Paying for In-Home Care

When chronic health conditions, surgery, dementia or even the normal aging process make it unsafe for a senior to live at home, home care can provide the assistance needed, while enabling them to continue living at home. When considering this option, many families are concerned about the cost and payment options.

“Home care has many benefits, including the comfort of recovery in personal surroundings and reducing costs,” explains the Chief Clinical Officer for Home health, Hospice and Palliative. “Despite the savings compared to assisted living or a nursing home, it can still be a financial burden for seniors and their families. It is often an out-of-pocket expense.”

Options for Paying for In-Home Care


Medicare is available to most people who are 65-years-old or older. Regulations vary widely by state, but in most cases, Medicare will provide the following services in a home setting:

•  Skilled nursing
•  Physical, occupational and speech therapy
•  Certain medical supplies (wound dressing, but not prescription drugs)
•  Durable medical equipment (such as a walker)
•  Some social services related to illness (for instance, emotional counseling)
•  Some Food and Drug Administration-approved osteoporosis drugs

However, keep in mind that Medicare does not cover 24-hour-a-day care in the home, or “custodial care” such as meal preparation, bathing, dressing and toileting. The only way Medicare will pay for custodial care is if a senior also requires skilled nursing or therapy services.


This insurance bridges the gaps in Medicare coverage. It can sometimes be purchased in addition to commercial health insurance to get additional home health care coverage. Depending on the policy, services are covered by the supplemental policy when the policyholder is also receiving Medicare coverage for them. Medigap requires physician approval and it is most helpful when individuals are recovering from surgery, an injury or an acute illness.

Medicare Managed Care Companies

These companies contract with Medicare to provide a host of Medicare-covered home health services. Instead of getting traditional Medicare, subscribers choose a private Medicare program that offers some additional benefits, and sometimes additional restrictions, too.


This assistance for low-income individuals is administered on a state level, so it can differ greatly. That also means that each state has its own set of eligibility requirements. In general, Medicaid covers part-time nursing, home services and medical supplies and equipment. Depending on the state, Medicaid may cover occupational, speech or physical therapy, and medical social services.

Aid & Attendance for Veterans

This a little known benefit, but an important one for wartime veterans or surviving spouses of veterans who need assistance performing activities of daily living (ADLs) or are housebound. There are a number of eligibility requirements and the application process can be lengthy. It is strongly recommended to seek assistance from sources like the VA or Area Agencies on Aging (AAAs) before applying.

Older Americans Act

This helps frail and older Americans stay independent in their own community and offers federal funds for state and local social services. Home care, personal care, meal delivery and shopping services are covered for people 60 and older. More and more, people who can afford to pay for some of these services based on their income. Most requests for assistance can be facilitated through a local Area Agency on Aging, or the local Council on Aging centers.

Long-Term Care Insurance

Some long-term care insurance covers home services. Benefits vary depending on the plan, so make sure you and your loved one understand which services are covered and which are not before purchasing a policy. There can be limits on coverage based on pre-existing conditions, there may be prior hospitalization requirements and some policies cover what is already covered by Medicare. It may be worthwhile to pay a little more for this kind of policy, especially if it includes nonmedical care, because having assistance with personal care and housekeeping can keep loved ones in their home longer and give them as much independence as possible.

Commercial Health Insurance

These plans are administered by companies like Blue Cross Blue Shield, and although policies often cover selected services, it varies from plan to plan. Many times, skilled care is offered through a cost-sharing option.
Individual Retirement Accounts

Individuals and families have many options to pay for future expenses. Working with your bank, credit union or financial planner is a good way to put together a personal savings plan. If your parent has an individual retirement account (IRA), some funds from that account may be able to be used for home care.

Health Savings Accounts (HSA)

Health savings accounts (HSAs) are used to save money for future medical expenses. You — not your employer or insurance company — own and control the money in your health savings account. The funds roll over from year to year and the money is not taxed. To be eligible to open a health savings account, you must have a special type of health insurance called a high-deductible plan – sometimes referred to as “catastrophic coverage,” – that acts like a safety net if extensive medical care is needed. Health Savings Accounts have only been around since the early 2000s; however, they aren’t yet a common way to pay for in-home care or nonmedical health care, but they are a rising trend.

Employer-Paid Assistance

Another emerging trend and is seeing employers providing some sort of elder care to employees. When you consider how many hours of work are missed when an adult child has to care for their aging or ill parent, offering some kind of assistance can be good business. “We’ve even seen employers pay to have health care workers go into employees’ parents’ homes to perform assessments,” researching options with your company’s human resources department is important.

Individuals or families should know the programs that are available, exhaust all eligible options and then have a plan for what is not covered. Whatever option you choose, planning ahead is by far, the best prescription.

Reverse Mortgages

A reverse mortgage loan is a special type of mortgage loan for seniors (generally age 62 and older) that pays a homeowner loan proceeds drawn from accumulated home equity. Unlike a traditional home equity loan or second mortgage loan, no repayment is required until the borrower(s) no longer use their home as their principal residence. Interest on a conventional loan is calculated as simple interest while on a reverse mortgage the interest is calculated as compound interest.

Reverse mortgage loans can be used to tap into funds to help pay for in-home care. However, it is very important to do some homework! Make sure you are doing business with a lender with an approved reverse mortgage program in the State in which you reside. Participate in an “in person” counseling session, if possible and have family members and/or trusted advisors with you to the counseling session. Ask the counselor about resources, services and benefits available to seniors from non-profit and/or government programs. Ask the counselor about alternative loan products. Ask the counselor how to interpret the loan documents. Be sure you and any co-borrower receive certificates and documentation. Obtain independent legal and other financial advice prior to signing loan documents and retain your own legal representation at closing of the loan.