Assisted living costs between $4,000 and $6,000 per month on average, a figure that puts it out of reach for many older adults living on Social Security alone. But several federal and state programs exist specifically to help low-income individuals cover these costs, and combining multiple sources of funding often makes the difference between affording care and going without it.
Medicaid Waivers for Assisted Living
Medicaid is the single largest source of public funding for assisted living among low-income residents. Traditional Medicaid covers nursing home care, but it doesn’t automatically cover assisted living. The workaround is a Home and Community-Based Services (HCBS) waiver, which nearly all states and Washington, D.C., now offer in some form. These waivers redirect Medicaid dollars away from nursing homes and toward community settings like assisted living facilities.
To qualify, you need to meet two tests. First, a financial test: your income and assets must fall below your state’s threshold. These limits vary significantly by state, but as a reference point, the federal SSI limit for an individual in 2025 is $967 per month in income and $2,000 in countable assets. Many states set their own limits somewhat higher. Second, you need to demonstrate that you require a “nursing home level of care,” meaning you need regular help with daily activities like bathing, dressing, eating, or managing medications. Your state’s Medicaid office will arrange an assessment to determine this.
The major catch with HCBS waivers is waitlists. Because states cap the number of people who can receive waiver services, some states have waiting periods of months or even years. Apply as early as possible, even if you don’t need care immediately. Getting on the list now protects you later.
Spending Down to Meet Medicaid Limits
If your income or assets are slightly above Medicaid’s thresholds, you may still qualify through a process called “spending down.” This lets you reduce your countable resources by paying for qualifying medical expenses until you reach the eligibility limit. Approved expenses include:
- Home health aides or in-home care services
- Prescription and over-the-counter medications
- Medical equipment and home modifications like grab bars, wheelchair ramps, or stair lifts
- Unpaid medical bills from any provider
- Transportation to medical appointments
Keep every receipt. You’ll need to document all qualifying expenses when you submit your Medicaid application. Some states call this a “surplus income program” or “medically needy program,” and the median income limit for medically needy coverage in 2025 is just $511 per month. Working with a Medicaid planning specialist or elder law attorney can help you navigate spend-down rules legally without accidentally triggering penalties.
VA Aid and Attendance Benefits
Veterans and surviving spouses of veterans have access to a pension benefit called Aid and Attendance, which provides monthly cash specifically for those who need help with daily activities. This money can go directly toward assisted living costs.
In 2025, the maximum annual pension for a single veteran who qualifies for Aid and Attendance is $28,300 (roughly $2,358 per month). A veteran with a spouse can receive up to $33,548 annually (about $2,796 per month). If two married veterans both qualify, the combined maximum reaches $44,886 per year. These payments won’t cover the full cost of most assisted living facilities on their own, but combined with Social Security and other income, they can close a significant gap.
To qualify, you generally need to have served at least 90 days of active duty with at least one day during a wartime period, meet income and asset requirements, and have a medical need for regular assistance. Applications go through the VA and can take several months to process, so starting early matters.
The PACE Program
The Program of All-Inclusive Care for the Elderly (PACE) is an alternative to moving into an assisted living facility altogether. PACE coordinates medical care, social services, and support services so that people who would otherwise need nursing home care can remain living in the community. A dedicated team of health care professionals manages everything from prescriptions to transportation to personal care.
You can join PACE if you’re at least 55, live in an area served by a PACE organization, and have been certified by your state as needing nursing home-level care. If you qualify for Medicaid, you pay no monthly premium. Regardless of your financial situation, PACE charges no deductibles, copayments, or coinsurance for any service your care team approves. The limitation is availability: PACE organizations don’t operate in every area, so check whether one exists near you through Medicare.gov or your local Area Agency on Aging.
HUD Section 202 Senior Housing
The Department of Housing and Urban Development’s Section 202 program funds affordable housing specifically designed for adults 62 and older with very low incomes. These residences aren’t traditional assisted living facilities, but they provide supportive services like help with cooking, cleaning, and transportation, bridging the gap between fully independent living and a facility setting.
Section 202 housing is built and operated by nonprofit organizations that received federal funding to construct the buildings. Residents typically pay 30% of their adjusted income toward rent. Like Medicaid waivers, these units are limited in number and often have waitlists. Contact your local housing authority or use HUD’s resource locator to find Section 202 properties in your area.
Converting a Life Insurance Policy
If you or a family member hold a life insurance policy, it may be possible to convert some of that value into funds for care right now. Some policies include an accelerated death benefit, which lets you access a portion of the death benefit while still alive if you need long-term care. The payout is typically capped at 50% of the policy’s face value, though some policies allow the full amount. For policies that specifically cover long-term care, the monthly benefit for nursing home or assisted living care is usually about 2% of the policy’s face value.
Another option is a viatical settlement, where you sell the policy outright to a third party. The amount you receive depends on your life expectancy. National guidelines suggest payouts ranging from 80% of the death benefit if life expectancy is under six months, down to 50% if life expectancy exceeds two years. Viatical settlements are generally tax-free for people who are terminally ill, but the details depend on your situation and state laws.
Nonprofit Benevolent Care Funds
Many nonprofit assisted living communities maintain benevolent care funds for residents who outlive their savings. At UPMC Senior Communities in Pennsylvania, for example, more than 50% of residents needing the highest level of care have depleted their personal assets and depend on charitable support. The system provides over $4 million annually in uncompensated care and charitable relief.
This isn’t a benefit you apply for upfront. It’s a safety net for residents who entered a facility able to pay but whose finances ran out over time. If you’re considering a specific community, ask whether it’s a nonprofit, whether it has a benevolent care program, and what happens if a resident can no longer afford the monthly rate. Nonprofit facilities are far more likely to have these programs than for-profit chains.
Combining Multiple Funding Sources
Most low-income families don’t cover assisted living with a single program. The realistic path involves layering several sources. A veteran’s surviving spouse might combine a small Social Security check with Aid and Attendance benefits and a Medicaid waiver. Someone with modest savings might use those funds to pay privately for the first year or two, spend down to Medicaid eligibility, and then transition to waiver-funded care at a facility that accepts Medicaid.
Start by contacting your local Area Agency on Aging, which exists in every part of the country and can walk you through which programs you qualify for in your state. Many offer free benefits counseling. An elder law attorney can also help with Medicaid planning, particularly around spend-down strategies and protecting a spouse’s assets. The earlier you begin planning, the more options remain available.