How Pricing Works for Assisted Living

Pricing Works Assisted Living

How Pricing Works for Assisted Living

If you have an elderly loved one nearing the stage of life where assisted living is an option (or even a necessity), you need to educate yourself on the different ways the pricing for assisted living works. As with most service sectors, there are different pricing schemes, and the one that you choose should suit you, your family, and your elderly loved one. Here is more information on what you may encounter as you shop for the best assisted living arrangement.

The Flat-Fee Arrangement

The most predictable arrangement is one in which the assisted living facility simply charges a flat fee each month. Regardless of what specific levels of care your elderly loved one needs (or does not need) the fee remains the same every month.

This arrangement has the benefit of being stable and predictable. If you are in a financially tight situation, it can help with budgeting, since you know exactly how much money you will need each month to pay the bill.

The disadvantage of this arrangement is that the flat fee will typically be a little bit higher than what you would pay under a different arrangement if and only if your elderly loved one is fortunate enough to not need many services. Of course, the other side of this is that if your elderly loved one would typically need a high level of service, you may find that a flat fee arrangement is actually cheaper than other pricing options for assisted living.

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Fee-for-Service Pricing

The other end of the spectrum of the flat-fee pricing model is the fee-for-service model. This is also known as “a la carte” pricing, and works essentially the way the name suggests: each month, the assisted living facility charges a base rate for rent and meals. Any additional services that your elderly loved one may require are charged to his or her bill that month.

The advantage of this pricing model is that you only pay for what you need; of course, if your elderly loved one needs more services, this can quickly become expensive. A disadvantage to a la carte pricing is that it can be wildly unpredictable, with one month’s fees being low and the next month being excessively high due to changes in your loved one’s situation. Still, if your family is not operating on a tight budget, this arrangement can prove advantageous when compared to the flat fee arrangement, unless your elderly loved one consistently needs high levels of care.

Hybrid Pricing

A third pricing scheme is a hybrid of the flat fee and the fee-for-service models. Commonly referred to as the levels of care model, this pricing scheme classifies assisted living residents into one of the several tiers based upon their needs. A flat fee is charged that will vary depending on the tier in which the resident is placed.

Residents are frequently re-evaluated in order to ensure they remain in the proper tier for their needs. This arrangement has some of the advantages of both flat fee and fee-for-service, providing both predictability as well as a level of pricing commensurate with the needs of the elderly person.

Additional Costs

In addition to monthly fees, many assisted living facilities charge a one-time entrance fee. Similar to an enrollment fee at a college or a gym, this fee is designed to cover the initial costs associated with taking in a new resident. They can be quite high, so you should inquire beforehand as to whether any entrance fees are involved.

If the facility you are considering does charge an entrance fee, see if it can be negotiated. Depending on factors such as the current occupancy rate, some facilities are open to negotiating and even waiving the entrance fee.

So, Which Pricing Scheme Is Best for You and Your Family?

As with many questions, the answer to the query of which scheme you should choose is simply, “It depends.” You should carefully evaluate your elderly loved one’s situation and determine what level of care it is likely that he or she will need.

If you anticipate that your elderly loved one will need a high level of care, you may wish to explore flat fee options, and do your best to steer clear of fee-for-service facilities. On the other hand, if you anticipate that your elderly loved one will not need much care at all, a fee-for-service option will provide the best financial situation for you.

Finally, if you just cannot determine how much care your elderly loved one will need, you might consider facilities offering tiered pricing. That way, you can count on some stability in pricing without being grievously overcharged if your elderly loved one ends up not needing a high level of care.


Gaugler, J. E., & Kane, R. L. (2007). Families and assisted living. The Gerontologist47 (suppl 1), 83-99.

Yee, D. L., Capitman, J. A., Leutz, W. N., &Sceigaj, M. (1999). Resident-centered care in assisted living. Journal of aging & social policy10(3), 7-26.

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