How Families Pay for Assisted Living: Private Pay, Insurance, VA Benefits, the House, and TennCare CHOICES

Paying for assisted living

Key point: Most families combine several sources: income and savings first, then long-term care insurance, VA Aid and Attendance or the house, with TennCare CHOICES as the safety net for care costs only.

What a good provider should make clear: A written runway showing each source, when it starts, and the month the money would run out, with a plan for that month.

Common mistake: Assuming Medicare will pay, or waiting until savings are gone before learning how TennCare CHOICES works.

Questions to ask: Which of these sources does our parent qualify for, and how many months of care does the total cover at the expected rate?

Each source at a glance

Private pay: income and savings

Start with what your parent has coming in every month: Social Security, pensions, annuities, investment income. Then list savings and investments that can be drawn down, and when they can be accessed without penalty or tax surprises. The difference between monthly income and the monthly bill is what savings must cover.

Divide savings by that monthly shortfall and you have the number of months savings will last. Then add the annual rate increase and your parent's likely move to a higher care level. Our cost guide explains why the bill grows.

A financial adviser or an elder law attorney can help where there are retirement accounts, a spouse at home, or a business. A spouse who stays at home needs their own income protected; plan for both people, not one.

Long-term care insurance

If your parent bought a long-term care insurance policy, find it now and read the benefit section. Most policies pay when a licensed health professional certifies that the insured person needs help with at least two activities of daily living, or needs supervision because of severe cognitive impairment.

• Daily or monthly benefit: the most the policy pays per day or month.
• Elimination period: the number of days your parent must pay for care before benefits start, often counted in days of paid care rather than calendar days.
• Benefit period or pool: how long, or how much in total, the policy pays.
• Covered settings: most modern policies cover assisted living; older ones may cover only nursing homes. Check the wording.
• Inflation protection: whether the benefit has grown since purchase.

Call the insurer early to open a claim. They will need the care assessment, a plan of care, and the community's licence details. Communities familiar with long-term care claims can help with the paperwork; ask whether they bill the insurer directly or you are reimbursed.

VA pension with Aid and Attendance

Veterans who served during a wartime period, and their surviving spouses, may qualify for a VA pension with an Aid and Attendance increase if they need help with daily activities. The VA publishes a maximum annual pension rate. For rates effective December 1, 2025, the maximum with Aid and Attendance is $29,093 a year for a veteran with no dependents and $34,488 for a veteran with a spouse. The net worth limit for the period December 1, 2025 to November 30, 2026 is $163,699.

The maximum is not what everyone receives. The VA subtracts countable income from the maximum, and unreimbursed medical expenses, which can include the cost of assisted living care, reduce countable income. For a veteran paying for assisted living, that can make the pension meaningful.

• Apply through the VA directly, or with a free accredited Veterans Service Officer. Shelby County and the Tennessee Department of Veterans Services offer this help.
• Gather the discharge papers (DD-214), income and asset statements, and a physician's statement of care needs.
• Be wary of anyone who charges to help you apply, or who advises moving assets to qualify: the VA has a look-back on asset transfers and charging a fee to prepare a claim is restricted.

The house: selling, renting or keeping it

For many Memphis families the house is the largest asset. The choices:

• Sell: the proceeds fund care for years. Timing matters: a sale can take months, and your parent may need to move first.
• Rent: monthly rent can cover part of the bill while keeping the house, with the costs and work of being a landlord.
• Keep: if a spouse still lives there, or the family plans to return. Under TennCare CHOICES rules, the home your parent lives in does not count toward the asset limit, which matters when a spouse remains at home.

A reverse mortgage only works while a borrower still lives in the home as their main residence; once the last borrower moves out permanently, the loan generally becomes due. It is rarely a fit for paying assisted living for a parent living alone.

Talk to an elder law attorney before selling or transferring a house if TennCare might be needed within five years, because transfers for less than value are looked back on.

Bridge loans and short-term gaps

A bridge loan is short-term borrowing to pay for the first months of care while the house sells or a benefit such as VA pension or a long-term care claim starts paying. Some lenders market products for senior living specifically. Before you take one, know exactly how and when it will be repaid, the interest and fees, and what happens if the house takes longer to sell than planned.

Other short-term options families use: a family member covering the first months and being repaid from the sale, or negotiating a delayed community fee with the community.

TennCare CHOICES: what it does and does not cover

CHOICES is TennCare's programme for long-term services and supports. It can pay for care in a nursing home, or for home and community based services, which include care services in an Assisted Care Living Facility, for people who need that level of care and qualify financially.

What TennCare publishes for 2026:

• Income: no more than $2,982 a month (three times the SSI federal benefit). Above that, a Qualifying Income Trust may be an option.
• Assets: no more than $2,000 in countable resources. The home you live in does not count.
• Transfers: nothing given away or sold for less than its worth in the last five years.

What CHOICES pays in assisted living, from TennCare's 2026 memo:

• Covered care services: no more than $1,497.77 a month to the community.
• Room and board: not covered. The resident pays it from their own income, and the community may charge no more than $2,385.60 a month for it, or less if that is what it charges others, unless the family chooses to pay for a private room.

So a CHOICES resident still pays room and board from their income, and the community receives at most $3,883.37 a month in total. Many communities limit how many CHOICES residents they accept, and some accept none. Ask early. Our guide to when the money runs out covers spend-down and planning.

What Medicare does and does not pay

Medicare pays for your parent's doctors, hospital care, therapy and prescriptions (through Part D), short skilled nursing stays after a qualifying hospital stay, home health in limited circumstances, and hospice. It does not pay rent, meals or personal care in assisted living or memory care. A Medicare Advantage plan may add small extra benefits, but it does not pay for assisted living either.

Building the runway

1. List monthly income.
2. List assets and when each can be used.
3. Add benefits: insurance, VA, when each starts.
4. Estimate the all-in monthly bill at your parent's care level, rising each year.
5. Work out the month the money would run out.
6. Decide now what happens then: a CHOICES application, a community that accepts CHOICES, or family support.

Questions to ask

• To the community: do you accept long-term care insurance and help with claims? Do you accept TennCare CHOICES, and how many CHOICES residents do you take?
• To the insurer: what is the benefit trigger, elimination period and daily benefit, and is assisted living covered?
• To a Veterans Service Officer: does my parent meet the service, income and net worth tests for Aid and Attendance?
• To an elder law attorney: how do we protect a spouse at home, and how do we plan if CHOICES may be needed within five years?

Tax points worth asking about

Some assisted living costs may count as medical expenses for federal income tax purposes, particularly the care portion for a resident who is chronically ill under a licensed health care practitioner's plan of care. If an adult child pays a large share of a parent's costs, there may be dependant or medical expense questions too. These rules are detailed and depend on the family's situation; ask a tax professional before filing, and ask the community for an annual statement that separates care charges from rent.

Selling the house can create capital gains questions, especially when a parent has owned it for decades. The rules on the exclusion for a main home, and on how long your parent can be away before it stops being their main home, are worth checking with a tax adviser before the sale.