How to Pay for Home Care / Assisted Living

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When chronic health conditions, surgery, dementia or even the normal aging process make it unsafe for a senior to live at home, home carecan provide the assistance a senior needs, while enabling them to continue living at home. But when considering this option, many caregivers are concerned about the cost and how to pay for home care.

“Home care has many benefits, including the comfort of recovery in personal surroundings and reducing costs,” explains Kate Jones, Chief Clinical Officer for Home health, Hospice and Palliative care with Amedisys Home Health. “Despite the cost saving compared to assisted living or a nursing home, home care can still be a financial burden for seniors and their families. Paying for home care is often an out-of-pocket expense.”

Options for Paying for Home Care

Along with some research provided by the NAHC, Jones suggests some of the options available to pay for home care and some trends she’s witnessing.

Medicare:Medicare is available to most people who are 65-years-old or older. Regulations vary widely by state, but in most cases, Medicare will provide the following services in a home setting:

  • Skilled nursing
  • Physical, occupational and speech therapy
  • Certain medical supplies (wound dressing, but not prescription drugs)
  • Durable medical equipment (such as a walker)
  • Some social services related to illness (for instance, emotional counseling)
  • Some FDA-approved osteoporosis drugs

However, Jones explains that Medicare doesn’t cover 24-hour-a-day at home care, or “custodial care” such as meal preparation, bathing, dressing and toileting. The only way Medicare will pay for custodial care is if a senior also requires skilled nursing or therapy services.

Medigap: Like its name implies, this insurance bridges the gaps in Medicare coverage. It can sometimes be purchased in addition to commercial health insurance to get additional home care coverage. Depending on the policy, home care services is paid for when the policyholder is also receiving Medicare for home health care. Medigap requires physician approval and it’s most helpful when individuals are recovering from surgery, and injury or an acute illness.

Medicare Managed Care Companies: These companies contract with Medicare to provide a host of Medicare-covered home health services. According to Jones, instead of getting traditional Medicare, subscribers choose a private Medicare program that offers some additional benefits, and sometimes additional restrictions, too.

Medicaid: This assistance for low-income individuals is usually administered by states, so it can differ depending on where you live. That also means that each state has its own set of eligibility requirements. In general, Medicaid covers part-time nursing, home care services and medical supplies and equipment. Depending on the state, Medicaid may cover occupational, speech or physical therapy, and medical social services.

Aid & Assistance for Veterans: Jones admits this a little known benefit, but an important one for veterans who have been injured or disabled in a service-related condition and need home health care. A physician has to authorize the service, which has to be administered through the Veterans Administration, which has hospital-based home care units. Non-medical care isn’t covered.

Older Americans Act: This helps frail and older Americans stay independent in their own community and offers federal funds for state and local social services. Home care, personal care, meal delivery and shopping services are covered for people 60 and older. More and more, people who can afford to pay for some of these services – based on their income – are asked to do so. Most requests for assistance can be facilitated through a local Area Agency on Aging.

Long-Term Care Insurance: Some long-term care insurance covers home care services. Benefits vary depending on the plan, so make sure you and your loved one understand which services are covered and which are not before purchasing a policy. There can be limits on coverage based on pre-existing conditions, there may be prior hospitalization requirements and some policies cover what is already covered by Medicare. Jones says it may be worthwhile to pay a little more for this kind of policy, especially if it includes non-medical care, because having assistance with personal care and housekeeping can keep loved ones in their home longer and give them as much independence as possible.

Commercial Health Insurance: These plans are administered by companies like Blue Cross Blue Shield, and although policies often cover some home care services, it varies from plan to plan. Many times, skilled home care is offered through a cost-sharing option.

Individual Retirement Accounts: Individuals and families have many options to pay for future expenses. Working with your bank, credit union or financial planner is a good way to put together a personal savings plan. If your parent has an IRA, some funds from that account may be able to be used for home care.

Health Savings Accounts (HSA): Health savings accounts (HSAs) are used to save money for future medical expenses. You — not your employer or insurance company — own and control the money in your health savings account. The funds roll over from year to year and the money is not taxed. To be eligible to open a health savings account, you must have a special type of health insurance called a high-deductible plan – sometimes referred to as “catastrophic coverage,” – that acts like a safety net if extensive medical care is needed. Health Savings Accounts have only been around since the early 2000s and Jones stresses that aren’t common as a way to pay for home health care or non-medical health care. But HASs are a trend Jones is seeing more often.

Employer-paid assistance: Another emerging and hopeful trend Jones is seeing includes employers providing some sort of elder care to employees. When you consider how many hours of work is missed when an adult child has to care for their aging or ill parent, offering some kind of assistance can be good business. “We’ve even seen employers pay to have healthcare workers go into employees’ parents’ home to do assessments,” adds Jones, who suggests researching options with your company’s human resources department.

Jones advice’s that individuals or families should know the programs that are available to them, exhaust all eligible options and then have a plan for what is not covered. Whatever option you choose, planning ahead is by far, the best prescription.



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