Public Sector, Partnerships Can Help Industry Meet Middle-Market Assisted Living Demand

The senior living industry must provide more affordable assisted living for low- and middle-income older adults in the years to come, and the public sector can play a role in that effort.

That’s according to a recent white paper from The American Health Care Association and National Center for Assisted Living (AHCA/NCAL), which outlined barriers that prospective middle-market residents might face when accessing assisted living services and provided some insights for improving care.

The 80 and over population is projected to grow more than nine percent by 2027, with middle-income older adults making up a good number of that cohort. A recent update to the NORC at University of Chicago’s “Forgotten Middle” study found that about 11.5 million older Americans age 75 and older will be unable to afford AL care in the coming decade. And the gap of the middle market in senior living is widening.


“Many of those seniors will not have family caregivers like generations before them, and financial resources will be more limited,” said NCAL Executive Director LaShuan Bethea in a statement. “NCAL and its members are dedicated to offering more affordable assisted living options to ensure seniors, no matter their circumstance, have access to high-quality long term care.”

Middle-market products in senior living are tough projects, but operators like Fort Wayne, Indiana-based Priority Life Care are trying to crack the middle-market code with over 34 communities across the country, mostly assisted living and memory care.

Priority Life Care CEO Sevy Petras said the NCAL white paper is just another sign senior living operators need to be proactive and reach out to state and federal lawmakers to highlight the problem and help the industry make change.


“In support of these findings and to ensure assisted living is an option for every senior in every state, we all need to call our congressmen,” Petras said in an email to Senior Housing News. “We need to ask our congressmen to take the time to read this paper and work with us to find affordable solutions for our seniors.”

Challenges on costs, reimbursement

The average monthly cost for AL is $4,500 and $54,000 annually, according to the Genworth Cost of Care survey, with the median length of stay at approximately 22 months. That cost is prohibitive to many older adults seeking senior living options, doubly so given that programs like Medicare don’t pay for traditional assisted living services

Nearly one in six residents relies on Medicaid waivers to help pay for daily assisted living services. To qualify for Medicaid waivers, older adults must meet income and medical assistance guidelines. Most states require an individual to demonstrate the need for skilled nursing care.

But “seniors should not have to impoverish themselves in order to have their long term care covered, including in assisted living,” the white paper states.

One way to help meet that demand is by developing middle-market senior living communities. But those can come with an entirely different business model than typical private-pay senior living and gaps in the Medicaid payment reimbursement system make it harder for operators to realize consistent margins.

Costs to provide long term care have spiked since the onset of the Covid-19 pandemic, and those expense pressures are expected to remain as an inflationary environment continues. Added to the expense pressures are the challenges on labor where operators have increased wages, bonuses and benefits to retain and recruit vital frontline staff.

“The unfortunate reality of rising operating expenses means that these increased costs must be passed onto residents and families,” the report reads.

The white paper calls on lawmakers to expand and properly fund Medicaid assisted living services in order to help more providers get involved in addressing the middle-market gap. Coordinating care and bringing in outside services can also reduce the overall health care costs an operator faces, freeing up resources to be invested into waiver programs and allowing more people to participate, according to the white paper.

The NCAL calls for greater flexibility for room and board charges, recommending that policies are developed to “reasonably subsidize” monthly room and board costs.

To spur future development of middle market products, NCAL said lawmakers should consider expanding affordable AL services through a variety of grants and state programming, with an incentive to encourage development of middle market products through creating “new financing incentives” for low and middle income senior housing and AL residents. 

“Our work will continue until everyone who needs assisted living care can access it,” Bethea said. “We will advocate, educate, and collaborate to ensure our profession can efficiently meet the current and future needs of our nation’s seniors.”

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