Most families pay for home care services using personal funds from savings and retirement benefits, but there are other ways to cover these expenses. Medicare will pay for home health care for a short period of time following an illness, and some seniors may qualify for public assistance programs such as Medicaid and home and community based services programs. Veterans and their surviving spouses may qualify for VA benefit programs to help cover in-home care costs. By exploring different ways to pay for home care, you can support your senior loved one’s wishes to age at home safely and gracefully.
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Most families pay for home care services using personal funds.[01] This may include a variety of sources provided by seniors and their family members, such as:
Note that unreimbursed qualified medical expenses that exceed 7.5% of your loved one’s adjusted gross income (AGI) — or your AGI if you’re claiming them as a dependent on your tax return — are tax-deductible. Home health care services are considered tax-deductible when they’re considered medically necessary by a physician.
For many people, their home is their largest asset. Some seniors rent out or sell their house and move to a smaller home. A reverse mortgage is another way to use the home equity that your loved one has built over the years to pay for care.
“A reverse mortgage can provide the income a family needs to care for their loved one,” says Vicki Demirozu, founder of Giving Care with Grace, a soft skills training for caregivers. “I find that many people don’t know about them, but they can be very helpful when a family needs to pay for ongoing care.”
Whether it’s selling a policy for cash or taking a loan against its accumulated value, there are several ways that a life insurance policy can be used to pay for home care. Policyholders may be able to sell or surrender their policy, set up a living benefit program against their current policy, or take out a loan against the policy.
Long-term care insurance is an insurance policy purchased in advance to help pay for future care at home or in senior living settings. Policies vary, but typically seniors can become eligible for benefits once they’re no longer able to perform two activities of daily living (ADLs) independently.
Long-term care insurance may cover the following services, depending on the plan purchased:
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While Medicare won’t cover home care services indefinitely, it will cover these expenses for a short time after an illness or injury. For people who have low incomes, Medicaid often covers home care services. The National Council on Aging’s Benefits Checkup online tool helps seniors and their families find local programs that support home care and other needs.
Medicare will cover short-term home health care prescribed by a doctor. These skilled services are provided by medical professionals like registered nurses or physical and occupational therapists. Home health care is generally intended to provide temporary care for seniors who choose to recover at home instead of a hospital or skilled nursing facility.
Medicare will cover some nonmedical home care services, but only if a patient is receiving medical services and requires help with activities of daily living as part of a doctor’s care plan. Nonmedical services might include assistance with:[02]
“I advise families to start their research early, even before their loved one is discharged from the hospital. Even when money isn’t an issue, it may be that there isn’t an available home health nurse or home care aide who can go to their home right away. It takes time to build the right care team, so it’s really important to start thinking about how you’ll manage home care before your loved one needs it,” explains Demirozu.
Some Medicare Advantage policies may include additional coverage for nonmedical home care services. Medicare Advantage plans are a type of Medicare-approved health care plan offered through private insurance companies.
PACE, or the Program of All-inclusive Care for the Elderly, is a Medicare program that’s available in some states. Seniors who are eligible for PACE may be eligible for Medicare or Medicaid or both. PACE will cover all medically necessary care and prescriptions that have been ordered by a physician.
Medicaid may cover some home care services depending on a senior’s income and where they live. Many states offer Medicaid programs that cover some medical and nonmedical in-home care services for eligible seniors.
For example, many states have a home and community based services waiver program that covers specific nonmedical services in a senior’s home, such as help with activities of daily living.[03] Medicaid may also pay family caregivers to care for their loved one at home in some states. Contact your state Medicaid office for more information on specific programs, benefits, and eligibility requirements.
The U.S. Department of Veterans Affairs (VA) offers several programs to help veterans and their surviving spouses pay for home care.
Examples of VA home and community based services programs that may pay for in-home care include the following:
Because the qualifications and services covered are different for each program, families should speak with a VA social worker who can help determine which program fits their situation best.
“Sometimes even a little bit of home care can go a long way,” Demirozu says. “A couple of hours of respite can help a caregiver so much, whether it’s to get a haircut or have coffee with a friend. Home care can be good for the person receiving the care, but it’s also so helpful for their caregivers.”
To qualify for VA home care programs, veterans must meet the following basic requirements:
Other veterans benefits, such as the Aid and Attendance benefit and the basic and survivor’s pensions, can be used however the recipient sees fit, including for home health care expenses.
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Understanding various funding sources for home care can feel overwhelming. Consider speaking to one of these professionals directly if you’re still unsure about how to cover home care costs:
Hiring a home care aide or finding the right home care agency can be a complicated process. However, Senior Living Advisors at A Place for Mom can offer guidance on your loved one’s needs and help you explore ways to pay for in-home care. They can also help you determine your priorities, discuss your budget, and connect you with local home care agencies — all at no cost to your family.
Chidambaram P, Burns A. (2024, July 8) 10 things about long-term services and supports (LTSS). KFF.
Centers for Medicare and Medicaid Services. Home and community-based services authorities.
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