In a perfect world, every older adult would enter retirement with a pension and nest egg large enough to cover all future expenses. For most older individuals, however, this scenario just isn’t a reality. Even with careful planning, many senior adults find themselves unprepared to pay for home health care costs should the need arise.
The best time to consider how an older relative will fund home health care costs is well in advance of the need for such care. However, it’s not too late to look into the available options right now even if your loved one requires immediate in-home assistance. There are many ways to approach the issue of paying for home health care costs. Perhaps you’ll find that one or a combination of the following strategies is a good fit for your family.
1. Tap into Home Equity
Even in the absence of formal savings plans, many older adults have spent years or decades making payments on a residence. This diligence has likely created a store of wealth that could come in handy when faced with home health care costs. Reverse mortgage loans permit a qualifying older adult or couple to access their home’s equity while still residing in the property. Many individuals qualify even if their home isn’t completely paid off.
If your loved one isn’t opposed to leaving their current home, downsizing to a smaller residence may also make sense. Taking this step will allow them to access some of the equity that’s tied up in their current home. Other advantages could include freeing up additional funds by reducing their monthly house payment or eliminating it altogether. He or she may also be able to find a smaller, easier-to-maintain home that’s more elder-friendly than their existing residence.
2. Assistance From Family
No one wants to feel like a burden to their children or grandchildren. For older adults with limited resources, however, it’s often necessary to turn to family for help with home health care costs. When spread over numerous relatives, the cost of intermittent or even daily in-home care becomes much more manageable. Every family will have a different formula for contributing to a relative’s long-term care costs that’s based upon their unique situation. Some might prefer splitting the cost evenly among a group of relatives. Others may find that a sliding scale based upon individual income and economic circumstances is their best option.
A family member who pays for in-home care or who provides care for an elder loved one could be eligible for a federal or state tax deduction. A CPA, tax preparer or elder care expert can provide more information on whether this incentive applies to you.
3. Long-term Care Insurance
As the name suggests, long-term care insurance was created to help older Americans manage the costs associated with in-home or institutionalized care. Long-term care policies may pay for an in-home care provider, assisted living, full-time nursing home care or all of the above. The cost of long-term care insurance has risen significantly in recent years. However, this type of coverage still makes good financial sense for individuals who can afford to pay the monthly or quarterly premiums.
In order to make informed decisions about using long-term care insurance to pay for in-home care, first determine if your loved one has a policy in place. If so, look it over with them to see what types of care it covers and the coverage amounts. If he or she has no long-term care insurance, consulting an insurance provider to determine possible coverage eligibility may be a good idea.
4. Medicaid and State-run Programs
Medicare is a federally administered program that’s intended to serve the healthcare needs of older Americans. As such, many people mistakenly believe that it automatically covers in-home care along with other types of health care services. Unfortunately, traditional Medicare generally doesn’t cover any in-home health care costs. The good news for older Americans facing health challenges is that many state-administered Medicaid programs do offer some coverage for in-home care. The type, duration and cost of covered services will vary, so check with your state’s department of public health for more information.
Some states also offer free or low-cost in-home care services through the Program of All-inclusive Care for the Elderly. PACE was created with the goal of helping health-challenged older adults remain at home instead of entering long-term residential care facilities. As with other state-based programs, an individual’s eligibility for PACE will depend on where they reside as well as other factors.
5. Locally Based Non-profit Organizations
In some localities, non-profit entities have arisen to fill the urgent need for reliable, reasonably priced in-home care. One example of such an organization is Central Coast VNA. This home health care service in Monterey CA exists to meet the needs of residents of Central Coast, Monterey County and Hollister. Help is offered in the form of in-home assistance, wellness check-ups, hospice care and related services.
The services provided by CCVNA and similar organizations may not be offered completely free of charge to every individual. These types of entities are generally funded by private donors, insurance payments and other sources. They also rely heavily on volunteers to furnish services and manage other aspects of the operation. This allows them to keep costs as low as possible for the individuals and families that take advantage of their service offerings.