As people age and require more assistance with daily living and health needs, a range of housing and care options is available.  Over the past four decades the market for seniors housing and care — including assisted living and independent living communities — has greatly expanded to accommodate people with more complex needs.  These settings provide housing in a community environment that often includes personal care assistance services.  Unfortunately, these settings are often out of the financial reach of many of this country’s eight million middle-income seniors (those ages seventy-five and older).  The private seniors housing industry has generally focused on higher-income people instead.  We project that by 2029 there will be 14.4 million middle-income seniors, 60 percent of whom will have mobility limitations and 20 percent of whom will have high health care and functional needs.  While many of these seniors will likely need the level of care provided in seniors housing, we project that 54 percent of seniors will not have sufficient financial resources to pay for it. This gap suggests a role for public policy and the private sector in meeting future long-term care and housing needs for middle-income seniors.

- The Forgotten Middle

* The text below is also taken directly from The Forgotten Middle.  Read the entire report here.


"Alternative solutions are needed to serve the millions of seniors who cannot remain in their homes and who will lack the financial resources for private-pay seniors housing.  Among these solutions is finding less costly ways to provide housing and care.  From the private-sector perspective, options may include lowering investment return expectations by charging less rent and reducing profit margins; subsidizing lower-income residents with higher-paying residents, as in mixed-income communities; or offering more basic and less expensive housing service products. Technology may be another solution to reduce operating costs, increase staff efficiency, or make residents more self-sufficient. Seniors housing could also work to more formally involve family caregivers, outside volunteers, and healthier residents in a structured way to offset staffing costs, as occurs in some other countries.  Finally, à la carte pricing models that break out service and care expenses from housing create more flexibility for some residents.  Although some seniors housing operators are experimenting with options today, they are not widespread. One way to stimulate such private sector innovation could be to offer tax incentives for developers and operators of seniors housing to serve middle-income seniors.  As the opportunity to serve this growing cohort becomes more recognized, we expect creative entrepreneurs to pursue other yet-to-be-imagined solutions.  From a public program perspective, housing and health care policies could be considered.  For example, within federal housing policy, such as that related to low-income tax credits and other programs, eligibility limits could be raised to include more middle-income seniors. On the consumer side, subsidies or voucher programs could be expanded to allow more seniors to access seniors housing or new incentives created to encourage long-term care financial planning.  Another possibility is for housing communities with sufficient capacity to establish their own Medicare Advantage plans. For example, one plan offers on-site medical services delivered by employed physicians.  Other innovative plans being developed include provider consortiums that jointly own Medicare Advantage plans to capture covered lives on a more cost-effective basis."

Beginning in 2019, Medicare Advantage plans may offer supplemental benefits that cover non-medical services, including in-home modifications.  However, such benefits are optional for Medicare Advantage plans offered by companies that believe the coverage will be cost-effective; they are not available under fee-for-service Medicare.  Reimagining the Medicare benefit to provide broader access to supportive services could be one way to address the impending unmet needs.  Alternatively, lawmakers could consider a new benefit that explicitly funds long-term care (for example, a Medicare “Part E” that shifts funds from Medicare Part A acute care).  From a Medicaid policy perspective, policy makers could consider changes to Medicaid long-term care benefits.  The current program requires people to impoverish themselves (“spend down”) to qualify for coverage.  Although Medicaid is the payer of last resort, even high-income people can eventually receive sizable Medicaid coverage by living longer and having higher medical needs in old age.  However, by broadening eligibility and expanding coverage to home and community-based services for beneficiaries with higher incomes and less acute health needs, the program may be able to forestall health and functional deterioration and keep seniors in non-institutional settings longer, when preferred.  Today, roughly one-fifth of assisted living residents have some of their care covered by Medicaid, though many programs have waiting lists and other coverage limits.  By statute, Medicaid can pay only for care services and is not allowed to cover the costs of housing, except for institutions such as nursing homes and hospitals.  State Medicaid programs could take several measures to make these housing costs more affordable, such as limiting the amount seniors housing communities can charge Medicaid beneficiaries, allowing residents to retain greater income to pay for room and board while still qualifying for Medicaid, or allowing supplementation by families or trusts.  Importantly, any policy solution should recognize the full range of services that seniors may need as they age.  Failure to provide in-home supportive services may lead to a premature loss of function and avoidable institutionalization for some people.  Meanwhile, remaining in one’s home alone might not produce the best outcomes for all people.  Social isolation and loneliness have been documented to create real and costly declines in health status.  Future initiatives to expand seniors housing options and affordability should recognize a range of possible living arrangements, including in-home and community-based options."






Caroline F. Pearson, Charlene C. Quinn, Sai Loganathan, A. Rupa Datta, Beth Burnham Mace, and David C. Grabowski.  "The Forgotten Middle: Many Middle-Income Seniors Will Have Insufficient Resources For Housing And Health Care."  Health Affairs.  May 2019