Public policy concerning subsidies for elders in residential settings has paralleled the emergence of new residential long-term care models. Subsidies for low-income older persons may be provided through the federal Supplemental Security Income program (SSI), through state supplements to the federal SSI program, or through Medicaid. Many states have created living arrangements under a state supplement to the federal SSI payment for residential settings. These supplemental payments cover room and board and sometimes personal care. The payment standards typically were created years ago before the emergence of assisted living and the higher level of care provided in assisted living and, more frequently, in board-and-care settings. SSI payments developed primarily for "board," rather than "care," are quite low in relation to the fees in assisted living facilities. Many observers contend they are low in relation to the actual cost of meeting the increasing needs of low-income board-and-care residents. States are now developing policies which combine SSI and Medicaid to provide an appropriate level of service and to encourage aging in place.
The Social Security Administration publishes an annual report describing each state's living arrangements and the amount of the state supplement. Individual states may use a specific term to refer to their supplement and some use the term SSI to refer to both the federal payment and any state supplement. The federal payment in 1998 is $494 a month and is adjusted each January based on the cost of living. For the purposes of this section, references to SSI payments above $494 a month mean that the state supplements the federal payment.