What is Affordable Assisted Living?

What is Assisted Living?

We draw no distinction, other than cost, between affordable assisted living and market rate assisted living. Though there is no one clear definition of assisted living, we look to definitions from two important organizations:

The Assisted Living Federation of America defines assisted living as a special combination of housing, supportive services, personalized assistance and health care designed to respond to the individual needs of those who need help with activities of daily living ("ADL") and instrumental activities of daily living ("IADL"). Supportive services are available, 24 hours a day, to meet scheduled and unscheduled needs, in a way that promotes maximum dignity and independence for each resident and involves the resident's family, neighbors and friends.

The Centers for Medicare and Medicaid Services states defines assisted living as: "a type of living arrangement in which personal care services such as meals, housekeeping, transportation, and assistance with activities of daily living are available as needed to people who still live on their own in a residential facility. In most cases, the "assisted living" residents pay a regular monthly rent. Then, they typically pay additional fees for the services they get."

To learn about other housing options, see our senior housing comparisons.

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Background and Statistics - Demographics of the Senior Population 

"The central challenge in eldercare is to respond to both the successes of American medicine and the changing demographics of the elderly. Medicine is keeping people alive longer. But with the increasing mobility of Americans, we have more and more people who are living into their advanced years, but without the kind of family structure needed to provide both medical and social supports."(a)

The challenge of an aging population is often more acute in rural areas and smaller towns, as there are significantly fewer support services available for seniors who live on farms, in homes far from the city or in small communities. However, the challenge is by no means rural alone, it is one of national scope:

• In 1900, 1 in 25 Americans were 65 or older (4% of the population).

• In 1998, 1 in 8 Americans were 65 or older (12.5% of the population).

• In 2050, 1 in 5 Americans will be 65 or older (20% of the population).
  6.5 million people today age 65 and over need assistance with activities of daily living. This number will double by the year 2020.

• The 85 and older population will increase 39.3% this decade and 33.2% between 2000 and 2010. This is the largest growing segment of the elderly age group.

• Census estimates of population projections of persons age 85 and over range from 18.2 million to 31.1 million by the year 2050.

• Of 10.2 million households of people 75 or older, 2/3 have incomes below $25,000 — too little to afford market rate assisted living.

In order to meet the needs of this burgeoning senior population, it is crucial to create more cost effective, less restrictive alternatives to nursing home care particularly for the Medicaid population. To date, the assisted living industry has created a substantial number of units for market rate seniors (those with incomes in excess of $25,000 per year). The Coming Home Program (no longer operational) focused on moving this industry to create those same options for low-income seniors who outnumber market rate seniors 2 to l. It worked to encourage for-profit and nonprofit providers of assisted living to expand to create assisted living that is affordable for low-income seniors in both rural and urban communities.

To be eligible for federal funds, states are required to provide Medicaid coverage for most individuals who receive federally assisted income maintenance programs like Supplemental Security Income (SSI). Though some states supplement the SSI payment, the standard national payment is $484 per month. It is an industry standard that frail seniors will pay up to 80% of their income for a combination of rent and services. With that in mind, the goal of Coming Home projects was to reduce the shelter payment to about $350-$400 per month, with services funded through Medicaid.

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Housing as a Component of Health Care

"One of our first tenants was an emergency placement, a malnourished woman found sleeping on the floor with no heat. She was afraid to turn on the heat because she had no money. After moving in, she kept saying that she didn't deserve to live in so nice a place because she was so poor. She seems to be doing well, eating and putting on weight."(b)

The quality, safety, accessibility, and cleanliness of an elderly person's living environment has the ability to have a significant impact on their health. Good housing does not automatically equate to good health — but it does equate to a good setting for the delivery of both personal and health care services, but it can also be an obstacle to that same delivery.

"Another man, a diabetic who has had several toes amputated walked into the building Tuesday and said he was ready to move in. Marsha, the case worker had been trying to get him to move for some time suspecting that he was being financially abused by his landlord. He was renting a cockroach-infested house and his body was covered with cockroach bites. He had no bed and was sleeping on the floor wrapped in a sleeping bag to keep the cockroaches off him. He had no heat. Fortunately, Patsy, Carol and my husband, Stuart, were at Cache Valley when he showed up. They fed him lunch. Patsy and Carol rushed to Wal Mart and bought him new underwear, socks, a sweat suit, sheets and blankets. A local furniture store donated a mattress. They bought the bed frame and a used recliner chair, and later found an end table at a used furniture store. Stuart transported it all down in his truck in the cold rain. I understand our new tenant cleaned up nicely and came to dinner in his new clothes." (c)

It is safe to assume that most seniors who are economically comfortable live in a safe and clean housing environment, be it their home or apartment. In the case of low-income seniors, that assumption is not true. Low-income seniors are often forced by economics to live in housing that is not safe, not clean, not accessible, and for those reasons is detrimental to their health. In the Southern Illinois Coming Home projects, over 50% of the new residents had previously lived in conditions that were detrimental to their health. In many cases, those seniors lacked basic necessities such as heat and hot water. The aforementioned cases are representative of those residents.

From a cost containment perspective, service-enriched housing fits into the category of prevention. It, once again, provides a stable, independent environment in which both personal and health care services can be delivered and a senior's health status can be monitored.

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Assisted Living as a Component of a Larger Health Care System

The vast majority of assisted living currently in place across the country is "stand alone," meaning that the facility is not intrinsically connected to any other health care or long-term care facility, program, or provider. This creates problems for the consumer.

Philosophically, Coming Home not only focused on creating affordable assisted living, but rather on creating it within a larger community health care or long-term care environment. For seniors to move appropriately in a system of care, the provider of that care should be focused on what is in the best interest of the senior, and not on what is in the best interest of the health care facility. Coming Home believed that in order to gain economies of scale in the delivery of long-term care services, it is important for assisted living facilities to create space, or adapt existing space for community services like adult day health care, nutrition sites, clinic services, respite care, etc.

Coming Home's sites in Southern Illinois are good examples of that integration. For those projects, a representative from Shawnee Alliance for Seniors (the case management agency for the state) became a member of the River to River Residential board. Shawnee provided case management for 3,000 elderly people with incomes of less than $25,000 per year in 13 counties in rural southern Illinois. Shawnee worked with 14 hospitals, (three of which are represented on River to River's board,) assessing, tracking, and placing all elderly patients discharged from the hospital in that region. The Ullin Coming Home also integrated both respite care and a nutrition sites into the facility.

Coming Home's Arkansas project is another example of effective integration. The facility was sited next to the new senior center to take advantage of the nutrition site, case management services, recreation and a clinic.

Projects, whether they are urban or rural, need to start with an evaluation of the current community health care system and, if possible, seek to provide pieces of the long-term care system beyond just assisted living. Adult day health care, nutrition sites, clinic services, and respite care can all potentially be delivered cost effectively using planned community space in assisted living. Additionally, the funding mechanisms and financial and regulatory requirements for these programs are often compatible with assisted living.

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Managed Care and Assisted Living

Managed care is having a profound impact on health care delivery in the United States. Seniors represent the largest portion of health care spending and present the greatest challenges to managed care companies. As evidenced by the preceding review of national demographics, this portion of the population is also the greatest concern for Federal and state governments as they seek to control Medicare and Medicaid costs. Consequently, governments are looking to managed care companies as a means of controlling costs.

Reducing expenses through placement in lower cost environments is a basic principle of managed care. This refers to the movement of patients from inpatient facilities to lower-cost environments with comparable health and personal care services. It may mean a return to their residences with home, health, and/or personal care services, or a move to an assisted living residence with personal care services.

Medication non-compliance represents a high cost to the health system. In 1995, $85 billion was spent on drugs, and an additional $76 billion was spent on problems caused by non-compliance and other related issues. The improper use of medications is especially serious with the senior population. On average, assisted living residents take six medications. (d)  Since many assisted living facilities manage the medications of their residents, with a high degree of compliance, their drug management experience could become a powerful inducement for managed care providers to seek partnerships with assisted living providers.

Though there are many issues to resolve before assisted living residences become an accepted part of the managed care environment, the potential exists for their active participation in managing health care spending.

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Why Isn't This Being Done?

"Someone is going to have to develop truly affordable assisted living in the future." (e)

There are many reasons why assisted living has not made a significant impact on low-income seniors. Some of the most influential factors are as follows:

The cost to create a new state model is substantial. Coming Home staff spent three years working to create the first demonstration of affordable assisted living in Southern Illinois. Undertaking this project would not have been possible without funding from The Robert Wood Johnson Foundation. Coming Home expended nearly $400,000 in at-risk pre-development funding for this first demonstration in Southern Illinois. Without the revolving loan fund set up by the Foundation, that too would not have been possible.

The hard work has been done in Illinois. As a result of the work done by Coming Home and its Southern Illinois partners, it is now possible for Illinois for-profit and nonprofit entities to access existing demonstration funds through the Department on Aging and compete for equity funds from the Illinois Housing Development Authority. It is now possible to offset the costs of creating future projects, with development fees and supporting the operations through project cash flow, based on the work and experience of the Coming Home Program.

Many development and provider organizations simply won't take those kinds of risks.

Assisted living is a new industry and the developers and operators (both nonprofit and for-profit) have focused their efforts on marketing to those seniors with incomes in excess of $25,000 per year (35 percent of the senior population 75 years of age and older). As they reach capacity serving this upper-income group, they will more actively search out existing strategies and models that have proven successful for serving the Medicaid-eligible, low-income senior.

Though many states provide reimbursement for "assisted living," the product they are actually funding is an institutional board and care model that they choose to call assisted living. Seniors, regardless of their income levels, find this setting to be neither attractive nor desirable.

"State policy makers need to work with housing finance agencies and providers to understand the room-and-board costs that cannot be covered under Medicaid, as well as the service costs that can be covered. To be able to move into assisted living residences, frail older people with low incomes will need to retain sufficient income to pay for the room and board costs." (f)

States reimburse for the services delivered in assisted living, but cannot by law reimburse through Medicaid for the shelter piece. The cost for the housing piece in private pay assisted living almost always exceeds the income limitations that qualify that senior for Medicaid. Part of the challenge of the Coming Home Program was to reduce shelter costs so that they fell within the Medicaid limitations on income. The national Coming Home Program will continue to focus on SSI level ($484 per month) as the basis for affordability.

Charges for services delivered in most of today's private pay assisted living facilities exceed the funding that the state is willing to provide those same services for a Medicaid-eligible senior. However, Coming Home has demonstrated in four states that it is possible to deliver a comprehensive array of assisted living services in accordance with state Medicaid reimbursement parameters.

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The Coming Home Philosophy of Assisted Living 

In order to assist in the process of creating and implementing a set of quality standards for assisted living, the Coming Home Program's National Advisory Committee adopted a set of minimum standards for all Coming Home assisted living projects. This process began with an evaluation of the standards articulated in the Assisted Living Quality Initiative (ALQI) and the philosophy as articulated by the Assisted Living Quality Coalition.

Because Coming Home focused its efforts on creating and supporting affordable assisted living, there are several additional elements of the Coming Home philosophy that we sought to incorporate into the standards set by ALQI:

The following statements of philosophy are articulated in the Assisted Living Quality Initiative:

NCB Capital Impact/Coming Home also played a central role in the Assisted Living Workgroup (ALW) and co-chaired the Affordability Topic Group. The ALW website contains the final report of the ALW, formed in response to the Senate Special Committee on Aging's request that assisted living stakeholders work together to reach agreement on what constitutes assisted living and provide recommendations to assure the quality of assisted living programs. The report is a major resource for policy makers and providers, containing guidance on best practices and minimum standards from a majority of the participating stakeholders.

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