Quick Answer: In-home care costs $30-35 per hour nationally in 2026, which can total $5,700-6,500 monthly for extensive care. Most families use a combination of payment sources including private savings, long-term care insurance, veterans benefits, Medicaid waivers, and Medicare (for skilled services only). Understanding all your options can save thousands of dollars and make quality in-home care affordable.
One of the biggest concerns families face when considering in-home care is simple: how will we pay for it?
At an average of $30-35 per hour nationally, in-home care costs can quickly add up to several thousand dollars per month. For families on fixed incomes or with limited savings, these costs can feel overwhelmingโeven though in-home care is often significantly less expensive than nursing home or assisted living facilities.
The good news? Multiple funding sources exist, and most families use a combination of options to make in-home care work within their budget. This comprehensive guide will walk you through seven ways to pay for in-home care, help you understand what Medicare and Medicaid actually cover, and show you how to maximize every available resource.
In this guide:
- Understanding In-Home Care Costs
- 7 Ways to Pay for In-Home Care
- What Medicare Covers (and Doesn’t)
- How Medicaid Waivers Work
- Veterans Benefits Explained
- Insurance Options
- Creating Your Payment Strategy
Understanding In-Home Care Costs
Before diving into payment options, it helps to understand what you’re paying for and typical costs in 2026.
Average Costs by Care Type
According to 2026 industry data from the Genworth Cost of Care Survey and other market research:
Hourly rates:
- Companion care: $25-30/hour
- Personal care: $30-35/hour
- Home health aide: $35-40/hour
- Skilled nursing: $50-75/hour
Common monthly costs:
- Part-time care (15 hours/week): $1,950-2,100/month
- Regular care (30 hours/week): $3,900-4,200/month
- Extensive care (44 hours/week): $5,700-6,500/month
- Live-in care (24/7): $20,000-24,000/month
For a complete breakdown of in-home care services and costs by state, see our guide: Complete Guide to In-Home Care 2026
Why Costs Vary
Your actual costs depend on:
- Location – Louisiana averages $23-26/hour while Maine averages $40-45/hour
- Type of care – Companion care costs less than personal care or skilled nursing
- Hours needed – More hours sometimes qualify for volume discounts
- Agency vs. independent – Agencies cost 20-30% more but offer more protection
- Schedule – Nights, weekends, and holidays often cost 10-25% more
The Financial Challenge
For many seniors, monthly income looks like this:
- Social Security: $1,500-2,500/month
- Pension (if applicable): $500-1,500/month
- Total monthly income: $2,000-4,000
With in-home care potentially costing $3,900-6,500 monthly for extensive needs, the math doesn’t work without additional resources. That’s why understanding all payment options is critical.
7 Ways to Pay for In-Home Care
Most families use a combination of these funding sources. Let’s explore each option.
1. Private Pay (Personal Savings and Income)
What it is: Using your own moneyโcurrent income, savings, investments, or proceeds from selling assets.
Who uses it: Nearly everyone uses some private pay, even if combined with other sources.
Sources of private pay:
- Monthly income (Social Security, pensions, retirement accounts)
- Personal savings and checking accounts
- Investment accounts and CDs
- Home equity line of credit (HELOC)
- Sale of property or valuable assets
- Family contributions (adult children helping)
Pros:
- Complete flexibility in choosing providers
- No restrictions on services or hours
- Can start immediately without approval process
- Works with any licensed or unlicensed caregiver
Cons:
- Can quickly deplete lifetime savings
- May not be sustainable long-term
- Creates financial stress for families
- No tax benefits (usually)
Making private pay work:
- Start with fewer hours and increase as needed
- Use companion care instead of personal care when possible
- Consider independent caregivers vs. agencies for cost savings
- Negotiate rates for longer-term commitments
Financial planning tip: If paying privately, calculate how long your savings will last at different care levels. Work backwards from that number to determine when you’ll need to activate other funding sources or transition to facility care.
2. Long-Term Care Insurance
What it is: Insurance policies specifically designed to cover long-term care services, including in-home care.
Who has it: Seniors who purchased policies 10-20+ years ago, often in their 50s or early 60s.
How it works:
- You pay premiums for years before needing care
- When you need help with 2-3 Activities of Daily Living (ADLs), coverage begins
- Policy pays a daily or monthly benefit amount directly to you or the provider
- Coverage continues until you reach the policy’s lifetime maximum
Typical coverage in 2026:
- Daily benefit: $100-250/day
- Monthly benefit: $3,000-7,500/month
- Benefit period: 2-5 years (some have lifetime coverage)
- Elimination period: 30-90 days (you pay before insurance kicks in)
What policies typically cover:
- Personal care services
- Companion care
- Home health aide services
- Adult day care
- Respite care for family caregivers
- Home modifications (sometimes)
Pros:
- Can cover majority of in-home care costs
- Provides financial peace of mind
- Protects savings and assets
- Some policies have inflation protection
Cons:
- Expensive premiums (often $2,000-5,000/year)
- Not everyone purchased these policies
- May require certified agency vs. independent caregiver
- Elimination period means you pay out-of-pocket initially
Maximizing your policy:
- Review your policy NOW to understand coverage
- Know your daily/monthly benefit amount
- Understand the elimination period
- Check if inflation rider increases benefits
- Ask if care coordinators must approve providers
- Find out if family members can be paid caregivers
Important: Don’t assume you don’t have coverage. Many people bought policies decades ago and forgot. Check with your insurance agent or look through old paperwork.
3. Life Insurance Living Benefits
What it is: Using your life insurance policy to pay for care while you’re still alive.
Who can use it: People with permanent life insurance policies (whole life, universal life) or term policies with living benefit riders.
Three ways to access funds:
A. Accelerated Death Benefits
- Available on many newer policies
- Allows access to 25-95% of death benefit while living
- Triggered by terminal illness or chronic illness diagnosis
- No payback requiredโreduces death benefit to heirs
- Usually tax-free
B. Cash Value Loans
- Borrow against cash value in permanent policies
- Interest rates typically 5-8%
- Must be repaid or reduces death benefit
- Available as long as policy has cash value
C. Viatical Settlements
- Sell your policy to a third party for lump sum
- Typically receive 50-80% of death benefit
- Best for those with limited life expectancy
- No more premiums, no death benefit to heirs
Pros:
- Access funds you’ve already paid for
- Can provide significant lump sum
- Accelerated benefits usually tax-free
- No restrictions on how money is used
Cons:
- Reduces inheritance for beneficiaries
- May owe taxes on cash value loans
- Viatical settlements give you less than full value
- Once used, coverage is gone
Making it work:
- Review all life insurance policies you have
- Call insurers to ask about living benefit riders
- Compare accelerated benefits vs. cash value loans
- Discuss with family before reducing their inheritance
4. Veterans Benefits (Aid and Attendance)
What it is: Monthly tax-free benefit from the VA for veterans and surviving spouses who need help with daily living.
Who qualifies:
- Veterans who served at least 90 days active duty with 1+ day during wartime
- Surviving spouses of wartime veterans
- Need help with ADLs or are housebound
- Meet income and asset limits
2026 Maximum Monthly Benefits:
- Veteran with spouse: Up to $2,295/month
- Veteran alone: Up to $1,936/month
- Surviving spouse: Up to $1,244/month
- Two veterans married: Up to $3,051/month
Source: Department of Veterans Affairs
What it covers:
- In-home care services
- Adult day care
- Assisted living (if used for care, not just room and board)
- Personal care assistance
Income and asset limits (2026):
- Net worth under $150,000 (not counting home and car)
- Medical expenses can offset income for qualification
- Gifting assets has 3-year lookback period
Pros:
- Tax-free monthly income
- Can be combined with other benefits
- Covers in-home care and assisted living
- Surviving spouses also qualify
Cons:
- Application process takes 3-12 months
- Requires medical documentation
- Annual income/asset verification
- Can be reduced if income increases
How to apply:
- Contact a VA-accredited agent or attorney
- Gather service records (DD-214)
- Get physician documentation of ADL needs
- Document medical expenses
- Submit VA Form 21-2680 and 21-526EZ
Warning: Beware of companies charging large fees to help you apply. Many county veterans service officers provide free assistance. VA-accredited attorneys can help but shouldn’t charge upfront fees.
5. Medicaid Home and Community-Based Services (HCBS) Waivers
What it is: State Medicaid programs that pay for in-home care instead of nursing home care.
Who qualifies:
- Income at or below state limits (often $2,000-3,000/month)
- Assets under $2,000-2,500 (not counting home and one car)
- Need nursing home level of care
- Choose to receive services at home
What Medicaid HCBS typically covers:
- Personal care services
- Homemaker services (cleaning, meals)
- Respite care for family caregivers
- Adult day care
- Home modifications (grab bars, ramps)
- Personal emergency response systems
- Skilled nursing visits (limited)
What it does NOT cover:
- Room and board (you pay for housing)
- Companion care alone (must need personal care)
- Services provided by family members (in most states)
State-by-State Programs:
Each state runs different programs with different names:
- Alabama: Alabama Medicaid Elderly and Disabled Waiver
- Tennessee: TennCare CHOICES
- Georgia: Elderly and Disabled Waiver Program (formerly Community Care Services Program/CCSP)
- Florida: Long-Term Care Managed Care (multiple programs available)
- North Carolina: Innovations Waiver and CAP programs
- South Carolina: Community Choices Waiver
How much care you receive: Medicaid typically authorizes:
- 20-40 hours per week of personal care
- Sometimes up to 84 hours/week for intensive needs
- State determines hours based on assessment
Pros:
- Can cover significant care costs
- Allows aging in place instead of nursing home
- Some states have no monthly copay
- Renewable annually if still eligible
Cons:
- Strict income and asset limits
- Waiting lists in many states (6 months to 3+ years)
- Must prove nursing home level of care
- Limited to approved agencies in some states
- Exhaustingโlots of paperwork and reassessments
How to apply:
- Contact your state Medicaid office or Area Agency on Aging
- Complete financial eligibility screening
- Undergo medical assessment (ADL evaluation)
- Get on waiting list if applicable
- Receive care authorization once approved
Learn more: Visit the VA Aid and Attendance Benefits page for detailed information and application forms.
Financial planning note: Some families “spend down” assets to qualify for Medicaid by paying for care privately first. Elder law attorneys can help with legal strategies, but be aware of Medicaid’s 5-year lookback period for asset transfers.
6. Medicare Home Health Coverage (Limited)
What it is: Medicare Part A and Part B coverage for skilled home health services.
Important limitation: Medicare does NOT cover custodial care or companion care as stand-alone services.
What Medicare DOES cover:
- Skilled nursing care (part-time, intermittent)
- Physical therapy
- Occupational therapy
- Speech-language therapy
- Medical social services
- Home health aide services (ONLY when combined with skilled nursing or therapy)
Requirements to qualify:
- Must be homebound (leaving home takes considerable effort)
- Must be under a doctor’s care
- Doctor must certify you need skilled services
- Must use Medicare-certified home health agency
- Services must be medically necessary
What homebound means:
- You can’t leave home without considerable effort
- Leaving requires supportive devices or help
- Absences are infrequent and short
- You CAN leave for medical appointments, religious services, adult day care
Typical coverage:
- Up to 28-35 hours per week of skilled nursing and aide services combined
- Usually for a few weeks to a few months
- Not intended for long-term custodial care
Example of what Medicare covers:
- Recovering from hip surgery: Physical therapist comes 3x/week, home health aide helps with bathing 2x/week while receiving PT
- Managing diabetes: Nurse comes to teach insulin management, aide helps with foot care
Example of what Medicare does NOT cover:
- Senior needs help with bathing and dressing only (no skilled services)
- Companion care and housekeeping
- 24-hour care
- Long-term care needs
Cost to you:
- Medicare covers 100% of approved services
- You pay 20% for durable medical equipment
- No copays for home health services themselves
Combining Medicare with other coverage: Many families use Medicare home health for skilled services and pay privately or use Medicaid for additional personal care hours.
For more details: Home Health Medical Care for Seniors
7. Reverse Mortgage
What it is: A loan against your home equity that doesn’t require monthly payments, allowing you to access cash while living at home.
Who can use it:
- Must be 62 or older
- Must own your home outright or have significant equity
- Must live in the home as primary residence
How it works:
- Lender pays you monthly, lump sum, or line of credit
- You continue living in the home
- Loan doesn’t have to be repaid until you move, sell, or pass away
- Home must be maintained and property taxes/insurance paid
How much you can get:
- Typically 40-75% of home value
- Depends on age, home value, interest rates
- Older borrowers get higher percentages
Example:
- Home worth $300,000
- You’re 75 years old
- You might access $180,000-225,000
- Could receive $2,000-3,000/month for in-home care
Pros:
- Access home equity without selling
- No monthly loan payments
- Money can be used for any purpose
- Remain in your home
- Non-recourse loan (can’t owe more than home value)
Cons:
- Reduces inheritance for heirs
- Upfront costs (2-6% of home value)
- Interest accrues over time
- Must maintain property
- If you move to assisted living, loan becomes due
Important considerations:
- Only makes sense if you plan to stay home long-term
- Discuss with family before proceeding
- Shop multiple lenders for best rates
- Consider alternatives first (HELOC, selling and downsizing)
What Medicare Really Covers (and Doesn’t)
Medicare confusion is one of the biggest obstacles families face. Let’s clear it up.
The Bottom Line
Medicare covers: Skilled medical services at home (nursing, therapy)
Medicare does NOT cover: Custodial care, companion care, or help with daily living as stand-alone services
What’s Covered Under Medicare Part A and Part B
โ Skilled nursing visits (wound care, injections, monitoring) โ Physical, occupational, speech therapy โ Medical social worker services โ Home health aide (bathing, dressing) BUT ONLY when receiving skilled nursing or therapy โ Medical equipment (hospital bed, wheelchair, walker)
What’s NOT Covered
โ 24-hour home care โ Companion care โ Personal care (bathing, dressing) as the only service โ Homemaker services (cooking, cleaning, shopping) โ Custodial care โ Meals delivered to home โ Long-term care
The “Skilled Service” Rule
Medicare pays for home health ONLY when you need skilled medical services. Once the skilled need ends (wound healed, therapy goals met), Medicare coverage stopsโeven if you still need help with bathing, dressing, and daily tasks.
Typical Medicare scenario:
- You have hip replacement surgery
- Medicare pays for physical therapist to come 3x/week
- Medicare also pays for home health aide to help with bathing while you’re getting PT
- After 6 weeks, PT goals are met and therapy ends
- Medicare coverage stopsโeven though you might still need help bathing
What happens then: You transition to private pay, Medicaid (if eligible), long-term care insurance, or other funding for ongoing personal care needs.
Medicare Advantage Plans
Some Medicare Advantage (Part C) plans offer additional home care benefits:
- Limited personal care hours
- Homemaker services
- Respite care
- Meal delivery
Check your specific plan benefitsโthey vary significantly.
How Medicaid Waivers Work in Your State
Medicaid is often the most viable option for middle and lower-income seniors who need extensive in-home care.
Medicaid Basics
Financial eligibility (2026 general limits):
- Income: Typically $2,000-3,000/month or less
- Assets: Usually under $2,000-2,500 (excluding home and one car)
- Rules vary by state
Medical eligibility:
- Must need nursing home level of care
- Typically need help with 2+ ADLs
- State conducts assessment
How HCBS Waivers Work
Instead of paying for nursing home care ($8,500-10,500/month), Medicaid will pay for in-home care if you:
- Qualify financially and medically
- Choose to stay home
- Live in a state with an HCBS waiver program (most states have them)
What Medicaid typically authorizes:
- 20-40 hours/week of personal care for moderate needs
- 40-84 hours/week for intensive needs
- Respite care hours for family caregivers
- Adult day care
- Home modifications
State-by-State Programs (Southeast Focus)
Alabama: Elderly and Disabled Waiver
- Covers personal care, homemaker, respite
- No waiting list currently
- Must have income under $2,742/month (2026)
Tennessee: TennCare CHOICES
- Three options: CHOICES 1, 2, and 3
- CHOICES 2 covers in-home services
- Enrollment prioritizes those at immediate risk
Georgia: Community Care Services Program (CCSP)
- Covers personal care, homemaker, adult day care
- Waiting list varies by county (6 months-2 years)
- Maximum of 70 hours/week
Florida: Multiple Programs
- iBudget Florida (developmental disabilities)
- Managed Medical Assistance Long-Term Care
- Statewide Medicaid Managed Care for some
- Waiting lists can be long
North Carolina: Multiple Waivers
- CAP/C (Community Alternatives Program/Choice)
- CAP/DA (Disabled Adults)
- Innovations Waiver
- Personal care services up to daily maximum hours
South Carolina: Community Choices Waiver
- Personal care, homemaker, respite
- Moderate waiting list
- Must meet nursing facility level of care
The Waiting List Problem
Many states have waiting lists for HCBS waivers:
- Short waits: Alabama, South Carolina (6-12 months)
- Moderate waits: Georgia, North Carolina (1-2 years)
- Long waits: Some states 3-5+ years
Strategy: Apply now even if you don’t need services yet. You can always decline when your name comes up, but you can’t speed up the wait once you need care.
Spousal Impoverishment Protections
If you’re married and one spouse needs Medicaid:
- The healthy spouse can keep more assets (up to $148,620 in 2026)
- The healthy spouse’s income isn’t counted toward Medicaid limits
- Protects the healthy spouse from poverty
Veterans Benefits: Aid and Attendance Explained
Veterans benefits are one of the most underutilized resources for paying for in-home care.
Who Qualifies
Veteran requirements:
- Served 90+ days of active duty
- At least one day served during a period of war:
- WWII, Korean War, Vietnam War, Gulf War, or post-9/11
- Discharged other than dishonorably
- Need help with 2+ ADLs OR housebound
- Meet financial limits
Surviving spouse requirements:
- Married to qualifying veteran at time of death
- Haven’t remarried (some exceptions for remarriages after age 57)
- Meet financial limits
2026 Maximum Benefits
| Category | Monthly Benefit | Annual Benefit |
| Veteran + spouse | $2,295 | $27,540 |
| Veteran alone | $1,936 | $23,232 |
| Surviving spouse | $1,244 | $14,928 |
| Two veterans married | $3,051 | $36,612 |
Financial Limits
Net worth limit: Under $150,000 (2026)
- Does NOT include home
- Does NOT include one vehicle
- DOES include savings, investments, other property
Income consideration:
- Unreimbursed medical expenses can reduce countable income
- If income minus medical expenses is below limit, you may qualify
- In-home care costs count as medical expenses
Example:
- Veteran has $3,500/month income
- In-home care costs $4,000/month
- Net income = -$500, qualifies despite high gross income
What It Covers
Aid and Attendance benefits can pay for:
- In-home care services
- Adult day care
- Assisted living (care portion)
- Personal care
- Companion care
You receive cash, not direct payment to providers. Use it however you need for care.
Application Process
Timeline: 3-12 months (average 6 months)
Steps:
- Gather military service records (DD-214)
- Get doctor’s statement documenting ADL needs
- Compile financial documents
- Complete VA Form 21-2680 (medical assessment)
- Complete VA Form 21-526EZ (application)
- Submit to VA Regional Office
- Wait for decision
Where to get help:
- County Veterans Service Officer (free)
- VA-accredited attorney (fees only if approved)
- State Department of Veterans Affairs
Beware: Some companies charge $2,000-5,000 to help with applications. Most veterans can apply with free assistance from county VSOs or state veteran services.
Creating Your Personal Payment Strategy
Most families use multiple funding sources. Here’s how to create your strategy.
Step 1: Calculate Your True Costs
Current needs:
- How many hours of care per week?
- What type of care (companion, personal, skilled)?
- Multiply hours ร hourly rate = weekly cost
- Multiply weekly cost ร 4.3 = monthly cost
Example:
- 30 hours/week ร $32/hour = $960/week
- $960 ร 4.3 = $4,128/month
Step 2: Identify Available Income
List all monthly income:
- Social Security: $______
- Pension: $______
- Retirement account withdrawals: $______
- Investment income: $______
- Other: $______
- TOTAL MONTHLY INCOME: $______
Step 3: Calculate the Gap
- Monthly care cost: $______
- Monthly income: $______
- Monthly gap: $______
Step 4: Match Funding Sources to Your Situation
Use this decision tree:
Are you a veteran or surviving spouse? โ YES: Apply for Aid & Attendance immediately (3-12 month wait) โ NO: Continue
Do you have long-term care insurance? โ YES: Review policy, start claims process โ NO: Continue
Is your income under $2,500/month and assets under $2,500? โ YES: Apply for Medicaid HCBS waiver in your state โ NO: Continue
Do you have life insurance with cash value or living benefits? โ YES: Contact insurer about accelerated benefits โ NO: Continue
Do you own your home with significant equity? โ YES: Consider reverse mortgage if planning to stay home long-term โ NO: Continue
Primary payment will be private pay โ Calculate how long savings will last โ Plan for transition to Medicaid when assets depleted
Step 5: Layer Your Funding
Ideal scenario example:
Month 1-6:
- Private pay: $3,000/month (while waiting for VA decision)
- Out-of-pocket gap: $1,128/month from savings
Month 7-12:
- VA Aid & Attendance approved: $1,936/month
- Private pay: $1,092/month
- Out-of-pocket gap: $1,100/month from savings
Month 13+:
- Long-term care insurance: $4,500/month
- Out-of-pocket gap: $0 (insurance covers full cost)
Step 6: Plan for Increasing Needs
In-home care needs typically increase over time:
- Year 1: 30 hours/week
- Year 2: 40 hours/week
- Year 3: 50+ hours/week or transition to facility
Budget for escalating costs and know when you’ll need to:
- Activate additional funding sources
- Transition to Medicaid
- Consider facility care for better value
Frequently Asked Questions
Can Medicare and Medicaid be used together? Yes. Some people are “dual eligible.” Medicare covers skilled services, Medicaid covers personal care and custodial needs.
Can I pay a family member to be my caregiver? Sometimes. Some Medicaid programs and VA benefits allow payment to family members (usually not spouses). Private pay can always go to family if documented properly for tax purposes.
What if I make too much for Medicaid but can’t afford care? Look into Medicaid Qualified Income Trusts (QITs or Miller Trusts). These allow you to shelter excess income to qualify. Consult an elder law attorney.
How long does private pay typically last before needing Medicaid? Varies greatly. With $100,000 in savings and $4,000/month care costs, about 2 years. With $50,000 and same costs, about 1 year.
Is in-home care tax deductible? Medical expenses exceeding 7.5% of adjusted gross income are deductible. In-home care for medical purposes may qualify. Consult a tax professional.
What happens when I run out of money? You transition to Medicaid if you meet eligibility. This is called “spending down.” Elder law attorneys can help with legal planning.
Taking Action: Your Next Steps
- Calculate your monthly care costs using current or projected needs
- List all potential funding sources you might qualify for
- Start applications for slow-approval programs:
- VA Aid & Attendance (if veteran/spouse)
- Medicaid HCBS waiver (even if on waiting list)
- Long-term care insurance claim (if you have policy)
- Consult professionals:
- Elder law attorney (Medicaid planning, asset protection)
- Fee-only financial planner (sustainable spending plan)
- Tax advisor (deductions, trust structures)
- Create a 1-year, 3-year, and 5-year funding plan with contingencies
- Document everything – keep records of all care costs for insurance, taxes, and Medicaid applications
Additional Resources
- Complete Guide to In-Home Care 2026: Services, Costs, and How to Choose
- Home Health Medical Care for Seniors
- Search In-Home Care Providers Near You
- Assisted Living vs In-Home Care: Cost Comparison
Need help finding affordable in-home care options? Search providers in your area or explore other senior care alternatives.