Memory care is expensive — typically $5,000–$9,000 per month or more. For families paying privately, savings can deplete faster than expected. This guide explains what options are available when funds run low, how to plan ahead, and what happens if savings run out before a plan is in place.
Quick Answer
When savings run out, the main options are Medicaid (if the community accepts it), transitioning to a Medicaid-certified facility, or using bridge financing while Medicaid is pending. Planning ahead — ideally 12–24 months before funds are expected to run out — gives families the most options and the best chance of staying in the current community.
Do not wait until funds are depleted to plan
Medicaid applications take 45–90 days or longer. If a parent's funds run out before Medicaid is approved, the family may face a gap period with no funding source. Starting the planning process 12–24 months before funds are expected to run out is strongly advisable. An elder law attorney can help with spend-down planning and Medicaid applications.
1. Apply for Medicaid (if the community accepts it)
Medicaid is the primary public funding source for long-term care. If the memory care community accepts Medicaid, the resident can apply and — once approved — continue living there with Medicaid covering the cost. Not all memory care communities accept Medicaid; confirm this with the community's business office as early as possible.
→ Does Medicaid Pay for Memory Care?2. Transition to a Medicaid-certified facility
If the current community does not accept Medicaid, the family will need to find a Medicaid-certified memory care community or nursing home. This requires researching available options, getting on waitlists early, and planning the transition carefully to minimize disruption for the person with dementia.
3. Bridge financing while Medicaid is pending
Some families use bridge loans, reverse mortgages, or life insurance policy loans to cover care costs during the Medicaid application period. These are short-term solutions and carry financial risks — consult a financial advisor and elder law attorney before pursuing them.
→ How to Pay for Senior Care While Waiting for Medicaid4. Veterans benefits
If the person with dementia or their spouse is a veteran, VA benefits — including Aid and Attendance — may help cover memory care costs. Aid and Attendance can provide up to $2,300+ per month for eligible veterans and surviving spouses.
→ VA Benefits for Assisted Living5. Long-term care insurance
If the person has a long-term care insurance policy, review the policy carefully for memory care coverage. Many LTC policies cover memory care, but benefit periods, daily maximums, and elimination periods vary. Contact the insurance company to file a claim if not already done.
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Most states require that a person's assets fall below a threshold (typically $2,000 for an individual) before they qualify for Medicaid. The process of spending assets down to this level is called the "spend-down." Key points:
Not all assets count toward the spend-down
A primary residence (in some circumstances), one vehicle, personal belongings, and certain prepaid funeral arrangements may be exempt. An elder law attorney can identify which assets are exempt in your state.
Transfers made within 5 years may be penalized
Medicaid has a 5-year look-back period. Gifts or transfers of assets made within 5 years of applying for Medicaid may result in a penalty period during which Medicaid will not pay for care. Do not transfer assets without consulting an elder law attorney.
Spousal protections exist
If the person with dementia has a spouse living at home (the 'community spouse'), Medicaid rules allow the community spouse to retain more assets and income. The community spouse resource allowance and minimum monthly maintenance needs allowance protect the community spouse from impoverishment.
Medicaid planning is legal and legitimate
Working with an elder law attorney to structure assets and income in a way that maximizes Medicaid eligibility is legal. This is different from fraudulent transfers or hiding assets, which can result in penalties and criminal liability.
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