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Private Pay Home Care Services: An Overview of Payment Options

Updated: Nov 19, 2021

Private pay home care services are available for seniors, people with disabilities, and individuals who need help to recover from an illness or injury.

If you need private care assistance, you can hire a caregiver directly or through an agency. Either way, you can work with the caregiver to customize services according to your needs.

Have you typed “Private in-home care services near me” into an online search? We’ll give you an idea of how much services cost and provide an overview of the various ways to pay for private home care services.

Benefits of Private Duty Home Care Services

You have the ability to hire a private duty home care service provider on your own without having to get a referral from your primary care physician, and you can use the services as long as you need them.

A private home care agency will be able to match you with a qualified caregiver that has the necessary skills to provide care. They’ll also take your preferences and overall compatibility with the caregiver into consideration.

How Much Do Home Care Services Cost?

Private pay home care provided by a registered nurse or therapist is more expensive than other types of in-home care.

The 2020 Genworth Cost of Care Survey shows the median cost of home health care is $24 per hour. By contrast, the median cost of non-medical home care (custodial care, homemaker services, etc.) is $23.50 per hour.

Ways to Pay for Private Pay Home Care

Next, we’ll provide an overview of ways you can pay for private pay home care:

  • Traditional health insurance plans. While coverage varies among traditional health insurance coverage, most plans pay for certain elder care services. However, most plans will not pay for non-medical home care services. They may pay for a portion of in-home skilled care, but most traditional insurance providers won’t pay 100% of the bill.

  • Medigap insurance is also known as Medicare Supplement Insurance, and it will pay for the gaps in coverage that Medicare doesn’t cover. Medigap can help with getting reimbursed for deductibles and copayments. Be aware that Medigap policies only pay for medically necessary services, and they only pay for them for a short term. If you need services for a longer term, you’ll need to find an additional funding source.

  • Long-term care insurance. Long-term care insurance is designed to provide funding for nursing home care, assisted living care, and in-home care. It’s best to plan ahead when buying long-term care insurance. The American Association for Long-Term Care Insurance reports 53.6% of those who are over the age of 75 were denied coverage for long-term care insurance. Long-term care insurance policies will also be less expensive when you apply at younger ages when your health is better. Long-term care plans will only pay for private pay home health aides if the plan specifies it will pay for non-medical services.

  • Life insurance. If you have a whole life insurance policy, you may be able to borrow from the cash value to pay for private pay home care services. Depending on the type of life insurance policy you have, you may also be able to get a large payout by surrendering the entire policy. If your life insurance policy has an accelerated death benefit rider, you may be able to withdraw funds based on the rider. The amount you receive will be deducted from the final death benefit. Your policy will outline the conditions for making a withdrawal which typically requires you to be terminally ill or unable to perform activities of daily living (ADL). Your physician will need to provide a statement or medical records to affirm your health needs. Because using the accelerated death benefit rider doesn’t equate to surrendering the policy, you would still need to continue paying the premiums to ensure the full value of the policy is available upon your death. Your policy will outline the conditions for drawing on your life insurance policy. In some situations, you may be able to sell your life insurance policy to a third party to pay for private home care services. The buyer of your life insurance policy would be responsible for premium payments and would collect the final payout.

  • Personal income and savings. Most families that need private in-home services pay out of pocket using retirement funds, health savings accounts, pensions, annuities, investments, Social Security, or real estate sales. If the person’s condition worsens, Medicaid will require you to spend down most assets before you can qualify for the program. Unless a person needing care has significant savings or assets, they will eventually need to rely on Medicaid for care.

  • Reverse mortgage. If you have a large amount of equity in your home, you may qualify for a reverse mortgage loan which refers to borrowing against the value of your home. You can use the funds to pay for private in-home care or update your home to make it more conducive to an aging adult. Alternatively, you may be able to use the funds to purchase long-term care insurance. The mortgage will need to be paid when you sell the home, move, or pass away.

  • VA Health Benefits. Veterans may be able to use their health benefits to fund various in-home caregiver services or respite care for family caregivers. The VA also has other programs such as the Skilled Home Health Care Services (SHHC), Homemaker and Home Health Aide Services (H/HHA), and Home-Based Primary Care programs that may fund care.

  • VA pension benefits. Veterans may be able to fund services for themselves or their spouses with their pension payments. “Improved” pensions, those that are considered Aid & Attendance or Housebound, increase funds when a veteran or their spouse needs a higher level of care.

If you don’t have success finding a funding source. Our specialists at Abington Caregivers have lots of resources to help you identify funding sources you may not have found on your own. Give us a call today at (215) 600-3434.

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