The Cost of In-Home Care: Who pays for Elderly Care at Home?

Many older adults prefer to age at home without assistance. But sometimes it isn’t possible due to declining health or dementia. One option to help aging adults remain in their homes longer is in-home care — a type of nonmedical help with day-to-day life provided by trained aides in the comfort of a senior’s own home. But how much is in-home care, and is it the right next step for your loved one?

The cost of in-home care for the elderly depends on the number of hours a senior spends with a caregiver, as well as the services they need and the supplies necessary to support them.

“Home care as a whole is a very individualized service,” says Joe Buckheit, founder of AgingCare.com. “Costs are not only specific to region and agency, but also to the services being provided.”

Learn more about how home care costs are calculated, the difference between private and agency in-home care costs, states with the highest and lowest rates, and how the cost of in-home care for seniors compares with nursing home and assisted living pricing.

How is the cost of in-home care calculated?

In July and August of 2020, CareScout, a Genworth Financial company, contacted 57,981 providers to complete 14,326 surveys of nursing homes, assisted living facilities, adult day health facilities, and home care providers.

• More than 90% of home care agencies charge by the hour, though some offer discounted rates for monthly contracts.
• The median cost of home care in the U.S. was $24 an hour in 2020. This means half of home care agencies charged less than $24 an hour, while half charged more.
• In-home care costs vary based on geographic location, licensing requirements, and level of care required.
• The monthly median cost of in-home, full-time care for seniors is $4,481. This is based on 44 hours of care a week.
• From 2004 to 2020, the cost for in-home care services rose 1.88% – 3.80% per year on average. “The home care industry is growing, and recent demand is surging,” says Buckheit.

Costs of in-home care vary by need

How much will your family pay for home care based on the data above? The cost ultimately depends on a few factors, including what home care services your relative needs and how often they need them. Before beginning your search for in-home care, consider how much help your loved one requires. Do they live alone independently but want assistance with a few chores? Or do they require full-time help?

“Each agency should work with the family to perform a needs assessment,” says Buckheit. “Senior care services that require a higher level of training or experience may incur a slightly higher cost.”

The family and home care aide or agency will develop a plan that can range from simple companionship to hands-on personal care and help with activities of daily living (ADLs), like dressing and bathing.

How are rates structured?

Most home care aides and agencies are priced by the hour. They often have a minimum number of contracted hours — generally two to four hours a day or seven hours a week — to cover transportation and staffing costs.

Some home care agencies will offer contracts for weekly or monthly care if a family determines their elderly loved one needs significant assistance throughout the day.

In-home care costs vary by state

If you live somewhere with a high cost of living, you can expect to pay above the national median for home care. However, if your city has a relatively low cost of living, you’ll probably pay less. State regulations impact the cost of care as well; several states require special certifications, while others have capped costs for elder home care.

Genworth Financial compiled a list of hourly, monthly, and annual median costs of home care in each state.

10 most expensive states for home care:

• Washington: $31.16/hr
• Minnesota:$30.75/hr
• California:$29.00/hr
• Massachusetts: $29.00/hr
• New Hampshire:$28.50/hr
• Vermont:$28.50/hr
• Wyoming:$28.12/hr
• Alaska: $28.00/hr
• South Dakota: $28.00/hr
• District of Columbia:$26.13/hr

10 most affordable states for home care:

• Louisiana:$17.00/hr
• Alabama:$18.00/hr
• Mississippi:$18.00/hr
• West Virginia:$18.50/hr
• Arkansas:$20.00/hr
• North Carolina: $20.00/hr
• Tennessee: $20.50/hr
• Georgia: $21.00/hr
• Kentucky: $21.25/hr
• South Carolina: $21.38/hr

How much does 24/7 in-home care cost?

Agencies and private caregivers have different price structures for round-the-clock home care, depending on the number of care aides, sleeping arrangements, and room and board. How much 24/7 in-home care costs varies by model, from most to least expensive:

Non-sleeping visits: 24/7 in-home care is generally covered by three caregivers working 8-hour shifts, or two caregivers working 12-hour shifts. For older adults who need round-the-clock care, aides should always be awake and available to monitor fecal and urinary incontinence, or to regularly move an immobile senior to prevent bedsores. Caregivers are generally paid the same hourly rate for waking shifts, day or night. The median rate for 720 hours, or 24/7 care for 30 days, of in-home care a month at an hourly rate is $17,280.

Sleeping visits: Seniors who need full-time supervision for peace of mind but can sleep through the night may not need an alert caregiver 24/7. If an elderly loved one just needs occasional help, an overnight caregiver may be able to sleep with a bell or alarm to wake them in case of an emergency or a trip to the restroom. For a 10- to 12-hour sleeping shift, you can expect to pay a flat rate of $120-$200. The median monthly cost of in-home care with a 12-hour sleeping shift of $150 is $12,780.

Live-in caregiver rates: A live-in caregiver may provide daily assistance as well as emergency support throughout the night.

“A live-in caregiver receives the benefit of room and board, however, it does not negate the need to pay for hourly care,” says Buckheit, though he notes there may be some reduction in in-home caregiver costs accounted for by living expenses.

Before hiring a live-in caregiver, work out a care contract including responsibilities and fees, since they can vary greatly on a case-by-case basis.

Cost of in-home care: A progression based on health

Home care costs increase as a senior’s needs increase, requiring more hours of care.

“Families that choose in-home care are acknowledging they need more assistance to keep their loved one home safely for as long as possible,” says Buckheit.

By starting home care early, seniors may be able to age in place longer without worrying about isolation, nutrition, or household responsibilities. Your home care agency will help you decide how many hours a week will benefit your family, but some common hours by care need are listed below.

Common home care cost plans

These price estimates, like the others cited throughout the article, are based on Genworth’s median home care cost of $24 an hour.

• 7 hours a week: $713 a month— Healthy, independent seniors may be able to get all the care they need from several short visits a week. Housework, companionship, meal preparation, and cleaning can be accomplished in this time frame for less than $1,000 a month. Seven hours a week is generally the minimum requirement for home care agencies, though some have higher or lower thresholds.
• 15 hours a week: $1,528 a month— A 2-3 hour daily check-in can benefit seniors who need more care but are independently mobile and cognitively sound. Several hours in the morning could provide assistance bathing, dressing, and preparing meals for the day.
• 30 hours a week: $3,055 a month— A 30-hour week may be ideal for seniors living with family caregivers who work or who prefer more companionship and stimulation. Thirty hours a week equates to six hours a day, or much of the time a senior would otherwise be alone.
• 44 hours a week: $4,481a month— Forty-four hours of care would provide coverage for a family caregiver who works full-time and doesn’t want their senior loved one to be alone. An aide could assist with all ADLs, including toileting, dining, and bathing. For aging loved ones requiring dementia care at home, incontinence assistance, or aid with other chronic conditions that prevent them from being alone safely, 44 hours a week may be an ideal schedule — assuming a family member can cover nights and weekends.

Private vs. agency home care expenses to consider

Families looking for in-home caregivers have two options: Hiring a private, independent caregiver, or using a licensed home care agency. There are pros and cons to both private and agency caregivers.

Private in-home caregiver considerations

“There is no payment structure for hiring a caregiver individually,” says Buckheit. “A private hire is contracted by the family and all fees, payments, and taxes are to be determined contractually between the caregiver and client.”

• Private caregivers often have lower hourly costs since they set their own rates.
• You may have to pay extra to conduct background checks or have a lawyer review contracts.
• Private caregivers may not have worker’s compensation insurance, making any accidents on the job potentially costly to families.

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Agency in-home caregiver considerations

Though agency care is generally slightly more expensive, it removes scheduling and paperwork burdens from families and provides peace of mind. Also, if a caregiver is sick or otherwise unable to work, the agency will provide another aide to ensure there aren’t gaps in care.

• Families typically pay more for agency caregivers than private caregivers. Agencies pay salaries for multiple employees, workers’ compensation and liability insurance, and payroll.
• Agencies often provide continued training for care aides or may require aides to be certified nursing assistants or companions.
• Contracts, insurance, and taxes are generally already included in home care agency costs.

Cost of home care vs. nursing homes and assisted living

Genworth’s survey cites the monthly median costs of assisted living and nursing homes at $4,051 and $8,517, respectively. Compare the costs and benefits of these care types.

In-home care vs. assisted living

At $4,300 a month, assisted living costs are similar to the $4,481 a month cost of 44 hours a week of in-home care. These two types of care also offer similar services, from help with ADLs to housekeeping and transportation. Neither is designed for seniors who need extensive medical care.

There are a few differences between assisted living and home care pricing:

• Assisted living includes restaurant-style meals and snacks. Home care aides help with meal prep but do not cover the cost of groceries.
• Assisted living communities have nighttime staff onsite in case of an emergency.
• Assisted living includes maintenance-free living, with costs of housing, utilities, repairs, and housekeeping included. While home care includes household tasks and chores, home mortgage or rent, taxes, and maintenance are paid by the homeowner.

In-home care vs. nursing homes

Nursing homes — sometimes called skilled nursing facilities — provide comprehensive medical care in addition to personal care services. That’s why they tend to be the most expensive senior care option at about $8,821 a month for a private room.

• Nursing homes offer round-the-clock care for one inclusive price, while home care costs are hourly.
• Nursing homes employ licensed medical professionals to assist with chronic conditions, wound care, and therapy, while home care aides are generally not qualified to provide medical assistance.
• Home care aides provide one-on-one assistance, while nursing homes often have a large, rotating staff.

How to cover the cost of in-home care for the elderly

For some families, determining how to pay for home care is stressful. However, there are several little-known funding sources, including VA programs, reverse mortgages, and — for low-income seniors — Medicaid.

Does Medicare pay for in-home care?

Original Medicare doesn’t cover home care or non-medical services by home care aides. It does, however, cover select home health care services. In short, home medical services prescribed by a doctor and carried out by a skilled medical professional are covered by Medicare. Home health is generally intended to provide short-term care for seniors choosing to recover at home versus a hospital.

“Medicare covers medically necessary, in-home care, also called home health or skilled nursing,” says Kim Barnett, content manager at AgingCare.com. “It must be ordered by a doctor, and it is authorized only for short-term purposes.”

(Learn more about the differences between home care and home health.)

However, Medicare Advantage, a type of health care plan offered by private companies, may cover non-medical or home care aides depending on the plan. In these cases, the home care agency must be part of Medicare’s network.

Does Medicaid cover in-home care costs?

For low-income seniors, Medicaid may cover some home care services depending on your state. In response to a desire to reduce or delay institutional care for the aging population, almost every state now offers Medicaid eligibility for medical and non-medical in-home care, says Barnett.

“However, as with all Medicaid-funded services, there are strict eligibility guidelines,” she says. “Each state determines its own programs and requirements.”

Medicaid’s home and community-based service waivers (HCBS waivers) program may be used to cover non-medical services such as help with activities of daily living (ADLs). Family caregivers may also receive payment through the Medicaid Cash and Counseling program. Contact your state Medicaid office for more information on programs, benefits, and eligibility.

VA programs for home care

The U.S. Department of Veterans Affairs (VA) offers programs to help pay for home care to assist veterans and their families. Qualifications and services covered are different for each program, so it’s best to speak with a social worker in the VA to determine which program is most beneficial or applicable to your situation.

Discover three possible VA programs to help offset home care costs:

• Aid and Attendance Benefits and Household Allowance
• Home Maker Home Health Aide Care
• Program of Comprehensive Assistance for Family Caregivers

Reverse mortgages

A reverse mortgage enables a home owner to take out a loan which converts part of the home’s value into liquid assets. The owner can then obtain funds in a lump sum or as needed to supplement income. This option enables seniors to stay at home while creating consistent cash for care by tapping into their home’s equity.

The only federally-insured form of a reverse mortgage is called a Home Equity Conversion Mortgage (HECM). These mortgages are backed by the U.S. Department of Housing and Urban Development (HUD).

Seniors interested in this type of reverse mortgage must meet certain requirements:

• Must be 62 or older
• Must own the property outright or pay down a considerable amount
• Must have no federal debt
• Must occupy the property as a principal resident

The Federal Trade Commission offers tips for shopping for reverse mortgages.

Private pay sources and long-term care insurance for home care

Families often pay out-of-pocket for home care services through several means including:

• Retirement income
• Savings
• Stocks
• Selling or renting a family home
• Assistance from friends or family

Did you purchase a long-term care insurance policy? There’s a good chance — depending on your policy and coverage — you can receive funds through long-term care insurance for in-home care. Typically, benefits begin when you need help with at least two ADLs, such as bathing or dressing.

Sometimes private health insurance pays benefits for home care services. Flexible spending accounts may also be used to pay for home care.

Seek personalized advice or assistance to find in-home care for your family

Understanding various funding sources for home care can be complex. Consider speaking to someone directly if you’re still unsure about how to cover home care costs.

• Elder law attorney: Many lawyers have experience in financial planning for long-term care, taxes, Medicare, Medicaid, and other financial issues that commonly affect seniors. The National Academy of Elder Law Attorneys’ “Find a Lawyer” tool can help you easily locate attorneys in your state.
• Accountant: If you’d like assistance evaluating your family’s financial situation and additional ways to pay, consider speaking with an accountant.
• Certified financial advisor: An advisor can assist with every aspect of your life related to finances. The National Institute of Personal Financial Advisors can help you find someone to match your needs using their financial advisor search tool.
• Senior Living Advisor (SLA): A Place for Mom’s free, local SLAs are experienced in home care services and can provide one-on-one advice about care and costs at no charge to you.

If you think home care may be the right choice for your aging loved one, reach out to A Place for Mom’s Senior Living Advisors for a free consultation about home care options near you. They’ll be able to answer your questions about home care costs, benefits, and help you explore the next best steps.

Sources:

Genworth. “Cost of Care Survey, 2020.”