April 1, 2015
Figuring out how to pay for eldercare can be a challenge. The majority of seniors prefer to live at home as long as possible, but they may not have considered how to cover the cost of home care.
Here are four common myths about financing home eldercare, along with four funding sources that can help your loved one age in place.
Myth #1: Medicare covers home care for seniors.
Truth: Medicare pays only for medical care. If a senior needs wound care or physical therapy at home, Medicare may pay for all or a portion of those services. However, Medicare does not pay for any type of non-medical caregiving, such as companionship care, assistance with bathing or medication reminders. Learn more about navigating the Medicare Maze.
Myth #2: Medicaid covers home care.
Truth: Strictly speaking, Medicaid does not cover non-medical in-home caregiving. However, eligible seniors may be able to obtain services from local Home and Community Based Services (HCBS) programs. Generally, seniors must meet need-based requirements to qualify for these programs.
Myth #3: Private health insurance covers home care.
Truth: Most private health insurance specifically excludes non-medical home care from coverage. However, long-term care insurance may include benefits for in-home care. More on that below.
Myth #4: The VA pays for home care.
Truth: The Veterans Administration does not directly pay for in-home care of veterans or their spouses. However, the VA does offer cash benefits to qualifying veterans and/or their spouses. These cash benefits can be used to pay for home care.
4 Proven Ways to Fund Home Care Services
1. Long-term care insurance
These increasingly popular plans usually include benefits for home-based care, as well as for nursing homes and assisted living facilities. You should get a long-term care insurance policy before you need benefits. If you’re interested in this funding source, your best bet is to get the help of a financial advisor in choosing the best policy for your needs.
2. Reverse mortgage
For seniors who have paid off their house, a reverse mortgage allows them to access the equity without selling the property. You should carefully evaluate reverse mortgage plans before choosing one. Some plans take a large percentage of the equity as a fee for their services. If you’re unsure how to choose a reverse mortgage or determine if it’s the right option for you, consult a financial advisor. The Federal Trade Commission offers a wealth of information about reverse mortgages at ftc.gov.
3. Life settlements
This option allows a senior to possibly convert a life insurance policy into cash. Many factors can influence a person’s ability to do this, including the type of life insurance policy, the person’s health status and other factors. Again, you may want to seek financial counsel before choosing this option. You can read more about life settlements at lifecarefunding.com.
4. Veteran’s Administration “Pension with Aid and Attendance”
This is the program many veterans and their surviving spouses tap when they need funds for home care or other medical expenses. Veterans who served at least 90 consecutive days during a wartime period and who meet income and asset guidelines can obtain up to $25,000 per year. For more information, consult your local Veterans Administration office or visit caregiver.va.gov.
Get helpful tips and articles like these delivered to your email.