Assisted Living Costs the Government $12 Billion a Year. No One Can Say How Many Facilities Take It.
Summary
A first-of-its-kind GAO accounting puts combined federal Medicare and Medicaid spending on assisted living services at $12 billion in 2024 — a figure GAO itself calls an undercount, because assisted living isn't a uniformly defined provider type in federal claims data. The 687,000 aides who staff assisted living and other residential care settings earn a median $17.71 an hour.
Where the $12 billion goes
The money splits almost evenly between the two programs, but for very different reasons. GAO's analysis found $8.5 billion in traditional Medicare spending on 829,327 beneficiaries and at least $3.5 billion in federal Medicaid spending on roughly 300,000 beneficiaries — Medicaid's federal share only; combined with states' matching dollars, total Medicaid spending on services delivered in assisted living facilities was at least $6.2 billion.
Medicare doesn't pay for assisted living itself — room, board, and daily care are still the resident's own bill. What Medicare pays for is the medical care that happens to be delivered inside these buildings, and about 89 percent of that traditional-Medicare spending was for two services: hospice ($6.1 billion, 294,147 beneficiaries) and home health ($1.4 billion, 218,741 beneficiaries). Hospice care averaged nearly $20,735 per beneficiary in 2024 — more than three times the per-beneficiary average for home health.
View data as table
| Traditional Medicare | $8.5B | 829,327 beneficiaries |
|---|---|---|
| Federal Medicaid | $3.5B | 300,000 beneficiaries |
| Medicare → Hospice | $6.1B | 294,147 beneficiaries, ~$20,735 avg. |
| Medicare → Home health | $1.4B | 218,741 beneficiaries, ~$6,555 avg. |
| Medicare → Other services | $0.9B | home visits, psychotherapy, DME, etc. |
's own note on Table 2: the three Medicare service categories sum to $8.4 billion against a reported $8.5 billion total, "due to rounding." And the whole Medicare figure is itself a floor — it excludes Medicare Advantage entirely, which covered roughly half of all Medicare beneficiaries in 2024, because judged the encounter data too unreliable to analyze.
Coverage without a guarantee
Medicaid coverage of assisted living is a patchwork built state by state. As of March 2025, 44 states covered assisted living services for older adults or people with disabilities through Medicaid, per GAO. But coverage on paper isn't the same as a guaranteed spot: 29 of those 44 states cover the service through home- and community-based services (HCBS) waivers, which by design let a state "target program enrollment to specific populations and limit the number of participants the program serves." The remaining 15 states use other Medicaid authorities — demonstrations or state-plan options — that don't carry the same enrollment caps.
Combined federal and state Medicaid spending averaged about $23,000 per beneficiary in 2024, found, though it varies with how much a state's program covers and how long someone stays. The beneficiaries themselves skew younger than assisted living's population overall: about 21 percent of Medicaid beneficiaries receiving services in these facilities were 85 or older, versus more than half of assisted living residents generally, per a federal study cites. Most were dually eligible for Medicare and Medicaid, and about a quarter qualified through Supplemental Security Income.
The workforce delivering the care
More than one million people live in U.S. residential care settings — small group homes, assisted living communities, and life-plan communities — according to PHI's 2025 workforce report. The people staffing them are residential care aides: personal care aides, home health aides, and nursing assistants working specifically in these settings. PHI counts 687,000 of them nationally in 2024, a workforce that's grown steadily since the pandemic and is projected to add another 72,000 jobs — 10 percent — by 2034.
Their pay sits in the middle of long-term care's three worker segments. Residential care aides earned a median $17.71 an hour in 2024, adjusted for inflation — up from $14.10 in 2014, but still below the $18.83 nursing assistants in skilled nursing homes earned, and only slightly above the $16.77 home care workers earned in private homes.
View data as table
| Home care workers | $16.77/hr | 2024, inflation-adjusted; 3.2M workers |
|---|---|---|
| Residential care aides | $17.71/hr | 2024, inflation-adjusted; 687,000 workers |
| Nursing assistants (nursing homes) | $18.83/hr | 2024, inflation-adjusted; 492,000 workers |
None of these wages clear PHI's benchmark for financial stability in most states. Across the full direct care workforce — home care, residential care, and nursing home aides combined — median annual earnings were just under $26,000 in 2024, and PHI found 36 percent of direct care workers living in low-income households.
The takeaway
- The $12 billion figure is a floor, by 's own account. It leaves out Medicare Advantage entirely, undercounts states where billing codes don't cleanly identify assisted living, and can't be reconciled against a national count of facilities because none exists.
- "Covered" doesn't mean "available." 29 of the 44 states offering Medicaid-funded assisted living do it through waivers built to cap who gets in — the tool says most states reach for is also the one that rations the benefit.
- The workforce is bigger than the spending suggests. 687,000 residential care aides staff a system that, by 's federal claims data alone, moves $12 billion a year — and their pay sits between two other long-term-care segments that are also underpaid.
Figures cover federal spending and national workforce data for calendar year 2024 unless otherwise noted; state Medicaid coverage reflects 's review as of March 2025.
Sources
- U.S. Government Accountability Office, Assisted Living Facilities: Information on Federal Spending and Medicaid Coverage (-26-107884, published June 2, 2026; publicly released July 2, 2026) — the $12 billion total, the $8.5B/$3.5B program split, the Medicare service-type breakdown (hospice/home health/other), the 44-state and 29-waiver Medicaid coverage figures, and 's own undercount caveats. gao.gov/products/gao-26-107884 (full report PDF, fetched via Wayback Machine capture after gao.gov blocked direct retrieval from this network)
- PHI, Direct Care Workers in the United States: Key Facts 2025 (published September 15, 2025) — the 687,000 residential care aide workforce count, the $17.71 median hourly wage and its 2014–2024 trend, comparative wages for home care workers and nursing assistants, and the $26,000 median annual earnings and low-income-household figures for the full direct care workforce. phinational.org
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Assisted living has never had a federal price tag. Unlike nursing homes, which are Medicare-certified and federally inspected, assisted living facilities are licensed state by state, under state-specific definitions, with no single federal agency required to count them. That changed on July 2, 2026, when the Government Accountability Office published the first analysis to trace 2024 Medicare and Medicaid claims data across both programs and put a number on what the government actually spends inside these buildings: at least $12 billion. 's own caveat is in the report's first pages — the total is "likely an undercount," because assisted living "facilities are not a uniformly defined provider type" that claims systems can consistently identify.