here.

How Can I Plan Ahead?

Getting financial help for senior living starts with early planning and state-specific research. Here’s what you can do:

• Review your financial situation with a trusted advisor
• Apply for Medicaid through your state’s health department
• Talk with the assisted living community about what services may be Medicaid-covered
• Keep medical documentation up to date to prove eligibility for care-based programs

Find Community

While Medicare offers limited coverage for medical services in assisted living, it does not pay for housing or personal care. Medicaid may offer more substantial support—particularly for those who meet state-specific income and care requirements. By understanding how these programs work and planning ahead, you can make informed decisions that bring quality care within reach.

To explore your options or find a senior living community that fits your needs, use our community locator tool  or speak with one of our advisors today.

Where You Live Matters

Where You Live Matters is powered by the American Seniors Housing Association (ASHA), a respected voice in the senior housing industry. ASHA primarily focuses on legislative and regulatory advocacy, research, and educational opportunities and networking for senior living executives, so they can better understand the needs of older adults across the country.