How to Pay for Home Care: Tips & Resources

For many senior adults, remaining at home can be more appealing than moving to independent living or assisted living facilities. Still, aging can make common tasks more difficult, and your loved one may need help. Knowing the best ways to pay for in-home care can be challenging. Caring has various resources to help. Explore the most common methods of paying for in-home care with this guide, including private funding, insurance, and government programs. By understanding the available options, you and your loved one can choose the best approach for managing caregiving expenses while living at home.

For many families, private pay options are the most effective way to cover in-home care costs. This option can include sources like personal savings, work income, pension funds, and financial help from family members. Since there are no eligibility rules for your private pay funding, this option offers flexibility in choosing the right path forward for your loved one.

• Best For: Families who need immediate, flexible funding to start or continue in-home care
• Covers: Basic caregiver fees, personal care services, companionship aides, household help, and other expenses
• Pros: No applications or approval process; can be used for any type of in-home care
• Cons: Can become expensive over time; may deplete retirement savings or long-term financial resources
• Limitations: Some assets may have tax penalties or withdrawal restrictions; families may want to keep records if Medicaid is needed later

Example: A family used their mother's monthly pension to pay for a part-time home aide to help with housework. If her needs increase, they may begin to tap into her savings, held in CDs, to add additional hours for the aide.

Medicaid and Medicare are both government-funded programs but vary in some key ways. Medicaid, intended for low-income individuals, including seniors, may cover long-term personal care services. Medicare will only pay for short-term, medically necessary home health care.  

• Best For: Senior adults who need medical home health services (Medicare) or long-term personal care, and also meet income criteria (Medicaid)
• Covers: Skilled nursing visits, physical, occupational, and speech therapy, and part-time home health services ordered by a doctor (Medicare); Long-term personal care, assistance with activities of daily living (ADLs), depending on the state (Medicaid) 
• Pros: Can help reduce medical and personal care costs; Medicare benefits available country-wide; may work alongside other funding sources
• Cons: Medicare does not cover 24/7 care or long-term personal care; Medicaid eligibility rules are strict and vary by state
• Limitations: Medicare only covers intermittent, medically necessary care; Medicaid has income limits and may include wait lists

Example: An older widowed woman recovering from hospital-based surgery uses her Medicare benefits to remain in her home but still access short-term skilled nursing and physical therapy sessions. If she qualifies for Medicaid, she can also access personal care services to help with grooming, bathing, and other ADLs.

Medicaid, a program for seniors who meet financial eligibility requirements, can help them receive the care they need in their own homes, rather than a nursing home. There's a catch, though: waiver programs vary from state to state, and it's important to review the specific programs in your region to understand what services are available.

• Best For: Senior adults who meet their state's Medicaid income, asset, and medical-need criteria, and wish to receive care in their home rather than a facility
• Covers: In-home personal care with ADLs, respite care, meal support, transportation, and other community-based services
• Pros: Allows older adults to stay in their own homes; may reduce overall caregiving costs; depending on the state, may offer a wide range of support
• Cons: Eligibility rules vary by state; some programs may have long wait lists
• Limitations: Must qualify financially for Medicaid; typically required to need a nursing home level of care as defined by the state; families generally must maintain detailed records to keep benefits active

Example: An older man who wishes to remain in the home he's lived in his whole adult life qualifies for Medicaid. As his health declines, he can stay there by hiring an in-home aide several days a week who does light housekeeping, prepares meals, and assists with ADLs. 

Former servicemembers and their surviving spouses may qualify for veterans' benefits through the Veterans Administration (VA). Typically, this support occurs through the VA's Aid and Attendance or Housebound programs, which provide a tax-free monthly payment for veterans that can be used for supportive services. There are financial eligibility rules, and individuals must also meet specific medical criteria.  

• Best For: Veterans or their surviving spouses seeking help to pay for regular ongoing care needs
• Covers: In-home personal care, assistance with ADLs, homemaker services, and other caregiving services
• Pros: Tax-free monthly payments; Can reduce out-of-pocket care costs; works alongside other funding sources
• Cons: Application process can be complex and slow; there may be significant paperwork and documentation requirements
• Limitations: Must meet service requirements to receive a pension and have documented medical needs; benefit amounts vary by marital status 

Example: A Vietnam veteran has severely limited eyesight from a war injury. He requests help through the Aid and Attendance program to pay for an aide to help with his ADLs, including bathing, feeding, and dressing.

This option can help cover some in-home care costs for seniors with life insurance policies. Some older adults might sell their policy for a lump sum or, if eligible, use accelerated death or critical illness benefits. Permanent policies, such as whole life or universal life, may also have an accrued cash value that can be accessed.

• Best For: Senior adults with an existing life insurance policy that has a cash value, an accelerated death rider, or the option to sell
• Covers: In-home personal care, medical expenses, and other out-of-pocket home care costs
• Pros: May provide substantial funds; could reduce reliance on savings; provides a flexible source of income
• Cons: Using benefits may reduce the death benefit for heirs; selling a policy often provides less than the full value of an existing policy
• Limitations: Policies vary widely and may have different limitations; accessing accelerated benefits may require a medical diagnosis; selling a policy could have tax implications

Example: A 92-year-old grandmother has a terminal cancer diagnosis. Her family uses the accelerated death benefit on her whole life insurance policy to pay for the caregiving costs while preserving her remaining savings so that she can leave a legacy for her heirs. 

Only 3%-4% of senior adults aged 50 and over have long-term care insurance, but it can provide welcome financial support. These policies can cover the cost of personal care, home health aides, and other services, allowing them to remain in their homes longer. 

However, benefits and restrictions vary by policy, making it important to review your policy documents carefully to determine your coverage.

• Best For: Seniors who previously purchased a long-term care insurance policy with home care benefits
• Covers: Personal care services, in-home aides, home health care, respite care, and other approved care expenses
• Pros: May greatly reduce out-of-pocket caregiving costs; provides a regular monthly payment; supports aging in place
• Cons: Policies can be expensive, with costs increasing over time; policies must be purchased years in advance; coverage limits vary
• Limitations: There may be a waiting period for benefits or a daily or monthly benefit cap that limits total coverage; families must submit documentation to maintain eligibility

Example: The family of an older woman with a new Alzheimer's diagnosis, who does not yet need the care offered by a memory care facility, can activate her long-term care insurance to provide regular daily help with her ADLs. The monthly benefit pays for a caregiver each morning who helps her bathe and dress, reducing the financial strain on her family.

In-home care can be expensive, especially if you're hiring a caregiver who is not a family member. Along with considering home care costs in your state, you'll likely be looking for someone reputable, reliable, and insured to help manage your loved one's care. For free assistance finding trusted, quality in-home caregivers, contact a Caring.com family advisor at (800) 973-1540.

In addition to those already mentioned, ensure that you or your loved one takes advantage of the following programs, which can make paying for care easier.

If you or your loved one wishes to age in place, the cost of in-home care may be a concern. For many families, combining private funds, insurance benefits, and Medicare or Medicaid benefits can provide an ideal pathway. Since every funding source has different rules, it is essential to understand the pros and cons to help you build a comprehensive, effective plan that fits your loved one's needs. Caring.com can help — our in-home care resources cover everything you need to know to ensure you're using the right care options for your loved one.

Cost of care report. (2025). CareScout | Rau, Jordan, et al. Why long-term care insurance falls short for so many. (2023). KFF Health News | VA aid and attendance benefits and housebound allowance. (n.d.). U.S. Department of Veterans Affairs