Paying for In-Home Care

How Much Does Home Care Cost?

Like the costs of all healthcare, the cost of in-home care in the United States is rising. A 2010 study by MetLife found that home health care cost $21 per hour, while traditional home care cost $19 per hour. In 2013, the cost of home health care held steady at $21/hr, but the cost of traditional, non-medical care rose to $20/hr. It’s also important to note that care can be even more expensive on weekends, evenings, and holidays.

These costs may not seem like much on the surface, but they begin to add up when you factor in exactly how much care you should need. For example, imagine that you or your loved one need a home health aide for four hours per day, five days a week, not an unreasonable assumption. If you paid the national average rate of $21/hr, you would end up spending over $21,000 per year.

The most recent predictions that we’ve seen estimate that around 70% of Americans will require at least one form of long-term care at some point in their lives. Almost 9 out of 10 Americans say they would prefer to receive long-term care at home, and about 8 out of every 10 who need care receive some form of in-home care. In short, these costs are something that you should care about.

Will Medicaid and Medicare Pay for Home Care?

Medicaid and Medicare are government health programs designed to help specific individuals. Medicaid is a program to help Americans who cannot afford medical care, while Medicare is a health insurance program for individuals aged 65 and older and younger people with certain conditions or disabilities. Many Americans believe that Medicaid and Medicare will pay for the costs of in-home care. However, the truth is actually far more complicated, and for plenty of seniors this is simply not the case.

For those who qualify, Medicaid will pay for a much larger share of home care costs than Medicare. However, you cannot receive Medicaid unless you meet the income/asset qualifications for the program. Many seniors do not and must deplete a significant percentage of their assets before they qualify.

Medicare, on the other hand, covers all individuals over the age of 65, but it does not cover as many forms of home care. Medicare covers home health care – medical services such as licensed nurses – but not traditional, non-medical home care. Unfortunately, these costs make up the bulk of in-home care, as many seniors require assistance with activities of daily living (ADLs) rather than medical care.

There’s another, somewhat sensitive, issue that you should consider as well – if you are relying on a government program to cover in-home care costs, you will be limited to providers who accept Medicare or Medicaid. While you are still likely to have access to high quality service, you may be unable to hire the home-care provider that you prefer.

Does Health Insurance Cover Home Care?

In general, private health insurance will cover the same home care expenses as Medicare. This means that it will pay for home health care, care that is medically necessary and typically short-term. Like Medicare, few insurance policies cover any form of traditional home care, which is often the care that seniors need. It’s also worth briefly mentioning that disability insurance, which people sometimes lump in with health insurance, does not cover home care.

Long-Term Care Insurance

So far, the options that we’ve covered are not very reliable means of paying for home care. Long-term care insurance, on the other hand, is one of the best options available. Long-term care insurance, sometimes shortened to LTC insurance or LTCI, is an insurance policy that covers both home health care and traditional home care, along with many other forms of long-term care such as assisted living and nursing home stays. The LTCI works in much the same way as other forms of insurance – you pay a monthly premium for a defined amount of future coverage. Once you’ve purchased long-term care insurance, the policy language cannot be changed and the policy is generally renewable for life. In general, you do not have to pay the premiums while you are receiving care.

Of course, it’s important to consider the cost of long-term care insurance as well. In 2012, the average policy for an individuals and couples between ages 55-65 cost between $2000 to $3500 per year. The average policy included a $150 daily benefit for a three year period for a total of $164,000 and inflation protection.

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