One of the most challenging decisions seniors or their relatives can make is determining if and when to get help with their care. Many seniors would prefer to stay in their own home, but sometimes the basic chores they take for granted may become too much. They need some assistance with cooking, transportation, medication management, or simply could use some companionship. Whatever the reason, the more difficult question often becomes how to pay for care. FirstLantic offers guidance on payment options. However, before determining the best way to fund it, it’s helpful to differentiate between home care and home health care.
Home Care Aides assist with daily living such as dressing, housekeeping, and transportation, referred to as personal care, attendant care, non-medical care, and companion care. Home Health Aides can check patients’ pulses, temperature, or respiration and assist with medications or medical equipment. Home health aides are also known as nurse aides, nursing assistants, certified nursing assistants, and senior aides. Finally, private duty nurses can provide the level of care a loved one needs to stay safely at home rather than in a nursing facility or hospital. Licensed practical nurses (LPNs), registered nurses (RNs), geriatric nurses, and therapists can perform medical tasks such as administering and managing medications, wound care, speech, and physical therapy.
Now that you have an overview of the differences between home care and home healthcare, we can discuss the payment options. Although home care is often more affordable than assisted living facilities, it’s still primarily an out-of-pocket expense except in a few situations.
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 require care they typically are not eligible to purchase insurance, or it would be cost-prohibitive. For this reason, long-term care insurance is relevant only to persons who are conducting longer-term planning.
Life Insurance Policy Conversions
Life insurance holders have a variety of ways of converting their policy into cash or home care services before the policyholder’s passing. Three options allow individuals to stop making premium payments and receive immediate payouts. Viatical settlements are designed for individuals with less than a 2-year life expectancy, while Life settlements are used for persons with longer life expectancies. Life insurance conversions give consumers the most significant value. However, the benefit comes in care services instead of cash.
Three different pension benefits can apply towards home care. Individuals who require more care are eligible for higher benefit amounts. These are the Improved Pension, Housebound, and Aid and Attendance. Veterans can also get care assistance through Veterans-Directed Care, which allows for self-direction of services. Also available to veterans is the VA Respite Care program, which pays for care for a short time when family caregivers need a break or to go out of town for a few days.
Often referred to as original Medicare, it does not pay for non-medical home care aides and only selectively covers home health care. On the other hand, Medicare Advantage may pay for non-medical home care aides depending on one’s plan. For detailed information, click here.
Home Care Loans
These loans, also called bridge loans, help with short-term needs while waiting for other financing to become available. For example, a veteran’s aid and attendance pension claim approval can take 6-12 months. But once it’s approved, it is paid in a retroactive lump sum back to the claim filing date. A similar situation exists for families selling a home and having the elderly relative move in with the adult children. The finances will become available when the house is sold. For more information, click here.
Reverse Mortgages and HELOCs
Self-pay for care can be funded in several ways. Two options include reverse mortgages and home equity lines of credit. However, make sure to do your homework as it might not make economic sense for everyone. For example, if the person is single, needs care, and may move into residential care within two years, a reverse mortgage is probably not the best option. Read more on the pros and cons at the following links: Reverse Mortgages and Home Equity Lines of Credit.
In summary, it can be confusing to determine the best way to fund care. Fortunately, resources are available to help you make the best decision. The following organizations can provide additional guidance:
- Public Benefits Counselors – local Area Agencies on Aging (AAA) and Aging and Disability Resource Centers (ADRC) have benefits counselors on staff to help with financial planning. 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. However, families tend to contact care managers only after the need for care has become apparent, so they may not be in the best position to do long-term planning. 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 a 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 elder law 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.
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