payment information

Before you commit to in-home care, it’s important to consider how you will pay for it. You may have more options available to you than you might otherwise expect. These include reverse mortgages, annuities, Medicare, collective sibling agreements; private insurance (covered in the next section) such as life insurance and long-term care insurance; and public programs (covered in the last section) such as Medicaid and Veterans benefits.  

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All states provide some kind of long-term care for certain people, including the elderly, who live at home and who would require nursing home care if they didn’t receive these services. These programs aren’t technically part of Medicaid but are funded by Medicaid through waivers of normal Medicaid rules, which is how they get their designation as Home and Community-Based Services (HCBS) “waiver” programs.

Unlike Medicare coverage of home care or regular Medicaid home care coverage, these programs aren’t limited to medical care and their coverage doesn’t run out when a person’s medical condition stabilizes. (The purpose of these waiver programs is to keep people out of nursing homes for as long as possible.) 

• In-home healthcare, including nursing care and physical therapy.
• Personal care services to help with the normal activities of daily living (ADLs), such as eating, bathing, and dressing.
• Homemaker services, such as simple cooking, cleaning, and laundry.
• Meal delivery.• Adult day services participation (care, companionship, and activities at an adult day services center).
• Transportation assistance to and from medical care or other services.
• Assistive devices, medical equipment, and supplies.
• Minor home modifications (such as widening a doorway to accommodate a wheelchair, or installing a safety railing in a bathtub).

Eligibility for an HCBS waiver program has two parts. The first involves the need for care. The program must evaluate the applicant’s need for medical care and/or assistance with activities of daily living. Usually, the applicant’s need for care must be extensive enough that without in-home services, he or she would have to move into a nursing home.

The second part of eligibility is financial. An applicant must have low income and few assets, but these asset and income eligibility levels are usually significantly higher than for regular Medicaid coverage. In most states, an individual can have countable income (for a discussion of countable income, see How Medicaid Works) two or three times higher than for regular Medicaid eligibility. Similarly, an individual usually can have considerably more in assets — the value of the person’s home doesn’t count at all — than for regular Medicaid coverage. Also, in some states, income and assets resting solely in a spouse’s name aren’t counted.

The exact income and assets eligibility rules and amounts vary from state to state.If someone qualifies for HCBS coverage of in-home care, in some states there are also programs that can pay a family member to provide some of this home care.

To find out exactly what Home and Community-Based Services are available in your state, and what the eligibility rules are, contact a local office of your state’s Medicaid program. To find a local Medicaid office, go to the federal government’s Benefits.gov website and choose your state. This takes you to a page with contact information for your state’s Medicaid program and information about local offices. 

If your senior loved one was a veteran, you may be in luck when it comes to financial assistance — but you’ll have to be assertive and persistent to get it. Veterans who served more than 90 days of active duty, with at least one day during a wartime period, with an honorable discharge, may be eligible for the Veterans Pension. Veterans who need long-term help with the activities of daily living — or whose spouses need such help — may be entitled to monthly disability payments known as “aid and attendance” by the VA.

This type of veteran’s benefit requires documentation from a doctor and is calculated using a complex rating system based on how disabled your loved one is. Many people become daunted by the complexity of the qualification process, but once veterans benefits are established they can be extensive and continue until the end of life. According to the Senior Veterans Service Alliance, only 5.4 percent of veterans who are eligible for these benefits actually receive them, because so few veterans know about the benefits and how to qualify.

Help is available from Veterans Service Organizations (VSOs), a list of which is available in a PDF that can be downloaded from the Department of Veterans Affairs website. Legally, VSOs are not allowed to charge for help with veterans benefits applications. If a service requests payment for this help, look for another organization. If you’re having trouble finding a VSO, there are financial concierge services that can help.  Elder-life Financial is one such service with a network of VSOs. 

It’s not easy to get Medicare coverage for in-home care, and when you do it’s strictly limited. That said, it can be a godsend when you’re faced with a sudden medical crisis or downturn in your loved one’s condition. Medicare coverage is most common when your loved one is being discharged from the hospital or a rehabilitation facility. You’ll contract through a Medicare-certified agency for a period of skilled nursing care and therapy that’s tied to a certain period of expected recovery.

The good news is that Medicare coverage is easier to get than it used to be, and sometime in 2013 it should become easier still. Thanks to the settlement of a lawsuit, Medicare coverage for skilled nursing care and occupational and rehabilitative therapy — either at home or in a nursing home — can’t be limited by whether or not the patient’s condition is improving. 

Prior to the lawsuit, Medicare criteria would cover treatment only if the patient’s condition showed improvement, which meant that people with chronic conditions like COPD, heart failure, Parkinson’s, and Alzheimer’s lost coverage after a certain period of time. Look in our directory of government insurance counselors to find a counselor in your area who can help you with Medicare eligibility. 

Be sure to explore these options to help pay for in-home care. Unfortunately, you’re likely to get little help from private health insurance. Although most health insurance policies cover some doctor-prescribed in-home care for acute health issues, usually following a hospital or skilled nursing facility stay, no health insurance policy — whether through a retirement health plan, a spouse’s work or a Medigap policy to supplement Medicare — covers long-term in-home care.

Nonetheless, you should check your private health insurance to understand what is and is not covered, and then consider other private insurance options you may have, such as the following. 

If your loved one has a long-term care (LTC) insurance policy, it may cover some costs of in-home care. Some LTC policies only pay home care benefits to a licensed home care agency or other licensed providers; others pay a set daily amount to the insured person who qualifies for the benefits (which means your loved one can spend that money on any caregiver he or she chooses, including family members).

Read through the LTC policy itself to see if there’s coverage for in-home care and what the payment terms are: when someone qualifies, for how much, and how the benefits are to be paid. 

If you’re worried about Mom or Dad living alone, other family members may be worried, too. Working together, families can come up with a plan in which those who can’t help out because of geography or work demands pay siblings who do have that availability and flexibility to be with their parents on a daily basis.

In another strategy, siblings who have available funds can pay in-home caregivers or senior home care agencies now with the understanding that they’ll be paid back for their contribution from the siblings’ collective inheritance or the proceeds of the house after the parents’ death.

Either of these agreements needs to be spelled out very clearly to avoid tension, resentment, or dissension down the line. If a sibling acts as caregiver, she should have a set hourly wage and should keep close track of hours and any expenses incurred, such as gas or groceries, just as an employee would do. If a sibling pays for in-home care with the expectation of reimbursement, she should keep clear records in the form of invoices and receipts or canceled checks. It’s also a good idea to have something in writing to show the executor of the will, or even to put a clause in the will explaining the plan. 

If your loved one has a life insurance policy, you may want to look into whether it could provide money now to help pay for care instead of going to family members later. Cashing in a life insurance policy can sometimes provide a substantial amount of money to pay for in-home care.

Certain life insurance policies can be cashed in with the insurance company itself for 50 to 75 percent of the policy’s face value, though some policies permit these “accelerated benefits” or “living benefits,” as they’re called, only if the policyholder is terminally ill.

If these accelerated insurance benefits aren’t available, you can investigate whether a “life settlement” (also called a “senior settlement”) may be possible. This involves selling the policy to a life settlement company (different from the insurance company that issued the policy) for a lump sum. The exact amount of the payment — 50 to 75 percent of the policy’s face value — depends on the policy benefit amounts, the policy’s monthly premiums, and your loved one’s age and health. After buying the policy, the settlement company keeps paying the premiums until your loved one dies; then the life insurance benefits are paid to the settlement company rather than to a family member or whoever was the policy’s original beneficiaries. 

The relatively new Program of All-Inclusive Care for the Elderly (PACE) provides comprehensive home and community care for frail elders who would otherwise require nursing home care. PACE is only available in certain areas of some states, and eligibility is restricted to low-income seniors, usually those eligible for both Medicare and Medicaid. To see if there’s a PACE program operating where you live, and, if so, how to contact the program, see the National PACE Association’s online list of PACE programs. 

If your family is like most, it’s you and other family members who provide most of your loved one’s in-home care. But what if you or other family caregivers have to give up paid work in order to provide that care? The Cash and Counseling program may be able to help.

In some states, Medicaid or another state agency runs a program that pays elders directly to cover at least part of their in-home care. (Note that some states run similar programs under different names.) The amount the program pays depends on the program’s assessment of the person’s care needs. If your loved one qualifies for the program (the standards, in some states, are slightly easier to meet than for regular Medicaid coverage), he or she can then use the cash benefits to pay you or other family members, or independent home care workers, to provide care.

To find out about a Cash and Counseling or similar program in your state, contact the state Medicaid agency online or contact your local Area Agency on Aging.

Tip: Get free help with Medicaid, Medicare, PACE, or Cash and Counseling programs. If you need help with questions about Medicaid, PACE, or Cash and Counseling coverage of in-home care in your state, you can get free, expert counseling at a local office of the [State Health Insurance Assistance Program (SHIP) or Health Insurance Counseling and Advocacy Program (HICAP). . 

Reverse mortgages were developed by the government specifically for the purpose of helping seniors (originally widows) stay in their homes until the end of their lives.

With a reverse mortgage, seniors can use the value of the equity in their home to get cash now, either all at once or in monthly payments. But instead of borrowing a set sum, the loan balance increases over time. A reverse mortgage allows your loved one to stay in the home until she dies, even if by that time the loan balance exceeds the home’s worth. But at that point, the home must be sold to repay the loan balance.

Reverse mortgages do have limitations: Your loved one has to be 62 or older, and she has to own her home, either outright or with little debt left on the original loan. (The bank that holds the original loan must be paid back before payments are made on the reverse mortgage.) The bank decides on a value based on the home’s worth and also based on your loved one’s age, since that affects the length of time the payouts must cover.

While a reverse mortgage may be the perfect solution to your in-home care dilemma, it also comes with strict rules regarding homeowners’ insurance, mortgage insurance, and home maintenance, making it easy to default. Choose a reputable mortgage broker or bank and read the entire contract carefully. (According to the Consumer Financial Protection Bureau, reverse mortgage scams and foreclosures are on the rise, often because of high fees or clauses that make it easy to lose the home.)

Annuities are designed to help seniors turn retirement savings or a pension into a steady, guaranteed income stream that pays out until death or for a set number of years. The money can be used to pay for in-home care or, eventually, for assisted living if necessary. An annuity is like a cross between an investment fund and an insurance policy; the money is invested at a fixed or variable interest rate, and then, after an agreed-upon maturation date, you can begin making withdrawals.

Annuities have become controversial because of unscrupulous representatives who take advantage of vulnerable seniors. So help your loved one find a reputable financial institution and representative to consult regarding an annuity purchase.

Another benefit of an annuity is that the sum invested isn’t considered an asset when applying for Medicaid. The government counts the income paid out from the annuity, but not the amount originally invested.