The U.S. Census Bureau estimates that there are more than 50 million people in the U.S. aged 65 and older. At least 70 percent of these people will require some long-term care; and most of today’s seniors would prefer home care. This may explain why as the baby boomer generation continues to age, the need for cost-effective, in-home caregivers is also expected to grow.
The economics of home care
The cost of home care depends on where you live. In general, pay rates in urban areas are higher than in rural communities and still higher on the east and west coasts than in the central United States. Costs also depend on whether you’re looking for homemaker services — defined as “hands-off” care, such as cooking, cleaning, running errands, and general companionship — or home health aide services, which include personal care, such as bathing and dressing.
An annual study of senior care rates in the U.S. conducted by Genworth Financial found that average hourly rates for in-home care aides ranged from $16 to $28 across the country.
What does Medicare cover and why doesn’t insurance pay for caregivers?
Medicare Part A covers part-time skilled nursing or rehabilitation care at home following a patient’s hospital stay of at least three days. Medicare Part B covers the same care with no hospital-stay requirement. The care can include skilled nursing care and physical and speech therapy, as needed, along with medical supplies and equipment, as well as an occupational therapist to help the patient learn how to safely accomplish daily personal care. Medicare home care coverage is available only while a patient is actually recovering from an illness, condition, or injury. Once the patient’s condition has stabilized, Medicare home care coverage ends. Medicare doesn’t cover care needed because of a long-term condition or general frailty, and Medicare doesn’t cover full-time or daily in home care. Also exempted is the rental cost of durable medical equipment such as a wheelchair or hospital bed, for which Medicare pays 80 percent. Medicare Part A or Part B home care coverage is available only under some special conditions.
What does Medicaid cover?
Medicaid, an insurance program for low income persons, pays for non-medical home care, home health care and other in-home supports to help individuals remain living in their homes.
However, Medicaid rules are state-specific and therefore eligibility and benefits change in every state. When Medicaid provides care outside of nursing homes, it is referred to as Home and Community Based Services (HCBS). HCBS can be covered under Regular Medicaid, often called State Plan Medicaid, or under Medicaid Waivers, also called 1915 Waivers or HCBS Waivers and a new program called the Community First Choice Option (CFCO). Regular / State Plan Medicaid is an entitlement program as is CFCO but waivers are not entitlements. A limited number of slots are available and waiting lists are fairly common. Most states cover home care for the elderly (both non-medical and home health) in both their State Plan and their waivers.
Other options to pay for care
1. A Reverse Mortgage
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; consult with a mortgage broker and your lawyer.
2. Life Insurance
If someone has a life insurance policy that’s no longer needed to provide for others, a family may want to tap into that money now, using accelerated or living benefits. The way this works is that a loved one sells the policy back to the issuing agency for 50 to 75 percent of its face value, an amount determined based on the amount of the policy, the monthly premiums, and the policy holder’s age and health. There may be restrictions; consult with your insurance agent and lawyer.
3. Long-Term Care Insurance
As the name implies, this would be a logical way to pay for home care. Individuals who bought policies, generally in their 50’s or 60’s are well positioned for long term care needs as they age. Most policies require that the home care agency be certified and or licensed in the state they are providing care and that the patient’s health needs be serious enough to require ADL assistance for home safety.
4. An Annuity
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.
5. A Collective Sibling Agreement
Often, children or siblings must step in to help pay for healthcare. 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.
6. A Bridge Loan
A newer, increasingly popular way to help cover senior care costs is with a bridge loan. A bridge loan is meant to serve as a bridge to help families cover the initial costs of in home care, an assisted living community or other type of senior care until a more permanent funding solution is available. The loan provides funding on a temporary basis, typically for up to a year.
7. 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.
8. More options
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.
Home Care for Veterans
Home Health Aide (HHA) Homemaker/Home Health Program provides up to 12 hours/week
This program provides Veterans the opportunity to receive home care services through a community-based home care agency. These services enable veterans to avoid institutionalization and continue to live in their homes.