When a loved one starts showing signs of memory loss—whether it’s due to Alzheimer’s disease, dementia, or other cognitive impairments—it can feel overwhelming. You’re suddenly faced with a lot of questions: What kind of care will they need? How much does it cost? And more importantly, how will we pay for it?

Memory care is a specific type of long-term care designed to meet the unique needs of people with memory issues. Unlike regular assisted living, memory care communities provide 24/7 supervision, specialized staff training, and structured activities to support cognitive function. It’s not just about safety—it’s about dignity, routine, and quality of life.

But here’s the tricky part: memory care isn’t cheap. According to various sources, the monthly cost can range from $4,000 to over $7,000 depending on your location, the facility, and the level of care required. That’s a lot of money for most families.

The good news? You do have options. From personal savings to government programs and insurance benefits, there are ways to cover the cost of memory care without draining everything you’ve worked for. In this article, we’ll walk you through six of the most practical ways to pay for memory care, and help you figure out which one (or combination) might be right for your situation.

Let’s dive in.

Comparing Memory Care Payment Options

Before we get into the details of each method, it helps to get a side-by-side look at your choices. Here’s a quick breakdown of the six most common ways families pay for memory care:

Payment Method	Pros	Cons	Best For
Personal Savings/Out-of-Pocket	Full control, no restrictions	Can drain finances quickly	Those with significant retirement or savings
Long-Term Care Insurance	Designed for care costs	Must have purchased in advance	People with existing policies
Veterans Benefits (VA Aid & Attendance)	Monthly financial aid	Eligibility requirements, paperwork	Eligible veterans or spouses
Medicaid	Covers memory care in some facilities	Income and asset limits, limited locations	Low-income individuals
Home Equity	Unlocks property value	Risk of losing home	Homeowners who don’t need to live in the home
Life Insurance Conversions	Turns policy into cash	Reduced death benefit	Policyholders not needing full payout later

Each option has its own set of trade-offs. Some are straightforward. Others are filled with fine print. But understanding them gives you a better chance of making an informed, confident choice.

Use Personal Savings or Out-of-Pocket Funds

This is the most direct method, and honestly, the most common.

Families often dip into their savings, retirement accounts, or even cash out investments to cover memory care costs. This option offers flexibility—you can choose the facility you want without worrying about strict eligibility requirements or delays. There’s no waiting for approvals or insurance processing.

But it comes with one big downside: it can get expensive, fast.

Let’s say the facility charges $6,000 per month. That’s $72,000 a year. Over three years, you’re looking at over $200,000. If your loved one needs care for five years or more, the total could approach or exceed $400,000.

If you’re considering this route, it’s a good idea to sit down with a financial advisor and project how long your savings will realistically last. You want to make sure you’re not putting your own financial future at risk, especially if you’re retired or close to retirement age.

Some families choose to combine personal savings with other funding sources. For example, you might pay out-of-pocket for the first year while waiting for a VA benefit to kick in.

Tap into Long-Term Care Insurance

Long-term care insurance is designed for exactly this type of situation. If your loved one has a policy in place, now is the time to dust it off and look at the fine print.

These policies often cover:

• Assisted living
• Memory care
• In-home care
• Nursing homes

But every policy is different. Some have daily or monthly benefit limits. Others have a lifetime cap or an elimination period (which is basically a waiting period before benefits begin).

One key advantage of long-term care insurance is that it helps preserve personal savings and assets. Instead of burning through retirement accounts or selling property, insurance can cover part—or sometimes all—of the cost.

However, there’s one big catch: your loved one must already have the policy. If you’re reading this and thinking about your own future, now might be the time to consider purchasing coverage while you’re still healthy and eligible.

Apply for VA Aid and Attendance Benefits

If your loved one served in the military, even during peacetime, they may qualify for additional financial help through the VA Aid and Attendance program.

This benefit provides monthly payments on top of a regular VA pension. And the money can be used for memory care, assisted living, or even in-home care.

To qualify, your loved one must meet the following general criteria:

• Be a wartime veteran or the surviving spouse of one
• Need help with daily living activities (like bathing, eating, or dressing)
• Have limited income and assets (though the thresholds are higher than Medicaid)

The 2025 maximum monthly benefit for a veteran with a dependent is over $2,700, which can go a long way toward covering care expenses.

The application process can be slow and involves a lot of paperwork, so it’s wise to start early and seek help if needed. Many local VA offices or veteran service organizations can guide you through the process.

Explore Medicaid Options for Memory Care

Medicaid is a state and federally funded program that helps people with limited income and assets pay for healthcare—and in some cases, long-term memory care.

But here’s the tricky part: Medicaid rules vary a lot from state to state.

Some states offer Medicaid waivers that cover memory care in assisted living facilities. Others may only cover care provided in nursing homes. And there are strict financial eligibility rules, which often require a person to have minimal assets (usually less than $2,000, not counting their home and vehicle).

That said, Medicaid can be a lifeline for families who don’t have savings or insurance. Many people who initially pay out-of-pocket later “spend down” their assets and then apply for Medicaid.

If you’re considering this option, it’s smart to speak with an elder law attorney or financial advisor who understands your state’s Medicaid rules. Planning ahead can help you qualify without making costly mistakes.

Use Home Equity to Your Advantage

For many families, the most valuable asset they own is their home. And if your loved one no longer needs to live there, that home could be the key to affording memory care.

There are a few ways to tap into home equity:

• Sell the home and use the proceeds to pay for care
• Take out a reverse mortgage (available to homeowners age 62+)
• Open a home equity line of credit (HELOC)

Selling the home outright is the simplest and most effective approach, especially if there’s no mortgage or only a small one remaining. Reverse mortgages and HELOCs are a bit more complex and come with fees and interest, but they can work if keeping the home in the family is important.

Just be cautious: if you use home equity for care and then apply for Medicaid, the proceeds could affect eligibility. Again, this is where an elder law professional can offer personalized advice.

Convert a Life Insurance Policy into Cash

Many people don’t realize that an old life insurance policy can be converted into a life settlement or long-term care benefit plan. These options allow policyholders to receive a lump sum or monthly payments based on the policy’s value.

Here’s how it usually works:

• You sell the policy to a third party for a lump sum (typically less than the death benefit but more than the cash surrender value)
• Or, you convert it into a dedicated fund that pays for care expenses

This can be a smart move for someone who no longer needs the full death benefit or has no remaining dependents. It’s also a good option if the premiums have become unaffordable.

Just be sure to read the fine print. Selling or converting a life insurance policy may affect taxes, estate plans, and eligibility for Medicaid, so you’ll want to consult a professional before taking action.

FAQs About Paying for Memory Care

How much does memory care usually cost per month?
Costs vary widely, but the national average is around $5,500 to $7,000 per month. Urban areas and high-demand regions tend to cost more.

Does Medicare pay for memory care?
Medicare does not cover long-term memory care in assisted living facilities. It may pay for short-term hospital stays, medications, or rehab, but not ongoing room and board or personal care.

What’s the difference between memory care and assisted living?
Memory care is a specialized form of assisted living designed for individuals with Alzheimer’s, dementia, or cognitive decline. It typically includes secured environments, specialized staff, and targeted activities.

Can I deduct memory care costs from my taxes?
Possibly. If a doctor certifies that your loved one is chronically ill and receiving care as part of a care plan, some costs may be tax-deductible. Talk to a tax professional for details.

Is it too late to buy long-term care insurance?
Maybe. If your loved one is already showing symptoms of cognitive decline, it’s unlikely they’ll qualify for a new policy. That’s why it’s best to buy earlier, before health issues arise.

Do memory care facilities accept Medicaid?
Some do, but not all. It depends on the state and the facility. Make sure to ask each facility about their Medicaid policies and whether they accept Medicaid waivers.

Conclusion

Paying for memory care is never a one-size-fits-all situation. Every family’s financial picture is different, and so is every loved one’s care journey. What’s important is knowing that you have options—and many of them can be combined for the best outcome.

Whether it’s using personal savings, tapping into a life insurance policy, applying for veterans benefits, or exploring Medicaid, there are multiple pathways that can ease the financial burden. The key is to start planning early, get the right advice, and stay informed.

Memory care isn’t just a cost—it’s an investment in comfort, safety, and dignity for someone you love. And while the price tag may be high, the peace of mind that comes with quality care is often worth every penny.