Health insurance generally covers only medically necessary dementia care, not ongoing custodial care or room and board. Long-term care insurance may cover more memory care expenses, while Medicaid may help eligible seniors pay for certain services. Life insurance doesn’t directly cover memory care, but families may be able to access the policy’s value to help pay for care.
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Memory care expenses generally fall into three categories: medical care, custodial care, and room and board. Different types of insurance may help cover some of these costs, but most health insurance doesn’t pay for long-term custodial care or residential expenses.
A memory care community costs an average of $6,999 per month, according to A Place for Mom’s 2026 proprietary data.[01] Memory care may also be provided in assisted living communities, smaller residential care homes, or a person’s home. Costs and available insurance coverage vary by setting, location, and the amount of care needed.
Public and private insurance plans that can be used to pay memory care costs include:
Medicare may cover medically necessary dementia care, such as:
Medicare Advantage plans cover the services included in Original Medicare and may offer additional benefits that vary by plan. However, Medicare and most private health insurance plans generally don’t cover ongoing custodial care or room and board in a memory care community.[02,03]
Your next steps: Check your loved one’s Medicare, Medicare Advantage, or private health insurance plan to find out whether it covers the cost of any of the memory care services they need. Seek other funding sources for expenses the plan doesn’t cover.
Like Medicare, Medicaid typically won’t cover room and board in assisted living or memory care communities but may pay for memory care services provided to eligible seniors who live in these settings.
Medicaid recipients must meet their state’s financial and clinical requirements. For those who live in a residential care community, that community must be Medicaid-certified. [04]
“Some skilled nursing communities will have a memory unit, so Medicaid can be used for that,” says Gewirtz. In this situation, room and board, personal assistance, and nursing care costs are covered by Medicaid. [04]
Your next steps: If your loved one is enrolled in Medicaid, identify Medicaid-approved communities that can provide the level of memory care they need. Ask each community which costs Medicaid may cover, then calculate the amount your family will need to pay from other sources, such as Social Security or a VA pension.
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“Long-term care insurance can help pay for dementia-related care,” says Niki Gewirtz, a senior care expert with A Place for Mom. “If someone has a long-term care policy that reimburses $150 per day, that’s $4,500 per month that the family wouldn’t have to pay out-of-pocket,” she says.
Some long-term care insurance policies will cover the cost of a memory care community, as they are designed to help pay for long-term custodial care. Policyholders must meet certain criteria, or “benefit triggers,” to receive benefits, such as cognitive impairment or inability to perform two activities of daily living (ADLs). Policies also typically include an “elimination period,” or a waiting period between meeting a benefit trigger and receiving payments for care.
Your next steps: If your loved one has long-term care insurance, review the policy to confirm that they meet the requirements for receiving benefits.[05]
“I always recommend that people bring their policies along on community tours, or when they speak with a home care agency rep, so they can go over them together and talk about what needs to happen for that policy to start paying out,” says Gewirtz.
Your loved one may be able to access cash from a life insurance policy to pay memory care costs. For example, a whole life insurance policy may be sold to a third party through a life settlement in exchange for a lump sum or another form of payment.[06] A policy may also be surrendered to the insurer for its cash value.[07] However, selling or surrendering a policy may reduce or eliminate the death benefit and can have tax consequences.
Your next steps: Review your loved one’s life insurance policy and call their insurance company representative to learn whether the policy allows them to access funds for memory care costs and how to do so.
| Payment source | What it might help pay for | What families should do next |
|---|---|---|
| Medicare, Medicare Advantage, or private health insurance | Medically necessary care, including doctor visits, hospital care, prescriptions, diagnostic testing, and some skilled services. These programs and plans generally don’t cover long-term room and board or custodial care. | Review the plan’s benefits and confirm which medical services are covered. Estimate how much of the remaining memory care cost must be paid another way. |
| Medicaid | For eligible individuals, certain long-term care services in approved settings. Coverage, eligibility rules, and participating communities vary by state. | Contact the state Medicaid office to confirm eligibility and covered services. Ask prospective communities whether they participate in the applicable Medicaid program. |
| Long-term care insurance | Covered custodial care services after the policyholder meets the policy’s benefit triggers and elimination period. Coverage depends on the policy and approved care setting. | Review the policy’s benefit triggers, waiting period, daily or monthly benefit, exclusions, and covered settings. Ask the insurer what documentation is required to begin a claim. |
| Life insurance | Cash accessed through options such as loans, withdrawals, accelerated benefits, surrender, or a life settlement. It does not directly cover memory care. | Contact the insurer to review available options and their effect on the death benefit, taxes, and policy value before accessing funds. |
Expert advice for affordable memory care
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Planning for future dementia care gives you time to understand the likely costs of memory care, confirm available coverage, and identify how you’ll pay for expenses that insurance doesn’t cover.
To prepare:
A Place for Mom Senior Advisors can help you understand local memory care costs and identify communities in your area that accept different payment sources. Consult with tax, legal, and insurance professionals for guidance on financial planning and your loved one’s eligibility for certain benefits.
Whether your loved one has been diagnosed with dementia or you’re just exploring insurance policies to prepare for the future, it’s important to understand which costs insurance may cover and which expenses you’ll need to pay another way. Most families should expect to supplement insurance and benefits with personal funds, especially for room and board and ongoing custodial care.
Ask what the monthly fee includes, which services cost extra, and how fees may change as care needs increase. Also, ask which insurance plans or programs the community accepts and whether it participates in Medicaid.
Short-term care insurance may cover some custodial care for a limited period, depending on the policy. Coverage limits, benefit triggers, and eligible care settings vary.
Disability insurance usually replaces part of a person’s income when they can’t work. It generally doesn’t pay memory care providers directly, and many older adults no longer have active coverage.
A Place for Mom. (2026). Proprietary data.
Alzheimer’s Association. Medicare.
National Council on Aging. (2026, March 25). Does Medicare Cover Memory Care? A Comprehensive Guide.
National Council on Aging. (2026, June 23). Does Medicaid Cover Memory Care?
Administration for Community Living. (2020, February 18). Receiving long-term care insurance benefits. LongTermCare.gov.
The Financial Industry Regulatory Authority. (2023, September 29). What you should know about life settlements.
National Association of Insurance Commissioners. Life insurance.
The information contained on this page is for informational purposes only and is not intended to constitute medical, legal or financial advice or create a professional relationship between A Place for Mom and the reader. Always seek the advice of your health care provider, attorney or financial advisor with respect to any particular matter, and do not act or refrain from acting on the basis of anything you have read on this site. Links to third-party websites are only for the convenience of the reader; A Place for Mom does not endorse the contents of the third-party sites.