How to Pay for Senior In-Home Care?

You may be thinking about senior in-home care for your parents, loved one or yourself and if you are worried about how to pay for it, there are many ways you can afford senior home care. These include annuities, reverse mortgages, private insurance such as life insurance and long-term care insurance, public programs such as Medicare, Medicaid and Veterans benefits.

An Annuity

Annuities are intended to help seniors convert retirement savings or a pension into a constant, guaranteed stream of income that pays out for a fixed number of years or until death.  An annuity is like a cross between an investment fund and an insurance policy. The money is invested at a fixed or variable rate and then a person can start making withdrawals at an agreed upon maturation date.

Individuals could use the money to pay for in-home care or living at an assisted living facility. Due to dishonest officials who take advantage of seniors, annuities have become controversial. Assist your loved one in locating a reputable financial institution and consult a representative before buying an annuity.

Reverse Mortgage

Seniors after retirement may sometimes struggle with finances. If a senior is a homeowner, reverse mortgage is an option that may help manage the financial challenges. Reverse mortgages were developed by the government specifically for the purpose of helping seniors stay in their homes until the end of their lives.

Reverse mortgage is the opposite of a traditional home loan. Instead of paying a mortgage payment to the lender each month, the lender pays you. You still have to pay property taxes, homeowners insurance and other related costs, or you could risk foreclosure.

The sum that is paid in reverse mortgage is calculated on the basis of the individual’s age. The older you are the more home equity you can pull out. With reverse mortgage, seniors can choose to get the home equity either in a one-time payment or monthly payments. But instead of borrowing a set sum, the loan balance increases over time. A reverse mortgage allows your loved one to stay in the home until he/she dies, even if by that time the loan balance exceeds the home’s worth. But at that point, the home must be sold to repay the loan balance.

Reverse mortgages do have some limitations: A senior has to be 62 or older, and must own the home, either outright or with little debt left on the original loan. (The bank that holds the original loan must be paid back before payments are made on the reverse mortgage.) The bank decides on a value based on the home’s worth and also based on your loved one’s age, since that affects the length of time the payouts must cover.

Private Insurance

Other ways Ito pay for home care is through long-term care insurance and life insurance.

Long-Term Care Insurance

If a senior has long-term care insurance policy, it may cover the costs of in-home care. Some policies require seniors to work with a licensed home care agency or other licensed provider.

Long-Term Care Insurance (LTCI) is different from traditional health insurance because it is designed to cover the long term care needs, support, and services when the individual is unable to care for themselves. It includes custodial and personal care whenever and wherever you plan to receive care, be it in your own home, nursing facility, or a community organization.

Important information to know is when someone qualifies, for how much, and how the benefits are to be paid.

Life Insurance

If your loved one has a life insurance policy, cashing in on the policy could provide that much needed financial relief. Seniors could use the money instead of the funds going to the beneficiary later on.

In some instances insurance companies might pay 50-75 percent of the policy’s face value.  Some policies permit these “living or accelerated benefits” only if the policyholder is terminally ill.

The settlement company after buying the policy from the policy holder, keeps on paying the premium until the policy holder dies. Afterwards, benefits are paid to the settlement company rather than to the beneficiary of the policy.

Medicare, Medicaid and Veterans Benefits

Medicare is a Federal Health Insurance program for individuals over 65 years, younger people with disabilities and people with end stage renal disease.

Medicare parts A and/or B typically pays for medical related services provided at home for short term. Medicare doesn’t pay for non-medical care needs for seniors such as personal care, light housekeeping, meal preparation, medication reminders etc. Also services must be provided by a Medicare certified home health agency contracted by Medicare. A senior who is part of a Medicare Advantage Plan may have to use a certified home health care agency that participates in their plan’s network.

Medicaid is a joint State and Federal Program that provides health coverage for individuals with low income and limited assets. Benefits are administered on a state level, so eligibility requirements and covered services can differ greatly. Depending on the State the senior lives, the Medicaid State Plan may be able to cover home health care and personal care services. 

Some states have expanded their Medicaid coverage through the use of waivers to provide services for populations that might not be eligible otherwise. Home & Community Based Service Waivers (HCBS) can be used to pay for in-home health care and non-medical home care services. In many states, family caregivers can get paid for the care they provide through Medicaid “Cash and Counseling” programs. 

Veterans and their family caregivers may be able to get the Veterans Health Administration (VHA) Standard Medical Benefits Package that provides various levels of home care services. The VA’s Skilled Home Health Care Services (SHHC), Homemaker and Home Health Aide Services (H/HHA), and Home-Based Primary Care programs are available to all veterans who meet eligibility requirements for standard benefits, although some additional conditions may apply.

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