Non-medical home care is an ideal solution for many families as their parents age. However, the challenge often arises of how to pay for that care. While some seniors may have funds to pay for home care, a lot of seniors struggle to pay for their care at home without any government assistance.
This article addresses some payment options for non-medical home care. This list is not all-inclusive and you can come up with your own creative ways to pay for care at home.
As of now, Medicare does NOT pay for non-medical home care aides. However, Medicaid does (for qualified individuals). When Medicaid provides care outside of nursing homes, it is referred to as Home and Community Based Services (HCBS). States may offer a variety of unlimited services in this program. There are no general rules for what they cover, so eligibility and benefits vary by state, income etc. Also note that States can choose a maximum number of people they will serve so assistance through HCBS could be limited.
Department of Veterans Affairs
Veterans who qualify for home care are generally eligible for Veteran-Directed HCBS. Veterans who need skilled services, case management, assistance with activities of daily living (ADLs), are alone, or their caregiver is over-burdened, may receive benefits. The amount of the benefit depends on the level of care necessary. These benefits can be managed by the Veteran, his/her family or the caregiver. Veterans in this program are given a flexible budget, and along with their family, can decide which services they wish to pursue under this program.
Long Term Care Insurance
Traditional health insurance plans do not cover in-home care, but a Long Term Care (LTC) policy might. LTC policies usually cover personal and custodial care in the senior’s residence. It is a privately paid insurance plan, which often has a waiting period of 30-120 days before funds can be withdrawn on the policy, and a benefits period which also varies (often between three to five years). So it’s important to plan ahead. Those without LTC insurance at this stage are often ineligible to purchase a policy. If the senior has a LTC policy, make sure you understand the terms and conditions before starting care so you can be prepared for any additional coverage required. Some LTC policies may not cover care at home. Be sure to check the insurance policy.
HELOC, Reverse Mortgages
A Home Equity Line of Credit (HELOC) and a Reverse Mortgage are similar in that the homeowner can borrow against the equity of the home.
With a HELOC, borrowers are given a maximum amount so they can withdraw money as needed. Monthly payments are based on the amount withdrawn. A HELOC offers a way for seniors to get cash fast based on the equity in their home.
A Reverse Mortgage is a loan available to homeowners, 62 years or older, that allows them to convert part of the equity in their homes into cash. Reverse Mortgages generally have more restrictions, such as age, amount of equity in the home and residency requirements. They also have higher closing costs than a HELOC.
Both HELOC and RM can be good options if the senior needs quick cash and has equity in their home. A banker or loan officer can help decide which is best for the borrower.
Life Insurance Policy
If the senior in need of care has Life Insurance, check with their insurance company or financial advisor to see if the policy allows them to withdraw funds without passing. Sometimes it is possible to stop making premium payments and receive immediate payouts on their policies without passing. This can be done with viatical settlements (for those with less than 2-year life expectancy), life settlements and life insurance conversions where the benefit comes in the form of care, not cash. Accelerated death benefits and death benefit loans are two other ways individuals can receive cash in advance of their death. Check with a financial advisor to see if this option is beneficial to the senior.
Home Care Loans
These loans are intended for short term needs while the family is waiting for other funds. Some instances where these loans might be used are while the family is waiting for VA benefits or as temporary funds until the family can sell the senior’s home while they make other long-term arrangements.
Tax Credits and Deductions
While not direct funding for care, tax credits and deductions can offer relief by reducing other expenses for the senior. For example, LIHEAP helps seniors with their home energy bills. Also, any in-home expense incurred by the senior that enables the family to work, could possibly be a tax deduction for the senior. The senior might also qualify for the Credit for the Elderly or Disabled. An accountant can assist in finding the maximum deductions for your senior family member.
Arranging for funds for care can be overwhelming. Hence the more you include non-medical care in retirement planning the better prepared you can be. Sometimes it is a good idea to have group discussion between the senior, their family, financial advisor, accountant and caregiver agency.
At Inspired Care Home Health we offer free care consultation that not only include care options but also the available payment options to come up with the highest level care of care the senior can afford.