Maximize Earnings: Get Paid for Your Assisted Living Facility
Dec 02, 2024
Running an assisted living facility is about more than just caring for people. You also need to know how to make enough money to keep things running smoothly. The money you bring in helps you provide great care for your residents. If you want your business to succeed in the long run, it's super important to understand how you can earn money in the assisted living world.
In this blog, we’ll break down the main ways assisted living facilities make money. We’ll keep things simple, so you can easily understand how to get paid and grow your business. Let’s jump in and learn how you can make your assisted living facility a success!
Check to the video too:
1. Medicaid: Government-Funded Support
Medicaid is a big way that assisted living facilities get paid. It’s a government program that helps cover costs for people who qualify. Here’s a quick rundown of how it works:
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How Funding Works: Medicaid is a program where the federal government gives money to each state. The states then use that money to help pay for people who need assisted living (among other things). Each state decides how much money they will pay per day for each resident.
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Billing and Payment: The facility charges Medicaid based on how many days a resident stays. For example, if your state pays $100 a day, and a resident stays for 30 days, the facility gets $3,000 for that month.
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Resident Contributions: Many people on Medicaid also have to pay part of their own costs. This is called "share of cost." They use some of their Social Security money to help pay, while Medicaid covers the rest.
To make sure things run smoothly, most facilities have rental agreements that clearly state how much each resident needs to pay and what’s covered by Medicaid. This way, everyone is on the same page about costs.
2. Private Pay: Direct Payments from Residents
Another way facilities make money is through private pay. This is when residents pay for their care out of their own pocket. They might use their savings, money from selling a house, or get help from their family to cover costs.
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Higher Earnings: Private pay usually brings in more money than Medicaid. Monthly rates for private pay residents can range from $5,000 to $15,000, depending on what the facility offers.
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Contracts and Payments: It’s super important to have clear contracts for private pay residents. Make sure all the details are written down, like how much they’ll pay each month and what services they’ll get. Using automatic payments, like ACH (Automated Clearing House), makes paying quick and easy.
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Special Services: If you have private pay residents, you might be able to offer special services or fancier rooms. This can attract people who want a little extra comfort and care.
3. Long-Term Care Insurance: A Growing Revenue Stream
Long-term care insurance is becoming a popular way for people to pay for assisted living. This is especially true as more and more baby boomers—people born between 1946 and 1964—start needing care. While it’s not as common right now, it’s likely to be a big deal in the future.
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How It Works: Some residents have long-term care insurance that covers assisted living. The facility can bill the insurance company directly, which can make things easier.
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Benefits: Getting paid through insurance means you don’t have to rely on the resident to make payments on time. It’s a steady and reliable way to get paid, which helps keep cash flowing smoothly.
Why Knowing Your Revenue Streams Matters
Knowing how your facility makes money is super important. It helps you plan for the future, manage your budget, and keep your business growing strong. Whether you rely on Medicaid, private pay, or long-term care insurance, each method has its own rules and things to consider.
By understanding each type of payment, making clear agreements, and using smart payment systems, you set your facility up for long-term success. When you have a solid plan, you can focus on what really matters—giving your residents the best care possible!
Take the Next Step in Your Assisted Living Journey
If you found this information helpful, please visit Assisted Living Investing for more resources. Remember to download our free Business Plan Checklist to help you create a successful business plan for your facility.
Need help figuring out where to start? Join the next Roadmap Challenge and build your launch plan with me.
Show full transcript 👇
Transcript
00:00:00
in today's video we're going to get into how you get paid when operating your assisted living facility where does that money come from how are you getting it when does it come to you we're going to get out into all of that in today's video [Music] hey everybody welcome back to the channel it's Brandon Gustafson welcome back to Assisted Living investing today I want to get into the topic of how are you getting money for your assisted living facility how are you generating that income where does it come from uh
00:00:34
how much is it how frequently are you getting paid and we're going to get into that in today's video uh a few way there there are a few ways and I think you're probably going to be aware of those I'm going to talk about Medicaid first and I'm going to link a video up above of where I kind of got into the process of Medicaid and how it works and just a lot of the nitty-gritty for that so if you're interested in that process and everything that that entails make sure you go and watch that video because it's
00:01:01
going to have a lot of really good information for you as you're trying to kind of figure that out but the the first one is going to be Medicaid so Medicaid is a federally funded program that is administered at the state level and and so what that means is those funds come from from the federal government so they will tell the state you know you've got a billion dollars go ahead and give this money to Medicaid and states will go ahead and ask the federal government for more of that money
00:01:31
um on a on an annual basis they set their budget it kind of goes through it through a whole process but the state is then administering that and so they're going to say okay I have a billion dollars and I've got um you know a thousand Medicare beneficiaries so I've got a hundred thousand dollars that I can spend on each Medicare beneficiary per year these are round numbers these are not accurate numbers at all but let's just use those numbers as as quick examples on how that's going to work and so what they're
00:02:03
going to say to you is okay so you're in assisted living facility you're providing services to this resident here and we're going to give you a daily rate that you can build so let's just say that that daily rate is 100 dollars that you could bill your state may or may not be it could be higher or lower just kind of depends on how the state decides they want to administer that Medicaid plan but they're going to tell you this is your daily rate you go ahead and you Bill it for every day that the resident
00:02:33
is in your facility so if you've got a month that has 30 days in it you multiply that by a hundred dollars a day now you've got three thousand dollars in income coming in for that Resident from Medicaid your state might be different there's a few ways that they can administer this they can do it themselves or they may throw it out to a third-party administrator or an insurance company uh that you might be familiar with you know United Health Blue Cross Blue Shield Optum United Health uh Humana it could
00:03:05
be any number of of those businesses Molina Healthcare is another one that does it oftentimes these are insurance companies that have experience working in government-funded programs which I have a lot of experience actually working in those in my professional career so but that's kind of how that money gets to you you can build them this day is going to give you some guidance typically you can bill as frequently as you want but they're going to have specific days that they pay out the states that we operate in they pay
00:03:34
it out on a weekly basis I think it's every Thursday anything that's in that bucket they're going to pay out they'll start the process on Thursday usually get funded by Friday sometimes Monday it just kind of depends on the process there but you could bill as frequently as you want and then get your payout um you know on on the basis that the state that you're working with is doing those payouts to you when you're working with Medicaid there's also uh they call it different
00:04:04
things in different states I've seen it rent utilities and food I've seen it share of cost I've seen it and I kind of refer to in in different ways there but it's basically you can build Medicaid the the state for x amount of money per day and then your resident also is going to have to pay this additional share of cost fund that is based off of the social security income that they get and so they're going to take that money and this date says okay they got a thousand dollars they get to keep 125 of that for
00:04:40
whatever they want to do and the remaining uh 875 dollars you get to collect that from them for their share of cost those numbers are all kind of I'm just using round numbers to make this really easy it's going to depend on the state it's going to depend on how much Social Security income that Resident is getting there's a lot of factors that go into it but but when you're dealing with Medicaid you collect from the state you collect from the resident they both come to you as
00:05:06
collection processes so when you're working with a Medicaid resident you actually want to set up a very similar kind of rent agreement with your residents that they have to pay you the amount that is has been given you from the state you know 875 or whatever the amount is and then if they don't do that then they are subject to the the laws of tenants in your state so you could potentially evict a resident if they are refusing to to pay through that process it depends on the state that you're in
00:05:38
landlord tenant laws you might want to look into that actually as you're getting started on your assisted living facility and what those rules are because uh if you're in a landlord friendly State it's going to give you more benefit as well just something you want to be aware of as you kind of go down that path that's Medicaid uh the next one is going to be private pay residents so private pay is a person that just has enough money they've sold their house and all of that money is now sitting in their
00:06:08
bank account so they don't qualify for Medicaid and but they need assisted living services and so they're going to come to your facility in order to qualify for Medicaid they have to have under a certain threshold of money in the bank so they're going to be a private pay resident now some private pay residents they want a very high-end facility something that's really nice um they you know they were a real estate investor and they have a lot of money uh sitting around and so what they want to
00:06:37
do is uh be in a really nice high-end facility they want to they want to have that kind of Lifestyle which is great if that's the type of facility that you want to be you're charging them five to fifteen thousand dollars a month for staying in your facility which is great uh you know that's the kind of if that's the kind of high-end facility that you want to do you're going to set up a lease agreement with them that says you know you pay us ten thousand dollars a month for these services
00:07:06
kind of outline those Services there and then you have stipulations in that contract that say you know either of us could break this at with 30 days notice or whatever stipulations you want to have make sure you're looking at the rules and regulations in your state for how that's going to work but if you do that it's going to kind of you're setting yourself up with a contract it's going to protect you through that process so I highly suggest that you do that that's kind of how private pay
00:07:31
Works you're then just working directly with them or their designated payee but you're collecting that money from them on a monthly basis is how that one works just comes to you on our monthly recurring basis I would highly suggest that you set up an ACH type of a payment so it just pulls out of their account automatically you're going to need to get some paperwork and things for that to do it very simple to do a lot of banks will help you out with that process so highly suggest you do that
00:08:01
then you don't get you know checks lost in the mail or oh I forgot or whatever it's just pulling it on the fifth of the month or whatever date that you put in your contract so highly suggest you do that the third way that you could get paid and I don't have a lot of experience with this one but it is long-term care so a lot of people right now that are kind of in the age of Assisted Living they don't have that long-term care it wasn't really as prevalent of a thing for that generation
00:08:29
that is in assisted living as we get into the Baby Boomers though and as that that uh you know silver tsunami starts coming through you're going to see a lot more people that have long-term care so you're going to be building that long-term care insurance and they will pay you directly my assumption there is that money comes from them and there's not going to be any anything that goes with the resident I don't have a lot of experience with this one though so I can't tell you specifics on how it works
00:08:57
but my assumption there you're building the insurance they pay you the five thousand dollars a month or whatever that rent is um and then you collect it directly from that insurance company again I would suggest getting ACH set up there if at all possible it's going to just kind of save you some time and headache on the back end so those are the three different ways that you can get paid in Assisted Living if you use any of those three or you're interested in learning more about them make sure you comment
00:09:24
down below because I'll be able to kind of engage with you a little bit there and the channel also make sure you get over to the website assisted livinginvesting.net we'll have a link down below so you can get over to the website and and we can interact over there sign up for the newsletter you'll kind of get some some really good tips and tricks on our 12-week process for getting into assisted living facility uh getting into an assisted living facility and how to invest in them so make sure
00:09:49
you sign up for our newsletter we'll get you all that information over there and get our free underwriting calculator as well again over at assisted livinginvesting.net does investing in Assisted Living sound interesting to you but you don't know how to get started an assisted living investing we're here to start help you out through the process from start to finish make sure you visit us on the website thanks for watching and have a great
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