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Paying for Home Care

Paying for Home Care

Home care services are paid privately by the client or family members. Medicare and Medical do not pay for home care in most instances. Additional options to pay for care include:

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 have a need for care, they typically are not eligible to purchase insurance. Or if permitted to do so, their premiums would be cost prohibitive. For this reason, our discussion of LTC insurance is relevant only to persons doing very long term planning.

The NFL 88 Plan Benefits

NFL player disability and neurocognitive benefit plan named for Pro Football Hall of Famer and NFL legend John Mackey. In-home care increased to $140,000 per year, Institutional care increased to $160, 000 as of 2020 for custodial care resulting from dementia, Alzheimer’s Disease, ALS, and or Parkinson’s Disease.

Reverse Mortgage and HELOC’s

Families can self-pay for care by using their home as a financial resource. Two options include reverse mortgages and home equity lines of credit. However, depending on one’s marital status, their severity of need and the projected length of need, these options might not make economic sense. For example, if the person in need of care is single and may need to move into residential care within a two-year period, then a reverse mortgage is probably not the best option. Read more about when it is best to use each of these options and their pros & cons at the following links: Reverse Mortgages & Home Equity Lines of Credit

VA Aid and Attendance Pension Benefit

Veterans and their surviving spouses may qualify for Veterans Administration benefits to cover some of the cost of in-home care. A veteran or a surviving spouse of a veteran who served at least 90 consecutive days of active duty with at least one of those days during a period of war may be eligible for the Veterans Administration’s non-service connected disability pension.

Life Insurance Policy Conversion

Life insurance holders have a variety of ways of converting their policy into cash or home care services prior to the policyholder’s passing. There are three options that allow individuals to stop making premium payments and receive immediate payouts on their policies without passing. Viatical settlements are designed for individuals with less than a 2-year life expectancy. Life settlements are intended for persons with longer life expectancies. Life insurance conversions give consumers the greatest value for their life insurance policy. However, the benefit comes in the form of care services instead of cash. Pros, cons, and eligibility information is available for viaticals, life settlements, and conversion programs.

Bridge Loans

Loans specifically designed for elder care are an interesting financial product. These loans are intended for short term needs while a family is waiting for other financing to become available. For example, a veteran’s Aid & Attendance pension claim approval can take 6-12 months. But once it is approved, it is paid in a retroactive lump sum back to their claim filing date. A loan is made to veterans with the expectation that it will be re-paid from the lump sum. A similar situation exists for families selling a home and having the elderly relative move in with the adult children. Finances will become available it is just a matter of when the home will sell. For more information on fees, pros and cons for home care loans, click here.

Worker’s Compensation Insurance

Any individual requiring necessary home care services due to a work- related injury is eligible to receive coverage through worker’s compensation.

Catastrophic Illness Insurance

Catastrophic illness insurance is a form of supplementary health insurance that can pick up many of the costs associated with a serious illness that are not covered by your traditional health insurance. In most cases, they work like a life insurance policy rather than like traditional health insurance. They will pay out a specified benefit if you are diagnosed with a covered illness during the time that you are covered. Many of them also offer specific benefits like payment for alternative health treatments or converting your home for wheelchair accessibility-benefits that are seldom covered by traditional insurance policies.

Employer-Sponsored Health Savings Account (HSA) or Flexible Spending Account (FSA)

Flexible spending sccounts (FSA’s) are part of an IRS regulated, employer-sponsored benefit plan that allows participants to voluntarily convert part of their compensation into tax-free benefits. Contributions made through FSA’s are normally free of federal, state, and Social Security taxes.