“Does Medicare pay for assisted living?” with deeper housing finance modeling

This guide explains:

• What Medicare does and does not pay for in 2026
• How Medicare vs Medicaid work for assisted living and senior housing
• What happens if you “spend down” in assisted living and later need Medicaid long-term care
• How staying in subsidized independent housing with HCBS compares financially
• How newer Medicare Advantage supplemental benefits can help with non-medical supports like home modifications, meals, transportation, utilities, and sometimes rent
• Practical modeling of how these choices affect your budget over time

Throughout, we focus on general education, not legal or financial advice. Your situation will depend on your state, your health, and your exact income and assets.

You may also find it helpful to review our guide on managing complex medication side effects at Understood Care:
https://understoodcare.com/healthcare-info/managing-neuropathy-medication-side-effects

Quick answer: What Medicare pays for in 2026 (and what it does not)

Medicare is health insurance. It helps pay for medical and rehabilitation services, not long-term “custodial” care.

Medicare and assisted living rent

In 2026:

• Medicare does not pay assisted living rent, room, or board
• Medicare does not pay for long-term custodial care in assisted living or nursing homes
• You pay 100% of the costs of non-covered long-term care services, including most assisted living costs

Medicare’s own guidance states that Medicare does not pay for long-term care and that you are responsible for all costs of non-covered services, including most long-term care.

In other words, if you move into assisted living in 2026, Medicare will not pay the monthly fee for your apartment, meals, or help with daily activities like bathing, dressing, and toileting.

What Medicare may cover while you live in assisted living

Even if you live in assisted living, you still have Medicare, and it can help with:

• Doctor visits, specialist visits, and telehealth
• Hospital care
• Medications under Part D or a Medicare Advantage plan with drug coverage
• Short-term skilled nursing facility (SNF) stays after a qualifying hospital stay, when all conditions are met
• Skilled home health services if you are “homebound” and need intermittent skilled care

Medicare Part A covers care in a skilled nursing facility for a limited time after a qualifying hospital stay, but it does not cover long-term or custodial care in a nursing home.

So Medicare can be part of your care plan in assisted living, but it is not a long-term payor for rent or daily support.

Medicare vs Medicaid for assisted living and senior housing

People often use “Medicare” and “Medicaid” interchangeably. They are different programs with very different rules.

Medicare: Federal health insurance

• Federal program mainly for people 65 and older and some younger adults with disabilities
• Covers hospital care, doctor visits, outpatient care, and prescription drugs
• Limited coverage for skilled nursing and home health, usually short-term
• Does not generally cover long-term services and supports (LTSS) like ongoing personal care in assisted living or at home

Medicaid: Long-term care safety net

Medicaid is a joint federal-state program for people with low income and limited assets. It is the main payor for long-term services and supports in the United States, covering over half of national LTSS spending.

For older adults and people with disabilities:

• States must cover long-term care in nursing facilities, including room and board
• Many states also cover home- and community-based services (HCBS) that help people remain at home or in community settings
• States may cover services in assisted living facilities, but federal law generally prohibits Medicaid from paying assisted living room and board directly

To qualify for Medicaid long-term care, you must meet:

• Functional criteria (needing help with daily activities or having a qualifying level of care)
• Financial criteria, including low income and very limited countable assets, which vary by state but are often around 2,000 dollars in assets for a single person, with higher allowances for a spouse who remains in the community.

Medicaid is often called the “payor of last resort” for long-term care, which means you typically must use your income and savings first.

How much does assisted living cost in 2026?

There is no single national price for assisted living. Costs vary by:

• State and city
• Size and type of apartment
• Whether memory care is included
• How much personal assistance you need

KFF reports that in 2023 the average cost of assisted living facilities was about 64,200 dollars per year. That is approximately 5,350 dollars per month and only covers room and board. Any additional long-term care services are on top of that.

Costs have continued to rise with inflation and staffing shortages. By 2026 it is realistic to see:

• Many assisted living communities in the range of roughly 4,500 to 7,000 dollars per month
• Higher prices in expensive metro areas
• Lower costs in smaller towns or shared rooms

At these prices, most people cannot afford assisted living purely on Social Security and Medicare. They either:

• Use savings and home equity
• Rely on family help
• Qualify for subsidized housing and Medicaid services
• Or some combination of all three

Paying for assisted living on Social Security and Medicare in 2026

A common question is “How do I pay for assisted living on Social Security and Medicare?” Here is a simplified model using the 2026 Social Security averages.

Step 1: Estimate your Social Security income

The Social Security Administration’s 2026 COLA fact sheet estimates that the average monthly benefit for all retired workers in January 2026 is 2,071 dollars.

Your benefit could be higher or lower, but this gives a realistic benchmark.

Step 2: Compare Social Security to assisted living rent

Imagine:

• Assisted living rent and services: 6,000 dollars per month
• Your monthly Social Security: 2,071 dollars

Compute the monthly gap:

1. Start with 6,000
2. Subtract 2,000 to get 4,000
3. Subtract the remaining 71 to get 3,929

So you would be short about 3,929 dollars per month.

To see the annual shortfall:

1. Multiply 3,929 by 10 to get 39,290
2. Multiply 3,929 by 2 to get 7,858
3. Add 39,290 and 7,858 to get 47,148

So you would need about 47,000 dollars per year from savings, family, or other sources just to cover the gap between Social Security and the assisted living bill.

If you had 100,000 dollars in savings and used it entirely for that gap:

• Divide 100,000 by 3,929
• The exact quotient is a little more than 25, so your savings might last just over two years

That is before considering inflation, medical bills, or other living costs like clothing and personal needs.

This is why many older adults:

• Delay assisted living as long as possible
• Combine lower-cost housing with HCBS
• Or move directly to Medicaid-covered nursing home care once they spend down savings

What happens if you spend down in assisted living and then need Medicaid long-term care?

A major planning question is what happens if you move into assisted living, spend down your assets, and later need Medicaid long-term care.

Stage 1: Private pay in assisted living

At the start you:

• Pay the full private-pay assisted living rate from Social Security, pensions, and savings
• May receive some help from children or other family members
• Are responsible for your own medications, co-pays, and uncovered services

If your assisted living community does not accept Medicaid, they typically require that you remain private pay. Once your savings run low, you may face either:

• Moving to a different facility that accepts Medicaid
• Moving to a nursing facility that accepts Medicaid
• Or leaving assisted living altogether

Stage 2: Spending down to Medicaid eligibility

To qualify for Medicaid long-term care, you usually must:

• Have assets at or below your state’s limit (often around 2,000 dollars in countable assets for a single person, with special protections for spouses)
• Have income below program limits, or agree to contribute most of your income toward your care
• Meet your state’s functional level-of-care criteria, such as needing help with several activities of daily living

States also look back at certain asset transfers. Federal Medicaid rules require states to deny long-term services and supports if you transferred assets for less than fair market value during the five years before you applied.

Because the rules are complex and vary by state, it is important to talk with an elder-law attorney or a trusted benefits counselor before making major gifts or transfers.

Stage 3: Transition to Medicaid long-term care

Once you qualify for Medicaid long-term care:

• Nursing facility care: Medicaid must cover nursing facility services, including room and board, for eligible people who need that level of care. KFF
• Assisted living services: Many states use Medicaid home- and community-based programs to cover services in assisted living (such as personal care, case management, and sometimes transportation), but federal law generally prohibits Medicaid from paying the assisted living room and board charge.

In practice this means:

• If your current assisted living community does not work with Medicaid, you may need to move
• If it does work with Medicaid, you may still owe a portion of your income toward room and board
• Medicaid may limit how much the facility can charge you if you are a Medicaid resident

Most states allow a small personal needs allowance for residents in Medicaid-covered long-term care, but research shows these allowances are often very low and may not keep pace with inflation.

Estate recovery

Federal law requires states to try to recover certain Medicaid LTSS costs from the estates of people who were age 55 or older when they received services, including nursing facility care and HCBS.

This does not mean Medicaid will always take a family home, but it does mean:

• States must at least attempt to recover amounts paid for long-term care
• Families should understand state-specific estate recovery rules before making major housing decisions

Comparing paths: Assisted living spend-down vs subsidized independent housing with HCBS

For many families, a more sustainable path is to combine subsidized independent housing with Medicaid HCBS and Medicare Advantage supplemental benefits.

Path A: Market-rate assisted living with eventual spend-down

Using the earlier example:

• Assisted living: 6,000 dollars per month
• Social Security: 2,071 dollars per month
• Shortfall: about 3,929 dollars per month

If you pay this gap from savings:

• You spend roughly 47,000 dollars per year from savings
• A 100,000 dollar nest egg can be depleted in just over two years

After that:

• You may qualify financially for Medicaid
• You may need to move to a nursing facility that accepts Medicaid
• Or move to an assisted living facility that participates in Medicaid home care programs

Even then, Medicaid usually does not pay room and board in assisted living, so you continue to owe most of your monthly income to the facility and keep only a small allowance.

Path B: Subsidized independent housing plus HCBS

Now consider a different strategy:

Step 1: Move into subsidized independent senior housing

Examples include:

• HUD Section 202 Supportive Housing for the Elderly
• Housing Choice Vouchers used in privately owned apartments

These programs are designed for very low-income older adults and typically cap your rent at about 30 percent of your adjusted income.

Using the same 2,071 dollar Social Security benefit:

1. Multiply 2,071 by 3 to get 6,213
2. Divide by 10 to get 621.3

Your rent might be around 620 dollars per month, leaving roughly 1,450 dollars for food, utilities, medications, transportation, and personal needs. (Exact calculations vary by program and local rules.)

Step 2: Layer Medicaid home- and community-based services

Medicaid HCBS programs can provide:

• Personal care aides
• Adult day health services
• Homemaker support
• Respite for caregivers
• Non-medical transportation

National data show that most Medicaid long-term services and supports spending now goes to HCBS instead of institutions.

In many states, the same HCBS benefits that could be provided in assisted living can instead be provided in your apartment, allowing you to:

• Stay in your own home or independent senior building
• Preserve more of your income for daily expenses
• Delay or avoid nursing home placement

However, there can be waiting lists for HCBS waivers, and not everyone who qualifies for Medicaid automatically gets all services right away.

Step 3: Add Medicare Advantage supplemental benefits

If you enroll in a Medicare Advantage plan that offers supplemental benefits, you might also receive:

• Limited home-delivered meals
• Non-emergency medical or sometimes non-medical transportation
• In-home support services
• Home modifications like grab bars or ramps
• Help with utilities or other social needs in some plans

CMS changed the rules beginning in 2019 so that MA plans could offer new primarily health-related benefits and Special Supplemental Benefits for the Chronically Ill (SSBCI), including certain non-medical supports.

Analyses of MA plan filings and 2026 benefit data show that:

• Nearly all MA plans still offer dental, vision, and hearing benefits
• Many plans also offer transportation, meals, and in-home support services, though specific offerings can shift year to year
• Some plans support utilities or other social needs for high-risk members, and a small number are piloting housing-related supports

These benefits usually:

• Cannot be used to pay rent directly (except in rare, highly targeted pilots)
• Can reduce other costs (like food, transportation, or home modifications), freeing more of your income for rent and personal needs

Financial comparison

Using this combined strategy:

• Monthly rent might be around 620 dollars, instead of 6,000 dollars
• Medicaid HCBS and MA benefits can cover part of your care and transportation needs
• Your Social Security can stretch much farther, and your savings may last many more years

You may still need nursing home care eventually, but you are more likely to:

• Delay institutionalization
• Maintain more independence
• Possibly preserve more of your savings and quality of life

Where does assisted living fit, then?

Assisted living can still be the right choice if:

• You need more structure and 24-hour staff than you can safely get at home
• You can afford private pay for a meaningful period, or
• You live in a state and facility where Medicaid can help pay for services once you qualify

KFF’s 2025 analysis of Medicaid in assisted living found that most states cover some home care services for eligible residents in assisted living, but Medicaid still generally does not pay the room and board charge.

If you are considering assisted living, ask each community:

• Do you accept residents who are on Medicaid?
• If I move in as private pay and later qualify for Medicaid, can I stay, or would I have to move?
• How does my monthly payment change if I become a Medicaid resident?
• What happens to my spouse or partner if only I need Medicaid long-term care?

Action steps: How to plan for 2026 and beyond

If you are worried about how to pay for assisted living on Social Security and Medicare, consider:

• Clarify your income and assets
  • List Social Security, pensions, and other income
  • List savings, home equity, and retirement accounts
• Check your current Medicare coverage
  • Identify whether you have Original Medicare or a Medicare Advantage plan
  • Review your 2026 Annual Notice of Change if you are in an MA plan to see updated supplemental benefits
• Explore Medicaid and HCBS options in your state
  • Contact your state Medicaid office or Area Agency on Aging
  • Ask about Medicaid long-term care, HCBS waivers, and whether they can be used in assisted living or at home
• Apply early for subsidized housing if appropriate
  • Ask about Section 202 and other senior housing programs in your area
  • Understand income limits, waiting lists, and tenant protections
• Ask detailed questions about any assisted living you are considering
  • Private pay rates, annual increases, and care level add-ons
  • Policies for Medicaid residents and eviction protections
• Talk with a benefits counselor or elder-law attorney
  • Especially before transferring assets or adding family members to deeds or accounts
  • To understand Medicaid estate recovery and spousal protections in your state

Frequently asked questions: Medicare, Medicaid, and assisted living in 2026

• Does Medicare pay for assisted living rent in 2026?
  No. Medicare does not pay for assisted living rent or room and board in 2026. It may pay for medical and rehabilitation services like hospital care, doctor visits, skilled nursing after a hospital stay, and home health, but it does not cover long-term custodial care or assisted living rent.
• What is the difference between Medicare vs Medicaid for assisted living and senior housing?
  Medicare is a federal health insurance program and does not pay for long-term assisted living or rent. Medicaid is a joint federal-state program for people with limited income and assets. Medicaid can cover long-term services and supports in nursing facilities and through HCBS, and in many states it can pay for services in assisted living, but it usually cannot pay the room and board charge.
• How can I pay for assisted living on Social Security and Medicare in 2026?
  Most people cannot pay for assisted living using only Social Security and Medicare. Common strategies include using savings and home equity, combining Social Security with subsidized housing and Medicaid HCBS, relying on family support, or choosing a lower-cost senior housing option while using Medicare Advantage supplemental benefits to help with meals, transportation, and in-home support.
• Can Medicare Advantage plans pay for assisted living or my rent?
  Most Medicare Advantage plans in 2026 do not pay rent directly. Some plans can offer supplemental benefits such as meal delivery, transportation, in-home support services, home modifications, or help with utilities, especially for members with chronic conditions. These benefits may free up some of your income, but they rarely replace the need to pay rent yourself.
• Does Medicaid pay for assisted living in 2026?
  Medicaid typically does not pay assisted living room and board. In many states, Medicaid can pay for personal care and other services delivered in assisted living through HCBS waivers or state plan options, but residents usually pay their own room and board from their income, with limits that vary by state.
• What happens if I move into assisted living, spend down my savings, and then need Medicaid?
  Once your assets and income fall within Medicaid limits and you meet functional criteria, you may qualify for Medicaid long-term care. If your assisted living community works with Medicaid, you might be able to stay and have Medicaid pay for some services while you pay most of your income toward room and board. If your facility does not accept Medicaid, you may need to move to a different assisted living community or a nursing home that accepts Medicaid.
• Is it better to stay in subsidized independent housing with HCBS than to move to assisted living?
  It depends on your health and safety needs. Financially, subsidized housing with rent capped at about 30 percent of your income combined with Medicaid HCBS and Medicare Advantage supplemental benefits can be much more sustainable than private-pay assisted living. However, if you need 24-hour supervision or intensive help with daily activities, assisted living or nursing home care may still be necessary.
• Will Medicaid take my house if it pays for my long-term care?
  If Medicaid pays for long-term services and supports after age 55, your state is required to attempt estate recovery after your death. This can include recovery from a home you owned, although there are important protections for surviving spouses and in some cases for other family members. Estate recovery rules are state-specific, so you should talk to a local legal expert or benefits counselor.
• Can I give away money to qualify for Medicaid long-term care faster?
  Giving away money or property can cause serious problems. Most states review transfers made during the five years before you apply for Medicaid long-term services and supports. Transfers for less than fair market value can trigger a penalty period during which Medicaid will not pay for your long-term care. Always speak with an elder-law attorney before making large gifts if you may need Medicaid.
• Who can help me understand my options for Medicare vs Medicaid for assisted living and senior housing?
  Helpful resources can include your local Area Agency on Aging, your state’s Medicaid office, your State Health Insurance Assistance Program (SHIP), and an elder-law attorney. Together they can help you understand how Medicare, Medicaid, subsidized housing, HCBS, and Medicare Advantage supplemental benefits fit your specific situation.

References

1. Medicare.gov. Long-term care coverage page. Updated 2025. https://www.medicare.gov/coverage/long-term-care Medicare
2. Centers for Medicare & Medicaid Services. Items & Services Not Covered Under Medicare (MLN906765). September 2025. https://www.cms.gov/files/document/mln906765-items-services-not-covered-under-medicare.pdf Centers for Medicare & Medicaid Services
3. Medicare.gov. Skilled Nursing Facilities. Accessed 2025. https://www.medicare.gov/providers-services/original-medicare/skilled-nursing Medicare
4. Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet. https://www.ssa.gov/news/en/cola/factsheets/2026.html Social Security
5. KFF. 10 Things About Long-Term Services and Supports (LTSS). July 8, 2024. https://www.kff.org/medicaid/10-things-about-long-term-services-and-supports-ltss/ KFF
6. KFF. What Services Does Medicaid Cover in Assisted Living Facilities? March 14, 2025. https://www.kff.org/medicaid/what-services-does-medicaid-cover-in-assisted-living-facilities/ KFF
7. U.S. Department of Health and Human Services. Home- and Community-Based Services (HCBS) overview. https://acl.gov/programs/aging-and-disability-networks/home-and-community-based-services HHS
8. HUD. Section 202 Supportive Housing for the Elderly Program. https://www.hud.gov/program_offices/housing/mfh/progdesc/eld202 HUD Exchange
9. HUD. Housing Choice Voucher Program Guidebook. https://www.hud.gov/program_offices/public_indian_housing/programs/hcv/guidebook HUD
10. Medicaid.gov. Eligibility Policy: Transfers of Assets for Less Than Fair Market Value. https://www.medicaid.gov/medicaid/eligibility/eligibility-policy/index.html Medicaid
11. KFF. What is Medicaid Estate Recovery? November 2023. https://www.kff.org/medicaid/issue-brief/what-is-medicaid-estate-recovery/ KFF
12. JAMA Health Forum. Viewpoint on Medicaid personal needs allowance adequacy. 2023. https://jamanetwork.com/journals/jama-healthforum/fullarticle/2807618 JAMA Network
13. ATI Advisory. CY2026 Medicare Advantage Trends in Nonmedical Benefits (PDF). November 2025. https://atiadvisory.com/resources/wp-content/uploads/2025/11/ATI_CY26-MA-Trends-in-Nonmedical-Benefits.pdf ATI Advisory
14. KFF. Medicare Advantage in 2026: Premiums, Cost Sharing, Out-of-Pocket Limits, Supplemental Benefits, Prior Authorization, and Star Ratings. 2025. https://www.kff.org/report-section/medicare-advantage-2026-spotlight-plan-premiums-and-benefits-supplemental-benefits/ KFF
15. Centers for Medicare & Medicaid Services. CMS Finalizes Policy Changes and Updates for Medicare Advantage and the Prescription Drug Benefit Program (Final Rule 2019). https://www.cms.gov/newsroom/fact-sheets/cms-finalizes-policy-changes-and-updates-medicare-advantage-and-prescription-drug-benefit-program Centers for Medicare & Medicaid Services

If you would like, I can now adjust this article for a specific state (for example, California or New York), while keeping the national context and 2026 data.