Paying for Home Care

Paying for Home Care
Dawn Allcot, 10/3/2015
If you are considering in-home care for your loved one, you probably have a lot of questions about how to pay for care. HomeCare.com is here to help you find the best options based on your situation.

What are some of the ways we might pay for in-home care?
There are a number of ways to help pay for in-home care. Some options include: Medicaid, PACE, Long-Term Care insurance (LTCi), life insurance, Veteran’s benefits, a home equity loan, or a reverse mortgage. We will briefly address each of these.

Can I use Medicare to pay for in-home care?
Medicare Parts A and B cover some aspects of in-home care, such as skilled nursing care, physical therapy, speech-language therapy, or occupational therapy through a certified home health agency. This is typically associated with an episode of care. Medicare typically does not cover long-term home care, such as services provided by a home health aide.

If I am a Veteran can I apply for any benefits that will help cover home care costs?
Veterans who are age 65 or over, or otherwise classified as “totally disabled” according to VA guidelines, and who require assistance with Activities of Daily Living, may qualify for monthly assistance for home health care through the Department of Veterans Affairs Aid and Attendance or Housebound Approved Pension benefits. The requirements are less stringent than Medicaid requirements to qualify for a home health aide. Veterans may qualify to receive up to $1,788 monthly, as of 2015. Widowed spouses of Veterans may qualify to receive assistance on a monthly basis. To see if you qualify, check limits, and apply go to VeteranAid.Org.

Does LTCi pay for in-home care?
LTCi is an additional insurance policy that specifically covers long-term care costs. There are two different kinds of long-term care insurance: tax-qualified and non-tax-qualified. Tax-qualified insurance payments count as a deductible medical expense, but may have stringent requirements that must be met prior to opening a claim. Non-tax-qualified policies are not deductible, but you may be able to open a claim without meeting criteria depending on your medical condition. Upon opening a claim, you may encounter a waiting or “elimination” period. This is typically a period when you are responsible for paying your long-term care costs out of pocket prior to being eligible for reimbursement.

Depending on the carrier and plan, an LTCi policy may reimburse a daily amount for nursing home care, and a percentage of that daily benefit for in-home care. Since in-home care is typically less expensive than nursing home care, your out-of-pocket costs may be the same regardless of whether you choose a nursing home or the comfort of receiving care in the home. Shop carefully and make sure you understand the policy before making a purchase. You need to make certain that it will meet your expectations if you need long-term care at some point.

How can I use my life insurance to help pay for long-term care?
There are a number of ways to use a whole (universal) or term life insurance policy to pay for home care, including cashing in your policy at face value, “surrendering” it for a predetermined amount, or selling it to a settlement firm for a cash value. You may also take advantage of “Accelerated Death Benefits,” which permit you to cash in your policy for a monthly benefit of one to two percent of the cash value, up to 50 percent of the policy’s total value, to pay for home care. Finally, you may be able to convert your policy into a long-term care benefits plan, which provides monthly payments toward home care without affecting Medicaid eligibility. In many cases, you or your loved one will have to pay taxes on the income derived from the sale or surrender of the policy. Cash from life insurance benefits may also affect other program eligibility such as Medicaid. In some cases, there are no restrictions on the home health aide you hire for long-term care.

Can a home equity loan or reverse mortgage be used to pay for home care?
If you have equity in your home and a source of income, perhaps through investments or retirement savings, a home equity loan is one option to pay for home care. If you are 62 or older, and on a fixed income, a reverse mortgage lets you tap into your home equity to pay for home care. Under this scenario, you would be granted a loan from the bank based on the equity in your home. You don’t have to pay that money back until you sell the home or die. You must still pay property taxes, insurance, and interest on the reverse mortgage. It’s important to remember that tapping into your home’s equity to pay for home care can create challenges if you want to sell your home, or can reduce the inheritance for your surviving family members.

Does Medicaid pay for home care?
Medicaid is jointly funded by the federal and state governments, and eligibility is determined at the state level. Medicaid may help pay all or a portion of your home care costs if you meet eligibility requirements based on your finances and your physical health. If your income or assets are too high for you to qualify for conventional Medicaid, you may qualify for one of Medicaid’s Home and Community-Based Services (HCBS) “waiver” programs. The maximum allowable assets to qualify for an HCBS program is higher, as the program is designed to help seniors “age-in-place” longer and to keep individuals out of nursing homes for as long as possible. Go to www.benefits.gov, and search under your home state to find out if you qualify for Medicaid or an HCBS waiver program.

What is PACE and how can it help me pay for in-home care?
The Program of All-Inclusive Care for the Elderly (PACE) is a Medicare and Medicaid program designed to help seniors age-in-place. If you are 55 years or older, are currently receiving Medicare or Medicaid benefits, and are in need of long-term care, you may qualify for PACE if it is available in your community.

What are the benefits to “private pay” home care?
When you pay for home care with cash rather than using Medicaid or long-term care insurance, you may hire any home health aide you desire, for as long as you desire, with no restrictions other than the amount of money you are willing and able to pay. Furthermore, you do not need to be concerned about meeting any medical requirements to hire a home health aide. If you need extra support with ADLs, you can hire someone to help, without any restrictions or medical proof from a doctor.

Is in-home care less costly than moving to an assisted living facility?
As you consider ways to pay for home care for yourself or your loved one, it is best to consider your alternatives before making a decision. Is moving to an assisted living facility less expensive than hiring home care? The median cost for a one-bedroom assisted living apartment is $3,500/month or $42,000/year. If you are living in your own home and your home is or is close to being paid-off, the costs of home care plus your living expenses probably won’t come close to that. Home care offers the flexibility, privacy, and independence you may not receive in an assisted living facility. With home care, you only pay for the services you need. You won’t have the hassle, stress, or additional expense of a move, and you’ll be able to stay in comfortable surroundings. If loved ones can fulfill caregiving duties at least some of the time, you may be able to reduce home care costs even further. As the prices for assisted living continue to rise, and as home care services grow in popularity, more and more seniors are making the decision to age-in-place. HomeCare.com can help by matching you with the Caregiver that’s right for you.
Dawn Allcot

Dawn Allcot

Dawn Allcot is a full-time freelance writer, editor, and social media specialist who excels in getting businesses noticed online through informative, accessible content marketing. With more than 20 years editorial experience, she’s written and published thousands of articles on topics that include parenting, personal finance, technology, health, business, and senior care.