The question of how to pay for in-home caregiving support can be one of the most daunting barriers to starting the process of finding a carer.
As we’ve talked about throughout our Care at Home resources, there are a wide variety of services provided at different levels of expertise that are available to help you and your loved one at home. Just as there are many different options for types of caregivers, there are also numerous ways that care can be paid for – including Medicare, Medicaid, private care insurance, and out of pocket – each with specific limitations or requirements.
We’ve put together information about different options and additional resources for you to determine how best to pay for the at-home care you need.
Most of the time people pay for help in the home out of their own pocket. However, there are a handful of ways you may receive covered services.
Medicare will pay for certain caregiving services for a limited time. Medicaid has waiver programs that will pay for some in-home caregiving. Some long-term care insurance policies will pay under their conditions. And the VA has programs to pay for help in the home. If you are unclear about what benefits you may qualify for, visit Benefits Checkup.
AARP has also compiled a useful article on various sources of payment for home carers.
A program that may be useful in understanding several sources of payment is the Health Insurance Counseling and Advocacy Program (HICAP). HICAP assists individuals and families with Medicare problems and other health insurance concerns. More than 500 trained and registered volunteer counselors provide objective information on Medicare, Medicare supplement insurance, managed care, long-term care planning, and health insurance. Community education, individual counseling, and some legal services are administered through the Area Agencies on Aging.
HICAP counselors are available for appointments in a wide range of settings such as Area Agencies on Aging, senior centers, senior nutrition sites, libraries, hospitals, and community centers. Counselors may also visit homebound individuals unable to come to a site.
Your local HICAP agency can provide you with a free copy of HICAP’s “Taking Care of Tomorrow, A Consumers’ Guide to Long-Term Care.” Call your local HICAP at 800-434-0222.
Medicare and Home Health Care
Medicare pays for you to get healthcare services in your home if you meet certain eligibility criteria and the services are considered reasonable and necessary for the treatment of your illness or injury. This booklet by the Centers for Medicare & Medicaid Services (CMS) provides guidance on eligibility, services covered, and choosing a CMS-certified agency.
You are eligible to have Medicare pay for home health care if:
- Your doctor certified that you need skilled nursing care or other skilled services such as physical therapy,
- The home health agency serving you is Medicare-certified,
- Your doctor certifies that you are homebound, and
- Your doctor has seen you recently.
You usually will not qualify if you need full-time skilled nursing care over an extended period. However, you can have more than one 30-day period of care. Medicare’s home health benefit only pays for services you get from the Medicare-certified home health agency. They will pay the home health agency one payment for the covered services you get during each 30-day period of care. Other medical services and equipment may still be covered as part of your other Medicare benefits.
Medicare does not pay for:
- 24-hour-a-day care at home
- Meals delivered to your home
- Services, like shopping, cleaning, and laundry
- Personal care like bathing, dressing, and using the bathroom when it is the only care you need
Talk to your doctor or home health agency if you have questions about whether certain services are covered. Home health agencies must give you a written notice before giving you a service or supply that Medicare probably won’t cover. See Medicare’s booklet for more details.
You can find a Medicare-approved home health agency by looking at “Home Health Compare” and through the local agencies we previously discussed.
The Alliance’s Find a Provider directory also offers a comprehensive database of thousands of certified home health agencies. Search for home health providers in your area and check their profiles to see if they accept Medicare as a payment type.
However, please be aware that if you have a Medicare Advantage Plan or other Medicare health plan, you may be required to get home health services from agencies that your plan contracts with. Contact your plan administrator for more information.
If you have questions about your Medicare home health benefits or coverage and you have Original Medicare, visit Medicare.gov or call 1-800-MEDICARE 1-800-633-4227. If you are covered by a Medicare Advantage plan or other Medicare health plan, call your plan. You may also call or visit the website of your state’s insurance assistance program with questions about Medicare and Medicaid. Find your state’s information by visiting or calling the State Health Insurance Assistance Program (SHIP) website (https://www.shiphelp.org/) or call 1-877-839-2675. You can also contact HICAP as previously mentioned.
Medicaid and Home Health Care
While Medicare is a federally supported health insurance program for those 65 and up or those under 65 with certain needs, Medicaid is a joint federal and state program to help those with limited incomes.
Because Medicaid is a federal and state partnership, Medicaid programs will vary from state to state. In general, Medicaid programs offer support for aging in place, and services can range from light housekeeping to skilled care. The American Council on Aging has assembled very useful information on Medicaid programs supporting care services in the home.
To know what home health care services are available to get financial support for, you will need visit Medicaid.gov. There you can:
- Get an overview of what your state offers
- Explore eligibility for you or those in your care
- Find contact information for Medicaid offices in your area
VA Benefits for Caregiving in the Home
The Veterans Administration (VA) has several programs that support veterans and their caregivers in the home. These programs range from homemaker and home health aide care, to home-based primary care and more.
Visit the VA Home and Community-Based Services website for more information or find a VA location near you and give them a call.
Long-Term Care Insurance Policies
Long-term care insurance policies are meant to help cover the costs of services that health insurance, Medicare, and Medicaid don’t cover. This can include help with daily activities like eating and bathing, as well even helping with professional in-home caregiving costs. These policies are often premium-based, like other health-focused insurance types.
Check to see if you have a long-term insurance policy, and if you do, read it carefully. Some long-term care insurance policies will pay for caregiving help in the home if the policy’s requirements are met. Policies may specify how much help you can receive and may require use of their approved agencies. For example, many older policies will only pay for nursing home care. Others will pay for home health aides, but at a rate that has not kept up with inflation (Source: KFF Health News).
If you are considering buying long-term insurance, do your research just like you would when buying health insurance.
The California Department of Insurance has prepared a useful overview of long-term insurance for consumers—it contains good information no matter where you live. AARP also has a guide on making an informed decision on long-term care.
Accelerated Death Benefit from Life Insurance
Accelerated death benefits (ADB) exist to help terminally ill individuals with life insurance access a portion of their death benefit before they pass away (Source: Investopedia). The intent is to use the money to help cover healthcare and related costs. In return, the amount of the total death benefit is reduced.
You can add an accelerated death benefit rider to your life insurance. A rider is an additional coverage or benefit attached to an insurance policy. With many insurers, an ADB rider will be included in a life insurance policy and comes at no additional cost.
Keep in mind:
- In order to qualify for an accelerated death benefit, a policy owner needs to provide proof that they are chronically or terminally ill.
- ADBs are typically not taxed as income, but this can be dependent on the state where the policy owner resides.
- It may be possible to borrow money from a life insurance policy rather than receive benefits in a lump sum. It is worth considering the effects that this may have on estate planning and future costs.
If you have life insurance and are interested in this benefit, be sure to contact your insurance agent or carrier. Sometimes this benefit is available even if not explicitly stated in the insured’s policy, so it is worth asking about.
Paying Out of Pocket
Hiring someone to provide home health care is expensive. Care Scout has created a calculator that can help you get an estimate of costs of care. To use the calculator, enter your location as well as the type and amount of care you require. The calculator will give you an estimate of both your current and future costs. This can be extremely useful in your planning process.
If you have sourced your carers from an agency, you will pay the home health agency directly. An agency should give you their list of services and prices so you can construct a budget. Remember that care needs have a way of increasing over time.
Ask the agency if the carers they send you are employees of the agency, and if the agency handles tax matters. If not, clarify what your responsibilities are—preferably in writing .
Those considering long-term in-home caregiving should evaluate their choices: hiring carers directly or using an agency. In the short term, if care needs are likely to be fewer than six months, it probably makes more sense to use an agency.
If the care needs are likely to exceed six months, however, private pay may prove to be cheaper than an agency.
When considering private employment, families need to take into account the cost of taxes, workers’ compensation insurance, use of a tax and payroll service, and the potential savings from various tax breaks. Under certain circumstances, for instance if care is medically required, the direct costs of care may be tax deductible.
We’ve talked about the multiple options for paying for in-home caregiving services. While thinking about what options works best for your needs, consider combining various methods where possible. A single solution may not cover all your costs, so knowing about all the options available to you can increase your chances of coming up with the optimal plan.
When finding the help you need, you may be able to work with agencies or geriatric care managers to help you determine the best method of payment. Learn more about finding the help you need.
