Caregiving can have a major impact on a family’s finances. Those caring for an aging relative may spend $7,000 to $13,000 out of pocket each year to support their loved one’s needs, along with more than 23.7 hours per week, the AARP reports. And that doesn’t include wages for a professional caregiver. As you weigh the benefits of in-home care vs. assisted living facilities, you’re likely concluding that the costs of such care can feel overwhelming.
Just half of those over age 65 have had a conversation with a loved one about how they would pay for caregiving. Let’s explore how to get started with financial planning for home care.
Tips on Budgeting
Budgeting for future care needs can prove challenging, but take these steps to prepare as thoroughly as possible.
Understanding Health Aide Costs
In 2024, a home health aide’s hourly rate averaged $33. Consider your loved one’s current needs and conditions to begin planning for these expenses. Do they mainly need companion care, or do they require a form of specialized care that could cost more?
Of course, it’s impossible to predict the future. But based on current conditions and needs, estimate how many hours per week you expect to hire a caregiver for, over the next year. Then, looking at the next five years, calculate the number of hours of in-home care your loved one may require, presuming that number will increase substantially over time. Factor in the amount of care that you or other loved ones can realistically assist with.
Get Personalized Support
Your Area Agency on Aging may provide information on local resources. You can also contact the Aging Life Care Association to find a geriatric care manager or advocate, who can assist with planning for care and suggest services.
Government Programs
Several government programs can assist with the costs of home care, as we’ll discuss next.
Medicaid and Social Security
Medicaid and Social Security benefits may help cover home care costs for those who meet financial and health-related eligibility requirements. Rules vary by state, and benefits received through Medicaid may reduce Social Security benefits. Find out your state’s eligibility requirements several years in advance, if possible.
Meanwhile, Medicare doesn’t typically cover long-term care, such as help with activities of daily living, although it may cover certain medical care expenses.
The PACE Program
In certain states, seniors may qualify for PACE (the Program of All-Inclusive Care for the Elderly), which can assist with in-home care costs. A combined Medicare and Medicaid initiative, PACE helps cover coordinated care from a healthcare team.
Veterans Benefits
If your loved one has VA benefits, explore how they can support long-term care. The VA Medical Benefits Package supports respite care, skilled home health care, and homemaker and home health care assistance.
Private Funding
Due to limitations in government funding, many individuals turn to private sources of funding to cover home care costs.
Long-Term Care Insurance
Consider purchasing a policy for long-term care insurance. Such policies can help ensure you don’t lose control of your assets if you need to cover extensive care. Some life-insurance policies may also assist with these needs.
Other Private Funding Sources
Other private forms of funding elder care include retirement funds and pensions, investment funds, annuities or trusts, and reverse mortgages. Consider how options like a reverse mortgage may affect any Medicaid and Social Security benefits you receive.
Talk to a skilled professional about how in-home care can support your loved one’s needs in a cost-effective way. Schedule a free nurse consultation call today!
