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Affordability in Senior Living Communities

Written by Dr. Ramon Martinez
Published on January 5, 2023
Research Highlights

Since 2004, the median cost for assisted living facilities has doubled; private insurance premiums to cover these costs have tripled.

While nearly 7 in 10 seniors are projected to need daily care assistance, many cite cost as a barrier to access these services.

State and federal policies that reduce upfront or private insurance costs or expand Medicaid coverage can increase access to these services.

For more information, please read our memo on Long-Term Care Insurance Plans.

Costs for assisted living communities are a large proportion of middle-incomes.

In 2021, households making between $52,000 and $156,000 annually were classified as middle-income (Pew, 2022). Middle-income seniors are not eligible to qualify for Medicaid long-term services and housing subsidies (West and Dubay, 2019).

  • Several urbanized counties in MO have high percentages of seniors who pay more than 30% of their income on housing costs (Figure 1) (JCHS, 2018).

Roughly 14 million middle-income seniors will require assisted/independent living community services by 2029, 60% of whom will have mobility issues, 20% will have heavy healthcare needs, and 54% will have financial resource limitations (Pearson, 2019).

  • In 2020, the national average cost for a one-bedroom assisted living community unit was $54,000 a year (Genworth, 2021).
  • Top cited economic barriers for seniors who do not move into senior living communities include high entrance fees, lack of long-term affordability, and the perception that it is a bad investment (Chaulagain, 2021). 

Assisted Living Communities (ALCs) can have health and psychological benefits.

  • Residents of ALCs have better health, exercise, relationships, perceptions of aging, and higher incomes (Kozar-Westman, 2013).
    • However, outcomes for seniors are influenced by many additional factors, including geography, demographics, and prior health.
  • ALCs where younger and/or low-income students and families live alongside seniors for lower rent can reduce operational costs by up to 30%, as well as reduce loneliness and social isolation in seniors (Butts, 2008; Dieker, 2019; Suleman, 2021).
    • CA law extends tax credits to housing developers that build according to this concept.

Figure 1: Counties with high housing costs for seniors. Shaded Missouri counties have between 20% (dark blue), 20-30% (light blue), and 30-40% (yellow) of seniors (65 and older) who spend more than 30% of their income on housing costs. Data from the Harvard University Joint Center for Housing Studies.

Policies vary to address affordability in senior housing


Reducing Upfront Costs

The U.S. Dept. of Housing and Urban Development Section 202 program provides federal funds (up to $175 million in 2022) to nonprofit organizations that offer senior living communities with supportive services (cleaning, cooking, transportation) (HUD, 2022; 2022) or convert housing units into senior assisted living units (HUD, 2022).

Thirty-five percent of individuals in assisted living (often more affluent) enroll in Medicare Advantage (MA) plans, which offer tailored services a patient may anticipate needing (such as wellness programs, medical transportation, vision, dental, or hearing)(Medicare, 2023).

  • While data is limited on how cost-effective MA plans are on reducing operational costs, ALCs can coordinate reimbursement for these on-site medical services in the facility planning stage (Zimmerman, 2022; Grabowski, 2015).
  • Given the large variety of tailored MA plans, only a third of Medicare beneficiaries have reported comparing plan options to cover their specific health needs (KFF, 2022).
Broadened Medicaid Coverage

Medicaid is the largest funding source for long-term care (LTC) services (KFF, 2022). While middle-income seniors do not automatically qualify for Medicaid, many states (including MO) have initiated LTC partnerships for Long-Term Care Insurance Plans (LTCIP) holders to qualify for Medicaid coverage once their private policy plan maxes out (James, 2017; NCSL, 2005).

  • LTC services through Medicaid community providers are more cost-effective per individual (as much as 30%), with some states estimated to save from $35 million to $2 billion over an 8-year period (AARP, 2013). These services require waivers to federal regulations. For more information, read our Science Note Work and Community Engagement Requirements for MO HealthNet.
Long-Term Care Insurance Plans (LTCIPs)

LTCIPs cover the costs of senior living (including nursing homes, home health care, and assisted living) that extend past 100 days after a recent hospitalization that is covered by Medicare (ACL, 2021). Plans can vary significantly in the monthly or lifetime maximum of covered service costs (MO Dept. of Insurance, 2022).

For more information, please read our memo on Long-Term Care Insurance Plans.


Administration for Community Living (2021) LongTermCare.gov: Costs & Who Pays.  https://acl.gov/ltc/costs-and-who-pays

Allen, K (2005) THE LONG-TERM CARE PARTNERSHIP PROGRAM National Conference of State Legislatures. https://www.ncsl.org/print/health/partnershipltc.pdf

Butts, D, Jarrott, SE, Schroeder, A, Perkins, O (2008) Intergenerational Shared Sites: Saving Dollars While Making Sense. Generations United. https://www.gu.org/app/uploads/2018/05/SharedSites-Report-SavingDollarsWhileMakingSense.pdf

Chaulagain, S et al.   (2021) Factors affecting seniors’ decision to relocate to senior living communities International Journal of Hospitality Management. 95 102920. https://www.sciencedirect.com/science/article/pii/S0278431921000633

University of Colorado Department of Psychology (2019) Aging in Place in an Intergenerational Housing Community.  https://geron.uccs.edu/sites/g/files/kjihxj1246/files/2020-02/Aging-in-Place-in-an-Intergenerational-Housing-Community.pdf

Fox-Grage, W, Walls, J (2013) State Studies Find Home and Community-Based Services to Be Cost-Effective. AARP Public Policy Institute. https://www.aarp.org/content/dam/aarp/research/public_policy_institute/ltc/2013/state-studies-find-hcbs-cost-effective-spotlight-AARP-ppi-ltc.pdf

Grabowski, D, Caudry, DJ, Dean, KM, Stevenson, DG   (2015) Integrated Payment And Delivery Models Offer Opportunities And Challenges For Residential Care Facilities Health Affairs. 34 (10):1650-1656. https://www.healthaffairs.org/doi/abs/10.1377/hlthaff.2015.0330

              Genworth (2022) Genworth Cost of Care Survey.  https://pro.genworth.com/riiproweb/productinfo/pdf/298701.pdf

James, E, Gellad, WF, Hughes, M (2017) In This Next Phase Of Health Reform, We Cannot Overlook Long Term Care. Health Affairs. https://www.healthaffairs.org/do/10.1377/forefront.20170316.059218/full/

Joint Center for Housing Studies of Harvard University (2018) COST BURDENS RISE WITH AGE IN MANY METROS.  https://www.jchs.harvard.edu/cost-burdens-rise-age-many-metros-map

Kozar-Westman, M, Troutman-Jordan, M & Nies, MA   (2013) Successful Aging Among Assisted Living Community Older Adults Journal of Nursing Scholarship. 45 (3):238-246. https://sigmapubs.onlinelibrary.wiley.com/doi/abs/10.1111/jnu.12027

O'Malley Watts, M, Musumeci, M, Chidambaram, P (2020) Medicaid Home and Community-Based Services Enrollment and Spending. Kaiser Family Foundation. https://www.kff.org/report-section/medicaid-home-and-community-based-services-enrollment-and-spending-issue-brief/

Ochieng, N, Cubanski, J, Freed, M, Neuman, T (2022) A Relatively Small Share of Medicare Beneficiaries Compared Plans During a Recent Open Enrollment Period. Kaiser Family Foundation. https://www.kff.org/medicare/issue-brief/a-relatively-small-share-of-medicare-beneficiaries-compared-plans-during-a-recent-open-enrollment-period/

Pearson, C, et al.   (2019) The Forgotten Middle: Many Middle-Income Seniors Will Have Insufficient Resources For Housing And Health Care Health Affairs. 38 (5):10.1377/hlthaff.2018.05233. https://www.healthaffairs.org/doi/abs/10.1377/hlthaff.2018.05233

Sechoupoulous, S, Kochhar, R (2022) How the American middle class has changed in the past five decades. Pew. https://www.pewresearch.org/fact-tank/2022/04/20/how-the-american-middle-class-has-changed-in-the-past-five-decades/

Suleman, R, Bhatia, F (2021) Intergenerational housing as a model for improving older-adult health. British Columbia Medical Journal. https://bcmj.org/articles/intergenerational-housing-model-improving-older-adult-health

U.S. Department of Housing and Urban Development (2021) Hud Awards $143 Million In Grants To Support Construction And Project Rental Assistance For New Multifamily Housing For Very Low-Income Seniors.  https://www.hud.gov/press/press_releases_media_advisories/HUD_No_21_156

U.S. Department of Housing and Urban Development (2022) Hud Makes $174.6 Million In Grant Funding Available For Construction And Ongoing Project-Based Rental Assistance For Low-Income Seniors.  https://www.hud.gov/press/press_releases_media_advisories/HUD_No_22_177

U.S. Department of Housing and Urban Development (2023) Assisted Living Conversion Program (Alcp).  https://www.hud.gov/program_offices/housing/mfh/progdesc/alcp

Missouri Department of Insurance (2023) Long-Term Care FAQs.  https://insurance.mo.gov/consumers/LongTerm/FAQ.php

U.S. Centers for Medicare and Medicaid Services. (2023) Medicare Advantage Plans cover all Medicare services.  https://www.medicare.gov/what-medicare-covers/what-medicare-health-plans-cover/medicare-advantage-plans-cover-all-medicare-services

U.S. Department of Housing and Urban Development (2023) Section 202 Supportive Housing For The Elderly Program.  https://www.hud.gov/program_offices/housing/mfh/progdesc/eld202

West, J, Dubay, L (2019) Middle-Income Seniors Face a Gap in Housing and Health Supports. Urban Institute. https://www.urban.org/urban-wire/middle-income-seniors-face-gap-housing-and-health-supports

Zimmerman, S et al.   (2022) The Imperative to Reimagine Assisted Living Journal of the American Medical Directors Association. 23 (2):225-234. https://www.sciencedirect.com/science/article/pii/S1525861021010550







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