February 27th 2026
By Ari Parker
Learn practical ways to pay for home care, including insurance options, Medicare, Medicaid, and out-of-pocket strategies to ensure quality care for your loved ones.
By Jordan McElwain
By Ari Parker
For many people, home care is necessary as they recover from an illness or injury or age in place. But home care can be expensive. However, there are a number of ways that people can pay for home health care.
In this article, we’ll go over how to pay for home care, including what Medicare covers and what other insurance options are available. We’ll also discuss how to best use personal and family financial resources and who qualifies for community and charitable assistance programs.
Nonmedical home care costs about $33 to $34 per hour. However, prices may change based on where you live. Factors like the cost of living, caregiver availability, and state rules can affect these rates.
Government programs, insurance, and employer benefits may all help cover home care.
Stacking tax credits and taking advantage of community and charitable assistance programs are often underutilized ways to pay for home care.
While Medicare provides some coverage for home care, it is limited.
Original Medicare does cover skilled home care for individuals who are homebound and have home care ordered by their doctor. However, this home care is limited to 8 hours per day and under 28 hours per week. It’s also limited to up to 100 days per benefit period. More coverage of up to 8 hours per day and 35 hours per week may be covered short-term if deemed medically necessary.
To get home care, a doctor must certify that the patient needs part-time skilled services, which are covered by Medicare Part A. These services include:
Medically necessary skilled nursing care
Medical social services
Physical therapy
Occupational therapy
Speech-language pathology
Medicare Part B covers durable medical equipment (DME) and medical supplies for use at home.
Home services that are not covered by Original Medicare include:
Meals and homemaker services
Custodial and personal care services, such as help with bathing and dressing, if they’re the only services a person needs.
Medicare Advantage is a private insurance option. It provides more coverage than Original Medicare. Some Medicare Advantage plans may offer home health benefits. They may also offer supplemental coverage options, such as additional aide hours, custodial care, or 24/7 coverage. However, Medicare Advantage plans differ, so it’s important to compare coverage.
To qualify for Medicare-covered home health, a healthcare provider must assess you face-to-face to certify that you are homebound and require part-time skilled nursing or therapy services. You can complete this assessment within 90 days before or 30 days after the start of home care. Medicare may require a physician's certificate, plan of care, and/or medical records to verify this.
It’s important to choose a Medicare-approved agency to ensure that coverage is provided. Before starting with an agency, confirm that it accepts Medicare assignment. Clinical notes and assessments from this agency can demonstrate any ongoing medical needs to continue coverage.
Medicaid pays for the largest share of home care, but has specific eligibility requirements.
Medicaid may provide coverage for home care services for individuals with low incomes. Coverage may differ by state, but usually includes:
Personal care services
Therapy services
Medical equipment and supplies
Nutrition services
Transportation
Most states offer Medicare coverage to adults who are at or below 133% of the federal poverty level and meet certain resource limits. Medicaid also has a look-back period of 5 years (60 months) for long-term care Medicaid eligibility. This means that Medicaid can look back at your financial history at this time for any asset transfers that may disqualify you.
Some states also offer medically needy programs to those who are above Medicaid’s income requirements but have significant healthcare expenses. These programs allow individuals to cover their healthcare expenses until they have spent the difference between their income and their state’s medically needy income standard. Then, Medicaid begins coverage.
States that offer the Program of All-Inclusive Care for the Elderly (PACE) under Medicaid can help provide coverage for services that help seniors age in place, including home care. To qualify, individuals must:
Be at least 55 years old.
Live in a PACE service area.
Meet state-certified nursing-home care requirements.
Be able to live safely in their community with PACE support.
HCBS waivers help individuals get the care they need at home rather than in an institutional setting, such as assisted living or a nursing home. To qualify, individuals must show that their care needs meet the state's requirements for institutional care.
Almost all states and the District of Columbia (DC) offer waiver programs. Coverage differs by program, but may include homemaker, home health aide, and personal care. Eligibility also varies depending on the waiver, and some waivers are limited by age or diagnosis. Contact your state Medicare office to learn which waiver programs are available in your area.
Consumer-directed services (CDS) let people take charge of their own care and choose how to spend their available funds. They can choose who provides care, set the caregiving schedule, and decide on needed services. These programs may allow families to hire and pay their members as caregivers. Eligibility varies based on the program.
Income thresholds vary by state, but they are often based on the federal poverty level. States may also set asset limits and exceptions. You need to provide proof of income, asset information, and personal identification to apply. Medicaid waiting periods can vary by state.
Long-term care insurance can help pay for home care, but it must be purchased before coverage is needed. Generally, long-term care insurance is most beneficial to those who purchase it at a young age and while they are healthy.
Long-term care insurance may offer traditional or hybrid policies. A traditional policy reimburses the policyholder for covered services up to their benefit amount. A hybrid policy may offer reimbursement, or it may offer cash indemnity, meaning a fixed payment, regardless of actual expenses. Policies will include a daily or monthly maximum coverage amount.
Most LTC policies have elimination periods. These work like a deductible, where the policyholder covers home care for a set period of time (for example, 30 or 60 days) before insurance coverage kicks in. Plans also usually have a maximum benefit duration, after which the policy will stop paying for in-home care. This may be time-based or a dollar amount.
Each LTC insurance policy defines home care differently. For example, some policies offer help with homemaker services, whereas other policies may exclude this care. In order for coverage to begin, most policies require that the policyholder needs help with at least 2 out of 6 activities of daily living (ADL). These include bathing, dressing, eating, toileting, transferring, and continence. Some policies may automatically qualify individuals diagnosed with dementia.
Some policies offer inflation protection. This means coverage grows over time to match inflation. Reviewing this section helps ensure that the policy will be adequate in the future. It’s also important to check the caregiver requirements. Some policies may allow family members to be paid for caregiving, whereas some policies only cover licensed home health aids.
Veterans’ benefits may also help to cover home care.
VA home health care may provide coverage for homemaker and home health services, including skilled home health care. To get VA healthcare, enrolled veterans need to qualify for community care and meet the service's clinical criteria. A copay may be charged based on the individual’s VA service-connected disability status. Programs that can assist with home health care include:
Homemaker and Health Aide program
Home-Based Primary Care (HBCP) program
Respite Care program
Monthly payments received from the Aid and Attendance Benefits program may also be used to help pay for home care.
To apply for VA benefits, you need:
A DD214 or discharge papers
Service treatment records
Medical evidence
Financial records
If you need help applying for VA benefits, reach out to VA-accredited Veterans Service Officers (VSOs) or contact your county or state veterans affairs office.
In this section, we’ll cover other types of insurance and benefits that can help pay for home health care, discussing home care costs and payment options.
Life insurance conversion options let you change a term life policy into a permanent one. Options include:
Viatical settlements: A person with a terminal or chronic illness sells their life insurance to a third party. While this provides immediate financial relief, there is a complete loss of the death benefit for beneficiaries.
Accelerated death benefits: Allows a terminally ill policyholder to access their death benefits while still living. This gives access to funds when needed. However, it reduces the death benefit for beneficiaries. It may also make the policyholder ineligible for some government programs.
Life insurance loans: Borrows against the cash value of a life insurance policy. This can give you tax-free cash. However, it lowers the death benefit for beneficiaries. Also, if the interest and loan balance go beyond the policy’s cash value, the policy might lapse.
Health savings accounts can be used to pay for home care. After you turn 65, you can withdraw from your HSA for any reason without penalty. But, withdrawals for home care that isn’t medically necessary, like companionship, meals, or errands, may still be taxed. Because long-term care insurance policies often take time to kick in, some people choose to use funds from their HSA to bridge the gap.
Disability insurance may help replace some income for those unable to work, allowing them to pay for home health care services. Some disability insurance policies may provide coverage for personal care, homemaking, and rehabilitation. However, coverage differs by policy, so it’s important to review plans.
Workers’ compensation can provide coverage for home care related to work injuries. To qualify, individuals must be employees, have suffered an injury or illness because of job duties, and the employer must have coverage. Eligibility requirements can also vary by state.
Some individuals use personal and family resources to help fund home care services.
Personal and retirement accounts can be an important source of funding for home care. After you reach retirement, you can withdraw from IRAs and 401(k)s to cover home care and other expenses. Withdrawals from traditional accounts face taxes. However, if you've held a Roth account for at least 5 years, withdrawals are tax-free.
It’s also important to note that money taken from retirement accounts is taxed as income. Also, before age 59 ½, there is a 10% early withdrawal penalty when withdrawing from IRAs and 401(k)s. However, there are some exceptions for medical expenses.
Some people choose to borrow against the value of their home equity to help fund the cost of home care. Options include:
Reverse mortgage: Allows homeowners aged 62 and older to convert some of their home’s equity into cash. The loan is repaid when the person moves out, sells the home, or passes away.
Home equity loan: Offers a lump sum with a fixed interest rate.
Home Equity Line of Credit (HELOC): Allows you to withdraw funds as needed.
To qualify for home equity loans, you need enough home equity. You also must keep up with home maintenance and pay for taxes and home insurance. Home equity loans can be helpful. They let people borrow against their biggest asset: their home. However, there are fees and interest, and it can lead to foreclosure if the home isn’t maintained.
There are also community and charitable assistance programs that can help pay for home care.
Local Area Agencies on Aging provide support in several areas:
Home health care
Meal services
Transportation
Caregiving support
Programs are often offered on an income-based sliding scale. Contact your local Area Agency on Aging to see what is available in your area.
Some non-profit and charitable organizations that provide financial assistance for home care include:
United Way: Funds non-medical home care, transportation, friendly check-ins, and care coordination.
National Volunteer Caregiving Network: Provides volunteer caregiving and transportation.
ElderLove USA: Offers affordable caregiving services and provides covered services to qualified individuals under Medi-Cal.
Volunteers of America: Provides help with home health care, senior centers, and meal programs.
Habitat for Humanity Aging in Place: Provides home repairs, modifications, and community services to help seniors stay in their homes longer.
Faith-based programs, groups for specific conditions like Alzheimer’s and Parkinson’s, and local senior services can provide extra support.
In addition to Medicaid, many states offer state-funded home care services, adult day care, and respite programs. Programs like property tax relief, utility assistance, and transportation support can help free up money for home care services. BenefitsCheckUp can be used to find these programs.
Senior companion programs, Friendly Visitor programs, and respite care programs are offered in many areas for free or at low cost. Some programs offered nationwide include:
AmeriCorps Senior Companion Program: Connects volunteers with older adults for companionship, offering help with activities of daily living, transportation, and cooking meals.
Papa Pals: Provides social support and companion care to older adults through their Medicare Advantage, Medicaid, or employer-provided benefits. Support can take place in person or over the phone.
Meals on Wheels: Delivers meals to seniors in need. Some Meals on Wheels also offer Friendly Calling and Friendly Visitor programs.
Little Brothers Friends of the Elderly: Offers one-on-one visits, special occasion celebrations, outings and social gatherings, and tech support.
AARP Friendly Voice: Provides calls to seniors from trained volunteers.
In this section, we’ll go over employer and union benefits.
In some situations, family caregivers may be able to take advantage of employee benefits to provide care for family members. These options include:
Dependent care FSAs
Employer-sponsored caregiving benefits
Paid family leave programs
Employee Assistance Programs (EAPs)
Union retiree benefits and corporate retiree benefits may offer coverage with home health services. Check for eligibility rules, coverage details, and premium and cost-sharing in your policy.
In some cases, individuals may need to take leave to arrange for care. FMLA can provide unpaid time for caregiving while protecting the individual’s job. States may also offer family leave programs.
In this section, we’ll go over tax deductions and credits.
Home care payments can qualify for medical deductions if they mainly involve medical care. These services include skilled nursing care, home health aides, and physical and occupational therapy. You can apply deductions for up to 7.5% of your adjusted gross income (AGI). Documentation required includes itemized receipts and invoices, and proof of payment.
An aging parent can be claimed as a dependent if they meet these criteria:
They are U.S. citizens or residents.
They don’t file a joint tax return.
Their gross income is below the IRS threshold for the year.
They live with you for over half of the year.
Credit includes up to 35% of qualified expenses for low-income households and 20% for higher-income households. Up to $3,000 of expenses per year per qualifying individual can be claimed.
Many states also offer caregiver tax credits to individuals helping to care for an aging parent. It’s important to check with your state for eligibility and credits. You can often get credits for:
Caregiving and adult day program costs
Long-term care insurance premiums
Home modifications for accessibility
Respite care
You can apply for some of these tax credits along with your income tax return, whereas others require you to submit a separate application.
A tax professional can help with maximizing deductions. They can be especially helpful for those who have complex caregiving expenses or multiple dependents, or who need help coordinating federal and state benefits. When working with a tax professional, it’s important to have any invoices and receipts, proof of payments, insurance statements, and doctors’ certifications or care plans.
Home care is expensive, but there are many funding options. Most people combine 2-4 different payment methods to help them cover the cost of home care. Government programs, such as Medicare, Medicaid, and VA, should be explored first. Planning ahead and seeking expert guidance helps to maximize the available sources. It’s best to start exploring options early and avoid waiting until a crisis to ensure that you or your loved ones get the care they need.
The monthly median cost for an in-home health aide is $7,055. Full-time care estimates can be over $24,000 per month, based on a rate of $33 per hour. However, these costs can vary by region.
Yes, Medicare Part A covers some home health care for homebound individuals. This applies if they need specialized part-time services ordered by their doctor. Personal care services aren't covered unless the person needs specialized part-time services, too.
Medicaid’s income and asset limits vary by state, but they are usually based on the federal poverty level. You can apply for Medicaid through your state’s Medicaid agency or through the Health Insurance Marketplace. Your application can take up to 45 days to process.
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