How to Pay for In-Home Care: 7 Options for Families

Once in-home care is on the table, one of the first questions families ask is a simple one: how are we going to pay for it?

Consider one family’s experience. After their father came home from a hospital stay needing help with bathing and getting around the house, his adult children called a few local home care agencies. The quotes were sobering. Then, while sorting through his paperwork, his daughter found a long-term care insurance policy he had bought in his late 50s, filed neatly between an old appliance warranty and a stack of expired fishing licenses. Nobody in the family knew it existed. It didn’t cover everything, but it changed the math considerably.

Most families pay for in-home care with a combination of sources rather than just one. This guide walks through seven of the most common options, takes a closer look at how long-term care insurance works for care at home, and shows how families often piece these sources together.

Understanding In-Home Care Costs

The figures below are 2026 national estimates based on regional agency market benchmarks. Actual rates vary widely by location, agency, and type of care.

• Companion and homemaker care: about $22 to $30 per hour
• Personal care and home health aide services: about $28 to $35 per hour
• Skilled nursing visits: often $85 per hour or more

At the personal care rate, that works out to roughly:

• Part-time care (15 hours a week): $1,800 to $2,250 a month
• Regular care (30 hours a week): $3,600 to $4,500 a month
• Extensive care (44 hours a week): $5,300 to $6,600 a month
• Around-the-clock care billed hourly: $20,000 to $25,500 a month (some agencies offer a flat daily live-in rate that can cost less)

Costs tend to run higher in large metro areas, on nights and weekends, and through agencies rather than independent caregivers, though agencies generally handle background checks, payroll taxes, insurance, and backup coverage. For estimates in your state, see our guide to in-home care costs by state.

For perspective, the Social Security Administration’s 2026 cost-of-living adjustment fact sheet puts the average monthly benefit for a retired worker at $2,071. Even with a modest pension, 30 or more hours of care a week can cost more than a retiree’s entire monthly income, which is why most families draw on more than one source.

7 Ways to Pay for In-Home Care

1. Private Pay

Nearly every family uses some private pay, whether from Social Security and pension income, savings and investments, home equity through a home equity line of credit (HELOC), or contributions from adult children. It offers complete flexibility with no approval process or waiting period, but it can use up savings faster than families expect. Many families start with fewer hours, use companion care for tasks that don’t need hands-on help, and estimate how long savings may last so there’s time to line up other sources.

2. Long-Term Care Insurance

Long-term care insurance is a private policy designed to help pay for ongoing personal care that Medicare and standard health insurance don’t cover, including care at home. Many people who have it bought a policy years or decades ago, often in their 50s or early 60s. Benefits typically begin once the policyholder needs substantial help with at least two activities of daily living (ADLs), such as bathing and dressing, or has a severe cognitive impairment such as dementia.

It can cover a large share of in-home care costs, but the details vary considerably from policy to policy. The section below, Long-Term Care Insurance and In-Home Care: What’s Covered, walks through how these policies work. And as the story above shows, forgotten policies do turn up. Old files, bank statements showing premium payments, or a parent’s longtime insurance agent can help confirm whether one exists.

3. Life Insurance Living Benefits

Some life insurance policies can provide money for care while the policyholder is living:

• Accelerated death benefits: Many policies, or riders added to them, allow early access to part of the death benefit for a qualifying chronic or terminal illness.
• Cash value loans or withdrawals: Permanent policies (whole life or universal life) with built-up cash value may allow borrowing against it.
• Life settlements: Some policyholders sell a policy to a third party for a lump sum that is more than its cash surrender value but less than its death benefit.

Each of these reduces or eliminates what heirs receive, and tax treatment varies by situation, so the insurer, a licensed insurance professional, and a qualified tax professional can help clarify the options.

4. VA Pension With Aid and Attendance

Aid and Attendance is an added monthly amount paid on top of a VA pension for wartime veterans and surviving spouses who need help with everyday activities like bathing, dressing, and eating, according to the U.S. Department of Veterans Affairs. The money goes to the veteran or spouse and can be used toward in-home care. Maximum monthly amounts effective December 1, 2025, per VA’s veterans pension rates and survivors pension rates:

• Veteran with no dependents: up to $2,424
• Veteran with one dependent, such as a spouse: up to $2,874
• Surviving spouse with no dependents: up to $1,558

VA reduces the payment by countable income, but unreimbursed medical expenses, including in-home care, can lower countable income. Eligibility generally involves wartime service, a discharge other than dishonorable, age 65 or older or a permanent disability for veterans, a need for help with daily activities, and net worth at or below $163,699 (assets plus annual income, generally not counting a home or vehicle). VA also looks at assets transferred in the three years before applying.

Veterans apply with VA Form 21P-527EZ and surviving spouses generally use VA Form 21P-534EZ, along with a medical examiner’s VA Form 21-2680. Processing can take several months. Free help is available from accredited Veterans Service Organization (VSO) representatives and county veterans service officers, and VA rules generally don’t allow accredited representatives to charge for preparing an initial pension claim.

5. Medicaid Home and Community-Based Services (HCBS) Waivers

Every state’s Medicaid program offers some form of home and community-based services, often through “waiver” programs that pay for care at home for people who would otherwise qualify for nursing home care. Rules vary significantly by state, but general eligibility looks like this:

• Income: Many states use 300% of the SSI federal benefit rate, or $2,982 per month for an individual in 2026 (based on the $994 SSI federal payment standard). Some states allow people over the limit to qualify through a Qualified Income Trust, also called a Miller trust.
• Assets: Commonly around $2,000 for an individual, not counting a primary home (within state limits) and one vehicle.
• Medical need: Typically a nursing-home level of care, based on a state assessment.

Waivers typically cover personal care, homemaker services, respite care for family caregivers, adult day services, minor home modifications, and emergency response systems. Room and board and companion-only care generally aren’t covered. Some states also let Medicaid pay certain family members as caregivers through self-directed programs.

Many states cap waiver enrollment, so waiting lists are common and change often. The state Medicaid agency or local Area Agency on Aging can explain current status, and the Eldercare Locator (1-800-677-1116) can connect families with their local agency. Our state guide to Medicaid waivers for in-home care covers individual state programs in more detail.

For married couples, federal spousal impoverishment rules let the spouse at home keep a share of the couple’s assets and income, up to a maximum of $162,660 in assets under the 2026 federal standards. Medicaid also generally reviews assets transferred in the five years before applying. Because the rules are complex and vary by state, families often consult a licensed elder law attorney or Certified Medicaid Planner.

6. Medicare Home Health Coverage (Short-Term and Skilled Only)

Medicare is often the biggest source of confusion. As Medicare.gov puts it plainly, Medicare doesn’t pay for long-term care. It does cover short-term, skilled home health care when a doctor certifies the need, the person is homebound, and care comes from a Medicare-certified agency. Our guide to what “homebound” means for Medicare explains that requirement.

Per Medicare’s home health coverage page, covered services include part-time skilled nursing, physical, occupational, and speech therapy, medical social services, and home health aide help with bathing and dressing, but only alongside skilled care. Medicare doesn’t cover 24-hour care, meal delivery, homemaker services, or personal care when that’s the only help needed. Covered services generally run up to 28 hours a week combined, and Original Medicare pays the full cost, apart from a 20% coinsurance on durable medical equipment.

In practice, a parent recovering from hip surgery may get covered physical therapy plus an aide’s help with bathing. Once therapy goals are met, coverage ends, even if the parent still needs help bathing, and ongoing care shifts to other sources. Medicare Advantage plans cover the same home health services but may use networks and prior authorization, and some add limited in-home support benefits. See our guides to Medicare Advantage home health coverage and home health care for seniors for more.

7. Reverse Mortgage

A reverse mortgage lets homeowners borrow against home equity without monthly loan payments. The most common type is the federally insured Home Equity Conversion Mortgage (HECM). Borrowers are 62 or older, live in the home as their primary residence, and keep up with property taxes, insurance, and upkeep. The loan generally comes due when the last borrower sells, passes away, or moves out, including living in a care facility for more than 12 months in a row.

Upfront costs can be significant, and interest reduces the equity left for heirs, and because the loan can come due after a long stay away from home, reverse mortgages are generally designed for people who expect to stay in their homes long term. Borrowers complete a counseling session with a HUD-approved counselor first, and HUD’s reverse mortgage (HECM) page lists approved counselors.

Long-Term Care Insurance and In-Home Care: What’s Covered

For families who have a policy, long-term care insurance can be one of the largest sources of help with in-home care costs. But benefits aren’t paid simply because someone needs care. They’re paid when the policyholder meets conditions spelled out in the policy, and the fine print matters.

What Most Policies Cover

Many policies include coverage for care at home, though the extent varies from policy to policy. Covered services commonly include:

• Personal care help with bathing, dressing, grooming, toileting, and mobility
• Homemaker and companion services
• Home health aide services and skilled home health care
• Adult day care
• Respite care for family caregivers

Policies may not cover care from family members, home modifications, care from providers the policy doesn’t recognize (some pay only licensed agencies), or costs above the daily or monthly maximum.

How Benefits Are Triggered

Many policies are “tax-qualified,” meaning they follow federal standards described in IRS Publication 502. A licensed health care practitioner certifies that the person either:

• Is unable to perform at least two of six activities of daily living (bathing, dressing, eating, toileting, transferring, and continence) without substantial help, for a period expected to last at least 90 days.
• Needs substantial supervision because of a severe cognitive impairment, such as Alzheimer’s disease or another form of dementia.

Some older policies use different triggers, such as requiring help with three ADLs, so the policy’s own wording is what counts.

The Elimination Period

The elimination period works like a deductible measured in time. It’s commonly 30, 60, 90, or 180 days, with 90 among the most common. Some policies count calendar days, while others count only days on which paid care is received, which can take much longer. During this period the family generally pays out of pocket, and at 44 hours a week of personal care, a 90-day elimination period can add up to roughly $16,000 to $20,000.

Types of Policies

• Traditional policies: Pay a daily or monthly benefit once triggers are met. Premiums generally aren’t locked in, and many long-time policyholders have seen significant rate increases.
• Hybrid life insurance or annuity policies: Combine a long-term care benefit with a death benefit if care is never needed. Premiums are often fixed, sometimes paid as a lump sum.
• Short-term care insurance: Covers care for a year or less, with easier qualification and lower premiums.
• Group or employer coverage: Offered through some employers and associations, with portability that varies.

Reviewing an Existing Policy

Families often find it helpful to read a parent’s policy before care is needed. Key terms to look for:

• Benefit triggers and how the policy defines “substantial assistance”
• Elimination period length, and whether it counts calendar or service days
• Daily or monthly benefit amount, and how long benefits last
• Inflation protection, and whether it’s simple or compound
• Covered settings, such as home care, adult day care, and assisted living
• Provider requirements, including whether independent or family caregivers qualify
• Waiver of premium once benefits begin

Inflation protection matters more than many families realize. A policy bought 20 years ago with a $150 daily benefit and no inflation protection still pays $150 a day, which covers roughly four to five hours of agency personal care. With 3% compound inflation protection, the same policy would pay about $271 a day.

Filing a Claim

Families typically start by contacting the insurer’s claims department, arranging the insurer’s assessment (usually including a doctor’s or other licensed practitioner’s certification), and confirming that the chosen agency meets the policy’s provider requirements. Keeping copies of care records, invoices, and correspondence, and tracking which days count toward the elimination period, may help avoid delays. If families have concerns about how a claim is being handled, their state department of insurance can help, and the NAIC’s long-term care insurance consumer page links to each state’s department.

For people who don’t have a policy yet, premiums are generally lower and health underwriting easier at younger ages, and someone who already needs care generally can’t buy one. A licensed insurance professional can help compare options, and our overview of long-term care insurance for seniors has more background.

Putting the Pieces Together

A simple starting point is to estimate monthly care costs (hours per week, times the hourly rate, times 4.3), subtract monthly income, and look at which sources could cover the gap:

• Wartime veteran or surviving spouse? VA pension with Aid and Attendance may be worth exploring early, since processing takes months.
• Long-term care insurance? Reviewing the policy early helps families understand when benefits may start and how the elimination period is counted.
• Income and assets near the state’s Medicaid limits? The state Medicaid agency or Area Agency on Aging can explain waiver options and waiting lists.
• Life insurance with cash value or living benefits? The insurer can explain what’s available.
• Significant home equity and plans to stay home? A reverse mortgage is one option to discuss with a HUD-approved counselor.

Here’s a simplified example. A widowed veteran needs 30 hours of personal care a week, about $4,128 a month, and has $2,600 a month in income plus a long-term care policy paying $3,000 a month after a 90-day elimination period. For the first three months, the roughly $1,528 monthly shortfall comes from savings. After that, the policy covers $3,000 and his income covers the rest. Meanwhile, a VA pension claim is pending, and if approved, the amount would depend on his income after care costs are deducted.

Care needs often grow over time, so revisiting the numbers periodically helps families see when to add a funding source, look into Medicaid, or weigh another setting. Our comparison of assisted living vs. in-home care costs can help with that decision.

Frequently Asked Questions

Can a family member be paid as a caregiver?

Sometimes. Some Medicaid self-directed programs, some VA programs, and some long-term care policies allow payment to family members, with rules that vary. With private pay, families often use a written caregiver agreement and talk with a tax professional about payroll and reporting.

Is in-home care tax deductible?

It can be in some situations. According to IRS Publication 502, medical expenses above 7.5% of adjusted gross income can be deductible for those who itemize, and qualified long-term care services for a chronically ill person can count. A qualified tax professional can say whether a specific family’s costs qualify.

What if income is too high for Medicaid but care is still unaffordable?

Some states allow a Qualified Income Trust (Miller trust) that can help people over the income limit qualify. Rules vary by state, and an elder law attorney can explain whether it applies.

Where can families get free help sorting through options?

The local Area Agency on Aging, found through the Eldercare Locator, can explain state and local programs. For Medicare questions, the State Health Insurance Assistance Program (SHIP) offers free, unbiased counseling, and the National Institute on Aging’s guide to paying for long-term care is a helpful overview.

Finding In-Home Care Near You

Knowing how care gets paid for makes the next step, choosing a provider, a lot less daunting. Senioridy’s in-home care directory lists home care agencies nationwide, and families who need skilled care can search our home health directory. For more background, see our Complete Guide to In-Home Care and our guide to personal care assistance for seniors.

This article is for informational purposes only and does not constitute legal, financial, tax, insurance, or medical advice. Cost estimates, VA pension rates, Medicaid limits, and Medicare rules are subject to change, so always confirm current figures and requirements with official program representatives. Medicare Advantage plans may have different home health rules, networks, and supplemental benefits than Original Medicare. For free, personalized Medicare guidance, contact your State Health Insurance Assistance Program (SHIP) counselor at shiphelp.org, available in every state at no cost. For questions about long-term care insurance, Medicaid planning, or taxes, consider consulting a licensed insurance professional, an elder law attorney, or a qualified tax professional.