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Ways to Pay for Home Care for Seniors

Merritt Whitley
By Merritt WhitleySeptember 11, 2020
Elderly couple using a calculator and laptop to figure out how to pay for home care services.

Older adults who prefer to live in their home but need extra help with daily living often gravitate to home care. From assisting with day-to-day tasks like cooking and running errands, to helping with personal care like dressing and bathing, this type of care can relieve stress while providing safety and companionship.

But for some families, determining how to pay for home care is stressful itself. However, there are several little-known funding sources, including VA programs, reverse mortgages, and — for low-income seniors — Medicaid. Learn more about ways to finance in-home care.

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.

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“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.

Medicaid’s home care benefits

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.

1. Aid and Attendance Benefits and Household Allowance

If you require assistance with activities of daily living (ADLs), are housebound, and/or have extremely poor eyesight (5/200 in one or both eyes) you may qualify for the VA’s Aid and Attendance Benefits and Household Allowance.  

This government program provides monthly payments — in addition to the VA pension — for qualified veterans and widowed spouses. Learn more about how Aid and Attendance pays for senior care.

 2. Home Maker Home Health Aide Care

Direct home care assistance for veterans and their spouses is available through Home Maker Home Health Aide Care. This program assists with grocery shopping, personal grooming, meal preparation, dressing, and more.

The first step is to speak with a VA social worker, says Robbin Stoddard, a Senior Living Advisor at A Place for Mom and former military pay analyst. “The social worker has to refer the family for the service. Then, they’re assigned to an additional person who comes to the home and determines the care and hours needed.”

“It’s similar to the assessment process for Medicaid programs,” she adds. All out-of-pocket costs are typically based on a sliding scale and the veteran’s needs. “In many areas, there may be a high demand, or the home care program may only be available to those with service-connected disabilities of 50% or more as they always have priority,” says Stoddard.

3. Program of Comprehensive Assistance for Family Caregivers 

This program focuses on caregiver support for those with service-connected disability of 70% or more. It provides family members with a stipend for caregiving. Learn how to apply and determine your eligibility.

Reverse mortgages

A reverse mortgage enables a home owner to take out a loan, which converts part of the home’s value into payments. 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

A few property requirements include:

  • Single family home or a home 1-4 units with one unit occupied by borrower
  • HUD-approved condominium
  • Manufactured home that meets FHA requirements

Learn tips for shopping for reverse mortgages from the Federal Trade Commission.

Private pay sources for home care

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

  • Retirement income
  • Savings
  • Stocks
  • Home equity
  • Assistance from friends or family

Long-term care insurance and other policies

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

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). Our SLAs are experienced in home care services and can provide one-on-one advice about care and cost at no charge to you.
Merritt Whitley
Author
Merritt Whitley

Merritt Whitely is an editor at A Place for Mom. She developed health content for seniors at Hearing Charities of America and the National Hearing Aid Project. She’s also managed multiple print publications, blogs, and social media channels for seniors as the marketing manager at Sertoma, Inc.

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