Private Insurance and In-Home Care
How to Use Private Insurance to Pay for In-Home Care
Be sure to explore these options to help pay for in-home care.
Long-term care insurance
If your loved one has a long-term care (LTC) insurance policy, it may cover some costs of in-home care. Some LTC policies only pay home care benefits to a licensed home care agency or other licensed provider; others pay a set daily amount to the insured person who qualifies for the benefits (which means your loved one can spend that money on any caregiver he or she chooses, including family members).
Read through the LTC policy itself to see if there's coverage for in-home care and what the payment terms are: when someone qualifies, for how much, and how the benefits are to be paid.
Life insurance for cash
If your loved one has a life insurance policy, you may want to look into whether it could provide money now to help pay for care instead of going to family members later. Cashing in a life insurance policy can sometimes provide a substantial amount of money to pay for in-home care. Certain life insurance policies can be cashed in with the insurance company itself for 50 to 75 percent of the policy's face value, though some policies permit these "accelerated benefits" or "living benefits," as they're called, only if the policyholder is terminally ill.
If these accelerated insurance benefits aren't available, you can investigate whether a "life settlement" (also called a "senior settlement") may be possible. This involves selling the policy to a life settlement company (different from the insurance company that issued the policy) for a lump sum. The exact amount of the payment -- 50 to 75 percent of the policy's face value -- depends on the policy benefit amounts, the policy's monthly premiums, and your loved one's age and health. After buying the policy, the settlement company keeps paying the premiums until your loved one dies; then the life insurance benefits are paid to the settlement company rather than to a family member or whoever was the policy's original beneficiaries.
Note: Expect little help from health insurance. Although most health insurance policies cover some doctor-prescribed in-home care for acute health issues, usually following a hospital or rehabilitation/skilled nursing facility stay, no health insurance policy -- whether through a retirement health plan, a spouse's work, or a Medigap policy to supplement Medicare -- covers long-term in-home care.