Income, Assets and Assisted Living Prices

assisted living costsHow income and asset levels influence your cost of assisted living and Medicaid eligibility.

The U.S. government's Medicaid program provides coverage to low-income seniors who need help paying for long-term care. In addition to Medicare (government-sponsored hospital insurance provided to most U.S. citizens aged 65 and older), Medicaid is the third largest federal government expenditure. When it comes time to see if Medicaid can help lower your loved one's assisted living prices, you'll need to get a feel for the income and asset limits she must meet before Medicaid will help with the cost of assisted living.

Assisted Living Prices Today

The MetLife Assisted Living General Costs study of 2008 found that the national average cost of assisted living was $36,000 per year. However, each state's Medicaid office determines the cost of an average monthly stay in an assisted living or nursing facility when providing benefits. Assisted living prices vary greatly depending on location, facility size, available amenities, medical staff and the resident's needs.

When Medicaid Covers the Cost of Assisted Living

Assisted living prices can be significantly lower than nursing home prices because of the different levels of care often provided in the two types of facilities. However, Medicaid will often pay for higher assisted living prices when the qualified individual requires a level of skilled care more commonly offered in nursing homes.

Since Medicaid provides coverage for medical (not merely custodial) care, you may find that your loved one doesn't qualify for coverage while receiving care at an assisted living facility. She may have to wait until circumstances require her to receive more immediate medical attention. So to summarize, Medicaid covers the cost of assisted living only in special situations when skilled nursing care is provided in an assisted living environment. For more information on Medicaid eligibility in your state, contact your local Medicaid office. Or to learn about Medicaid coverage in nursing homes, see our sister Website, Guide to Nursing Homes.

How Your Income and Assets Affect Assisted Living Prices

In addition to medical criteria, Medicaid qualification hinges on a detailed look at your loved one's income and asset levels. Since Medicaid is jointly run by federal and state governments, criteria vary by location. However, a general rule of thumb is that individuals may have no more than $2,000 worth of savings or liquid investments. Some states also limit monthly income to $500 to $1,600. Keep reading to learn more about income and asset limits.


When applying for Medicaid, your loved one's assets will be closely scrutinized to determine eligibility. Applicants with assets (goods, effects, properties, savings, insurance policies, etc.) not exceeding $2,000 are often covered for the cost of assisted living when medically necessary. Some other assets are exempt from Medicaid inquiries and can be maximized to retain personal financial stability while still receiving government help with assisted living prices:

  • A burial plot or separate burial account worth up to $1,500
  • A car valued at up to $4,500
  • A life insurance policy with a face value of up to $1,500
  • A wedding and engagement ring of any value
  • Home equity of up to $500,000 or $750,000 depending on location
  • Personal and household items (sometimes limited in value)
  • Up to about $2,000 in liquid assets including savings accounts


The cost of assisted living for your loved one might be lowered by Medicaid if she meets medical and financial criteria. Monthly income is determined by adding up money received from the following sources:

  • Annuities
  • Dividends and interest from savings or investments
  • Gifts
  • Pensions
  • Rents
  • Royalties
  • Social Security
  • Wages
  • About half of a working spouse's income

While over 30 states do not limit a Medicaid recipient's income level, qualifying individuals in all states must put all of their income toward assisted living prices with a few minor exceptions: 1) a small monthly stipend for "personal needs," 2) Medicare premiums and non-covered medical expenses, and 3) homeowner's upkeep. Talk to An Advisor Today

If you have questions about using Medicaid to help with the cost of assisted living, you can speak directly with one of our elder care advisors, free of charge. Simply call the toll-free number at the top right of this page and a trained advisor will help you find a nearby assisted living or nursing facility that meets your needs and fits your budget. Don't let assisted living prices keep your loved one away from the care she needs! Let our advisors help you find a facility she'll love and you'll feel good about.