5 Ways to Finance Home Care for Elderly Parents

Taking care of aging parents can be both a rewarding and challenging experience. Your parents have been there for you your entire life, so it's only natural that you want to give back and ensure that they receive the best care possible. 

However, providing home care for elderly parents can be expensive and financially draining. The costs may include home renovations, medical bills, and in-home care services, not to mention the added emotional stress. 

Fortunately, there are various financing options available that can alleviate the financial burden and help you prioritize your parents' well-being. In this blog post, we'll cover five ways to finance home care for your elderly parents.

5 Ways to Finance Home Care for Elderly Parents

Taking care of elderly parents can be emotionally and financially taxing, but it's something that many of us have to do - in fact, it's estimated that up to 70% of people will need long-term care at some point. Unfortunately, it can easily drain your retirement savings if you're not careful. 

But don't fret! There are several government programs and benefits that can help finance home care for your elderly parents. 

Government Programs and Benefits

Medicare is a federal health insurance program for people who are 65 years or older. It provides coverage for hospitalization, doctor visits, outpatient services, and preventive care. But what many people don't know is that it also covers some home care services, such as skilled nursing care, physical therapy, occupational therapy, and speech therapy. 

However, there are some restrictions and requirements. For example, your elderly parents must be homebound, have a doctor's order for the home care services, and receive the services from a Medicare-certified home health agency.

Medicaid is a joint federal and state program that provides health coverage for people with low income and limited resources. The rules and benefits vary by state, but most states offer some type of home and community-based services for elderly people who need help with daily activities, such as bathing, dressing, eating, and toileting.  

As an example, NY CDPAP is an option for residents of NY. CDPAP is a Medicaid program that lets you receive in-home health care services from a provider of your choice. 

There are certain eligibility requirements - for instance, you can’t hire your own spouse to provide care (though other family members are fine). However, this program does give you more flexibility in the selection, training, and supervision of your caregiver. 

If your elderly parent is a veteran or a surviving spouse of a veteran, they may be eligible for some veteran's benefits that can help finance their home care. 

The Department of Veterans Affairs (VA) offers several programs, such as the Aid and Attendance pension benefit, which provides extra income for veterans who need help with daily activities. The VA also provides home-based primary care services, homemaker and home health aide services, and respite care services for caregivers.

Long-Term Care Insurance

Long-term care insurance is a type of insurance designed to provide coverage for people who are no longer able to care for themselves. This often includes elderly individuals who require assistance with basic daily living activities such as bathing, dressing, and eating. Long-term care insurance provides a daily benefit to pay for the cost of this care.

These types of policies can be structured in different ways, but generally, they work like this: You pay a monthly premium for your policy. If you need long-term care, you must meet certain requirements, such as being unable to perform a certain number of daily living activities. Once you meet these requirements, your policy will pay out a daily benefit to cover the cost of your care.

Long-term care insurance can cover a wide range of services, including home care, assisted living, and nursing home care. Some policies may also cover adult day care, hospice care, and caregiver training. It's important to read the terms of your policy carefully to understand what it does and does not cover.

Retirement Savings and Investments

Another way to finance home care for elderly parents is investing through retirement savings and investments. If you have a 401(k) or IRA, you may be able to withdraw funds penalty-free to pay for long-term care. 

Another option is to tap into your home equity through a reverse mortgage, home equity loan, or home equity line of credit. However, there are risks associated with these options, so it's important to consider all the pros and cons before making a decision.

Life Insurance 

If your parents have life insurance policies, you may be able to tap into them to pay for home care expenses. Some insurance policies are designed with riders that offer long-term care benefits, and they allow policyholders to withdraw a set amount per year to pay for home care. 

And if your parents have numerous life insurance policies, you can consider selling some of them. Life settlement transactions are common in the insurance industry, and this can help you unlock cash at hand to pay for home care.

HSA

Health Savings Accounts or HSA are savings accounts that individuals who are enrolled in a high-deductible health plan can contribute to tax-free to pay for healthcare expenses. 

If your parents are still working and enrolled in a high-deductible health plan, they can contribute pre-tax money to an HSA account. The funds in these accounts can be used to pay for home care expenses tax-free.

Final Thoughts

The financial challenges associated with providing home care for elderly parents can be daunting and emotionally draining. However, with the financing options discussed in this article, you can alleviate some of the financial burdens you may face. 

Explore all the options available to determine what works best for you and your parents. Remember, providing quality care for your parents is an investment worth making.