Paying For Home Care: Financial Options, Aid and Assistance

Home Care vs. Home Health Care

Before 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 persons 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 care such as checking a patient’s pulse, temperature or respiration. They assist with medications, braces, ventilators and other medical equipment. And they 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.

Nationwide, in 2024, the average cost for non-medical home care is $28.41 per hour, with the state averages ranging from $21 – $35 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, independent caregivers 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.

Home health aides visit the home as much as medically necessary, typically for shorter periods of time than home care aides. In 2024, nationwide, the average hourly fee is $29.50. Different state averages range from $21 to $38 per hour.

Alzheimer’s care at home can be affordable and relatively low cost when compared to residential care. Typically, home care providers do not charge extra 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 $800 – $1,200 per month.

Financial Assistance for Home Care

Original Medicare’s Benefits

There are many misconceptions around Medicare’s benefits for home care. Original Medicare, also referred to as traditional Medicare, does not pay for non-medical care, period. Therefore, assistance for non-medical care provided in the home is not covered. Medicare Supplemental Insurances cover Medicare co-payments and deductibles. But they do not add new areas of coverage. So these policies are of no assistance for non-medical home care.

On the other hand, when home health care is considered medically necessary, it is covered, at least in part, by Medicare and other health insurance programs. However, original Medicare severely restricts coverage to only those individuals who are “homebound.” This is defined as persons who require assistance (by human or medical equipment, such as wheelchairs) to leave their homes. Alternatively, persons whose health may be worsened by leaving their homes are also eligible. During home health care visits, Medicare will not pay for any personal care that is provided during that visit. Visits tend to be brief and procedural in nature.

The exception to the limited home care rule are Medicare PACE programs. But, these are available only in limited geographic areas.

Medicare Advantage’s Benefits

Medicare Advantage (MA) plans are able to offer supplemental health care benefits to their participants – in other words, benefits that Original Medicare plans do not provide. Therefore, several in-home services may be available via one’s MA plan. Specific services will vary depending on the MA plan chosen. Possible in-home services that may be available include:

• Home health aides
• Personal care assistance
• Palliative care
• Meal delivery
• Non-medical and medical transportation
• Home modifications to aid aging at home
• Home air cleaning for chronic illnesses like asthma
• Adult companions to prevent isolation and loneliness
• Help with utility bill payments

Medicaid

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. Therefore, eligibility and benefits differ by 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 the following:

• Regular Medicaid, often called State Plan Medicaid
• Medicaid Waivers, also called 1915(c) Waivers or HCBS Waivers
• A relatively new state plan program called the Community First Choice Option (CFCO)

Regular / State Plan Medicaid is an entitlement program, as is CFCO. Anyone who meets the eligibility requirements is able to receive entitlement services. However, waivers are not entitlements. A limited number of slots are available and waiting lists are fairly common for Medicaid waiver programs. Most states cover home care for the elderly (both non-medical and home health) in both their State Plan and their waivers. Read a state-by-state guide to Medicaid programs covering home care.

Veterans Programs

There are several forms of assistance from the Department of Veterans Affairs (VA) 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 (cash assistance) that can be applied towards home care. Individuals who require more care are eligible for higher benefit amounts. These are the Improved Pension, Housebound, and Aid and Attendance. Eligibility requirements and benefit amounts are available here.

Veterans can also get care assistance through the Veteran Directed Care Program, a relatively new program. This program allows for self-direction of services. Also available to veterans is the VA Respite Care program, 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. They are loosely referred to as “nursing home diversion programs.” Eligibility, benefits and even sources of funding varies with each program. 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 among all of these programs is that they help seniors remain living at home or help families to care for seniors in their homes.

Please follow the links below to read about specific programs in your state.

Other Options

In addition to programs that pay for care, families should consider programs targeting seniors that can reduce other expenses. This can free up financial resources to be put toward the cost of home care. In this category, there are several 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 the elderly.

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 greatly even in the same geographic area. Our organization provides a free service that helps families locate quality-screened, affordable care providers. Start here.

Self-Payment Options for Home Care

Reverse Mortgages & HELOCs

Families can self-pay for care by using their home as a financial resource. Two options include reverse mortgages and home equity lines of credit. However, depending on one’s marital status, their severity of need and the projected length of need, these options might not make 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. 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

Life Insurance Policy Conversions

Life insurance 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 a 2-year life expectancy.  Life settlements are intended for persons with longer life expectancies.  Life insurance conversions give consumers 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.

Accelerated death benefits and death benefit loans are two other ways individuals can receive cash for 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 an interesting financial product. These loans are intended for short term needs while a family is waiting for other financing to become available.

For example, a veteran’s Aid & Attendance pension claim approval can take 6-12 months. But once it is approved, it is paid in a retroactive lump sum back to their claim filing date. A loan is made to veterans with the expectation that it will be re-paid from 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 and pros and cons for home care loans, click here.

Long-Term Care Insurance

Individuals with long-term care (LTC) 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. Or if permitted to do so, their premiums would be cost prohibitive.  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 among the states, but also even in the same geographic area within a state. A recent study found that 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 difficult and time consuming to contact each care provider in the area to 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 options is available here and a summary of those options is 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 financial planning experience.  Find your local AAA or ADRC. 
• Geriatric Care Managers / Life Care Managers – Care managers help families create and put in place long-term care plans. And as a part of that, some will help with financial planning. Since care managers 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 care managers only after the need for care has become apparent. Therefore, they are not in the best position to do long term planning.  Often, care managers come from nursing or public health backgrounds and do not have extensive financial experience.  Find a 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 that only attorneys can do.  Learn more.
• Elderlaw Attorneys – the most expensive and most thorough option are elderlaw attorneys. This type of 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 Washington, D.C., in 2024, according the Genworth Cost of Care calculator.

*Data provided by Genworth Financial, Inc. (NYSE:GNW)