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Table of Contents |
- Home Care vs. Home Health Care
- Costs: Home, Home Health & Alzheimer's Care
- Financial Assistance for Home Care
- Medicare's Benefits
- Medicaid
- Help for Veterans
- State Non-Medicaid Programs
- Other Options
- Self-Payment Options for Home Care
- Reverse Mortgages / HELOCs / Equity Key
- Life Insurance Policy Conversions
- Home Care Loans
- Long Term Care Insurance
- Finding Affordable Home Care
- Developing a Financial Plan for Home Care
- State-by-State Home Care Costs
Home Care vs. Home Health Care
Prior to a discussion of home care payment options, it is helpful to differentiate between home care and home health care. Home Care Aides provide custodial care; they help seniors with their activities of daily living such as bathing, dressing, housekeeping and transportation. This is also referred to as personal care, attendant care, non-medical care and companion care.Home Health Aides offer skilled care such as checking patients’ pulses, temperature or respiration. They assist with medications, braces, ventilators and other medical equipment and can provide higher level skilled nursing as well as more basic personal care. Home health aides are also referred to as nurse aides, nursing assistants, certified nursing assistants and geriatric aides.
Costs: Home, Home Health & Alzheimer's Care
Both home care aides and home health aides bill on an hourly basis (with the exception of live in caregivers who sometime bill flat rates). Home care aides can be retained through a home care agency or by hiring private caregivers. Home health aides experience greater federal regulation and are almost always hired through an agency.
Hourly rates for home care vary by as much as 50% even in the same state or town.
Nationwide in 2015, the average cost for non-medical home care is $20 per hour with the state averages ranging from $15 - $26 per hour. It should be noted that these are average costs from home care agencies. Private individuals can be retained to provide most of the same services with fees that are 20% - 30% lower. However, these independents are typically uninsured, do not go through background checks and may be unable to provide alternatives in case they are not available to work on short notice.
Independent caregivers typically charge 20% - 30% less than home care agencies.
Home health aides visit the home as much as medically necessary; typically for shorter periods of time than home care aides. In 2015, nationwide, the average hourly fee is also $20, the same as for non-medical home care. However, when looking at different state averages there is $16 - $27.
Alzheimer's care at home can be affordable and relatively low cost when compared to residential care. Typically home care providers do not charge additional fees to care for individuals with Alzheimer's. This is not the case in senior living residences where Alzheimer's and dementia care usually costs an additional $1,150 per month.
Financial Assistance for Home Care
Medicare's Benefits
Medicare does not pay for home care aides and only selectively covers home health care.
Home care aides provide personal care rather than medical care and therefore Medicare does not cover the cost of home care. Medicare Supplemental Insurances cover Medicare co-payments and deductible but do not add new areas of coverage, therefore these policies are of no assistance for non-medical home care.
Home health care costs, on the other hand, are considered medically necessary and therefore they are covered, at least in part, by Medicare and other health insurance programs. However, Medicare severely restricts coverage to only those individuals who are not able to leave their homes and Medicare will not pay for personal care during the visits, so the visits tend to be very brief and procedural in nature. Furthermore, the Centers for Medicare & Medicaid Services have announced annual 3.5% reduction in home health care provider reimbursements annually until 2017, which will further impact seniors.
The exception to the limited home care rule are Medicare PACE programs, however these are available only in limited geographic areas.
Medicaid
Medicaid, an insurance program for low income seniors, does pay for home health, non-medical home care and other in-home supports to help the elderly remain living in their homes. However, Medicaid rules are state-specific and Medicaid covers these services mostly through Home and Community Based Services (HCBS) Waivers. HCBS Waivers are different in every state, they offer different benefits, having varying eligibility requirements and unfortunately are not entitlements. Medicaid HCBS Waivers have enrollment caps and waiting lists may exists. Click here for a state by state guide to which HCBS Waivers cover home care, their eligibility requirements and application processes.Some home care is also offered through Medicaid Personal or Attendant Care programs. Again these programs are state specific and can be found at the link above.
Help for Veterans
There are several forms of assistance from the Department of Veterans Affairs that help veterans afford home care. This may be direct financial assistance or care services that can reduce a veteran's overall need.To start, there are three different pension benefits which can be applied towards home care. Individuals who require more care are eligible for higher benefit amounts. These are the Improved Pension, Homebound and Aid and Attendance. Eligibility requirements and benefit amounts are available here. Veterans can also get care assistance through Veterans-Directed HCBS, a relatively new program that allow for self-direction of services and the VA Respite Care which can reduce the home care hours a veteran requires.
State Non-Medicaid Programs
Most states have in-home assistance programs for low income seniors who are not eligible for Medicaid. These programs are intended to prevent or delay the placement of needy individuals in nursing homes and are loosely referred to as "nursing home diversion programs". Eligibility, benefits and even sources of funding varies with each program and some states even have more than one program. As an example of the diversity, some of these programs provide cash assistance, others provide care services and respite and still others provide non-care based, in-home support such as assistance with chores, meals and transportation. Assistance with adult day care and assistance for home modifications to enable aging in place are two other approaches the states use to help. The common thread amongst all of these programs is that they help seniors remain living at home or help families to care seniors in their homes.Please follows the links below to read about specific programs in your state.
Other Options
Families should think not just about programs which offer assistance but also programs targeting seniors that can reduce other expenses thereby freeing up financial resources to put be towards the cost of home care. In this category there are a variety of tax credits and deductions. For example, any expense incurred to care for an elderly relative that enables the family to work is tax deductible. Read about other tax credits for elderly.
Home care and adult day care are, in most cases, tax deductible expenses.
Energy costs to heat and cool one's home can take up a significant portion of low income seniors' fixed incomes. LIHEAP is a program designed to help seniors with their home energy bills, which can again free up dollars for home care. The LIHEAP application has specific filing deadlines which often give preference to lower income seniors. Learn more here.
Non-profit organizations sometimes offer financial or care assistance for individuals with specific conditions. Explore programs at the following links for individuals with Alzheimer’s , Cancer, Diabetes , Kidney Disease and Leukemia .
Possibly the easiest and most effective way to reduce home care expenses is to find affordable care. The hourly rates for home care can vary by as much as 50% even in the same geographic area. Our organization provides a free service that help families to locate quality-screened, affordable care providers. Start here.
Self-Payment Options for Home Care
Reverse Mortgages / HELOCs / Equity Key
There are several ways families can self-pay for care by using their home as a financial resource, these include reverse mortgages, home equity lines of credit and Rex Agreements. However, depending on marital status, severity of need and the projected length of need not each of these options necessarily makes economic sense. For example, if the person in need of care is single and may need to move into residential care within a two year period, then a reverse mortgage is probably not the best option. The same applies to Rex Agreements. One can read more about when it is best to use each of these options and their pros & cons at the following links: Reverse Mortgages, Home Equity Lines of Credit, Rex Agreements.Life Insurance Policy Conversions
Life insurances holders have a variety of ways of converting their policy into cash or home care services prior to the policyholder's passing. There are three options that allow individuals to stop making premium payments and receive immediate payouts on their policies without passing. Viatical settlements are designed for individuals with less than 2 year life expectancy. Life settlements are intended for persons with longer life expectancies. Life insurance conversions give consumer the greatest value for their life insurance policy however the benefit comes in the form of care services instead of cash. Pros, cons and eligibility information is available for viaticals, life settlements and conversion programs.
Life insurance policies can be converted into home care services, preserving the policyholder's eligibility for Medicaid. Learn more.
Accelerated death benefits and death benefit loans are two other ways individuals can receive cash for the life insurance in advance of their death. However, with these two options, the policyholder must continue to make their monthly premium payments.
Home Care Loans
Loans specifically designed for elder care are a new and interesting financial product. These loans are intended for short term needs while a family is waiting for other financing. For example, a veteran's pension claim approval can take 6-12 month, but once it is approved, it is paid in a retroactive lump sum back to their claim filing date. A loan is made to these individuals with the expectation that it will be re-paid for the lump sum. A similar situation exists for families selling a home and having the elderly relative move in with the adult children. Finances will become available it is just a matter of when the home will sell. For more information on fees, pros and cons for home care loans, click here.Long Term Care Insurance
Individuals with long term care insurance can use the benefits to pay for home care. For persons without LTC insurance who have a need for care, they typically are not eligible to purchase insurance. For this reason our discussion of LTC insurance is relevant only to persons doing very long term planning.Finding Affordable Home Care
There is a great deal of variation in the cost of home care not just amongst the states but even in the same geographic area within a state. A recent study found in most areas, there are care providers who charge as much as 50% below or above the average hourly rate for that area. This means the choice of care provider is a major factor in affording long term care at home. It is difficulty and time consuming to contact each care provider in the area and determine their rates. For this reason, we've partnered to provide a free service that helps families find the most affordable home care in their area. Start here.Developing a Financial Plan for Home Care
Since many families pay for home care from their savings, they are in a state of continuously diminishing resources. Many assistance programs determine eligibility based on an individual’s resources. Therefore, the assistance available to an individual is constantly changing. In other words, the longer a person requires (or is projected to require) home care, the more assistance that becomes available to them.For this reason (and others), it is advantageous to develop a long term financial plan when considering home care. Doing so has the dual benefit of ensuring a comfortable and consistent aging process for your loved one while at the same time preserving your family’s assets and resources.
The creation of a financial plan for home care is a complicated process and must accommodate various health scenarios. Fortunately, there are resources available to help families with financial planning for home care. A complete exploration of one's care planning option is available here and summary follows below. Each option has its pros and cons.
- Public Benefits Counselors – local Area Agencies on Aging (AAA) and Aging and Disability Resource Centers (ADRC) have benefits counselors on staff that can help with financial planning. While they typically do not charge for their assistance, they may be under-staffed and unable to provide adequate long term planning. They also tend to be highly knowledgeable about local programs but have less larger financial planning experience. Find your local AAA or ADRC.
- Geriatric Care Managers – GCMs help families create and implement long term care plans and, as a part of that, some will help with financial planning. Since GCMs are typically paid for out-of-pocket, one can expect a higher level of attention than one might receive from a public benefits counselor. Families tend to contact GCMs only after the need for care has become apparent and therefore GCMs are not in the best position to do long term planning. Often GCMs come from nursing or public health backgrounds and do not have extension financial experience. Find a Geriatric Care Manager.
- Eldercare Resource Planners - ERPs are specialists in developing financial plans for home care. They differ from Care Managers in that they typically come from a financial background instead of healthcare background. They are paid out-of-pocket but can often pay for themselves in the financial assistance resources they discover for their clients. They are significantly less expensive than Elderlaw attorneys, but cannot perform some of the legal procedures which only attorneys can. Learn more.
- Elderlaw Attorneys - the most expensive and most thorough option. An elderlaw attorney and their staff can provide a one-stop shop for home care financial planning but their hourly rate may prove cost-prohibitive for some families. One can search the National Academy of Elder Law Attorney database here.
State-by-State Home Care Costs and Affordability Index
This table contains the average hourly cost of home care aides for all 50 states and D.C. In addition, it contains our experimental home care affordability index* which considers the cost of home care in a state relative to its median household income. The state’s ranking out of 50 states and Washington D.C. is contained in the final column.
2015 Home Care Costs and Affordability
| |||
| State |
Home Care Hourly Rate
|
Home Care Affordability Index.
Lower #s are more affordable.
|
State Index Ranking
|
| United States |
$20
|
0.79
|
n/a
|
| Alabama |
$16
|
0.77
|
17
|
| Alaska |
$26
|
0.74
|
11
|
| Arizona |
$20
|
0.86
|
34
|
| Arkansas |
$17
|
0.88
|
41
|
| California |
$23
|
0.76
|
14
|
| Colorado |
$22
|
0.79
|
22
|
| Connecticut |
$20
|
0.61
|
4
|
| Delaware |
$20
|
0.69
|
6
|
| District of Columbia |
$20
|
0.61
|
5
|
| Florida |
$18
|
0.81
|
25
|
| Georgia |
$18
|
0.78
|
20
|
| Hawaii |
$24
|
0.76
|
15
|
| Idaho |
$19
|
0.88
|
40
|
| Illinois |
$21
|
0.79
|
21
|
| Indiana |
$19
|
0.82
|
26
|
| Iowa |
$22
|
0.89
|
43
|
| Kansas |
$19
|
0.78
|
18
|
| Kentucky |
$19
|
0.92
|
47
|
| Louisiana |
$15
|
0.72
|
9
|
| Maine |
$22
|
0.96
|
49
|
| Maryland |
$20
|
0.57
|
1
|
| Massachusetts |
$24
|
0.74
|
10
|
| Michigan |
$20
|
0.87
|
38
|
| Minnesota |
$24
|
0.78
|
19
|
| Mississippi |
$16
|
0.87
|
37
|
| Missouri |
$19
|
0.84
|
32
|
| Montana |
$23
|
1.04
|
51
|
| Nebraska |
$22
|
0.87
|
39
|
| Nevada |
$21
|
0.86
|
35
|
| New Hampshire |
$23
|
0.71
|
8
|
| New Jersey |
$20
|
0.59
|
3
|
| New Mexico |
$19
|
0.91
|
45
|
| New York |
$21
|
0.76
|
13
|
| North Carolina |
$18
|
0.82
|
27
|
| North Dakota |
$26
|
1.01
|
50
|
| Ohio |
$19
|
0.83
|
29
|
| Oklahoma |
$19
|
0.88
|
42
|
| Oregon |
$22
|
0.94
|
48
|
| Pennsylvania |
$20
|
0.80
|
24
|
| Rhode Island |
$24
|
0.89
|
44
|
| South Carolina |
$18
|
0.85
|
33
|
| South Dakota |
$22
|
0.91
|
46
|
| Tennessee |
$18
|
0.86
|
36
|
| Texas |
$19
|
0.77
|
16
|
| Utah |
$21
|
0.75
|
12
|
| Vermont |
$21
|
0.80
|
23
|
| Virginia |
$18
|
0.57
|
2
|
| Washington |
$24
|
0.83
|
28
|
| West Virginia |
$16
|
0.83
|
30
|
| Wisconsin |
$21
|
0.83
|
31
|
| Wyoming |
$20
|
0.71
|
7
|
*Data provided by Genworth Financial, Inc. (NYSE:GNW) and the US Census Bureau
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