4 Ways to Pay for In-Home Care

“You can be young without money, but you can’t be old without it”, Tennessee Williams.  This quote has never been truer.   People are living longer thanks to advances in medicine and technology however, the human body does not always allow the person to live longer and manage their daily activities alone.  This is where long term care comes into play.

Long term care consists of a variety of products and services that meet the needs of the older adult population to allow them to maintain quality of life.  This includes home care services, adult day care programs, assisted living facilities, adult homes, and skilled nursing facilities.  As age increases, so does the likelihood of needing long-term care.  70% of people over the age of 65 will require some form of long-term care services during their lifetime.

What does care cost?

According to a 2019 study by Genworth, the average cost of long term in Long Island is broken down in the following table.

LTC Option	National Average Costs	Long Island Average Costs
Nursing Home (semi-private room)	$220/day	$429/day
Assisted Living Community	$3600 monthly	$5625 monthly (Long Island)
Home Health Aide	$20/hour	$28/hour (Long Island)
Homemaker	$20/hour	$26/hour (Long Island)
Adult Day Services	$69/day	$178/day (Long Island)

 

There are four main ways that people pay for care; out-of-pocket (most common), long term care insurance, Medicaid, and reverse mortgages.  Families are often shocked at this reality as they come to learn that there are few funding sources that help to cover the cost of care.   While there are limited sources there are many viable options to learn about and consider.

Medicare part A and/or B pays for medically necessary home care services when prescribed by a physician and when a senior qualifies based on a recent hospitalization or a nursing and rehabilitation stay.  This coverage is provided short-term (an average of three weeks) and on a limited basis (about two to four hours of a home health aide visit per week).  A senior who needs non-medical assistance such as, meal preparation, light housekeeping, and transportation would not receive assistance with those services through this benefit through Medicare.

1. Reverse Mortgages. A reverse mortgage may be an option for a senior who is age 62 and over and owns a home.  This type of loan uses the home’s equity to provide funds through a loan product that does not need to be paid back until the home is sold.  It releases the home’s equity as one lump sum or in monthly payments.  The loan is repaid when the homeowner dies, sells the home, or leaves the home.
2. Life Insurance. Whole, term, or universal life insurance policies can be converted into a long-term care benefit plan.  This turns the policy into a long-term care benefit that will help pay for home care services, assisted living, etc.  The costs associated with the long-term care services are paid directly to the provider (as opposed to the care recipient).  In order to quality, the life insurance policy holder must have an immediate need for long-term care services.
3. Veterans Aide and Attendance Benefit. The VA Aide and Attendance program is a pension benefit that is offered to both veterans and surviving spouses who need long term care services.  This benefit will help pay for home care, adult day care, assisted living, and nursing facilities.  There are specific requirements to quality for the VA Aide and Attendance program including that the veteran must have served during a period of war, there must be a medical need to have long term care services, limited liquid assets, and the veteran must have been discharged honorably from service.  For more information about the VA aide and attendance program visit veteranaid.org.  You may also contact Gary Richard, Veterans Service Officer at 631-444-8759 or via email at gary.richard@suffolkcountyny.gov.
4. Paying out of pocket. When paying out of pocket for long-term care services, consider the various income sources that may exist such as, social security, pensions, retirement accounts, interest income, savings, stocks, bonds, mutual funds, annuities, real estate, and investment dividends.  If you are an adult child helping an aging parent with figuring out their finances, it may take some digging around and investigating to find the income sources that exist as many of these assets may have been setup several years ago in the past.