Home care costs a median of $35 per hour for a nonmedical caregiver, which adds up fast. Even part-time help at seven hours a week runs about $1,062 per month, while round-the-clock care can reach $25,479 monthly. Most families piece together funding from several sources rather than relying on a single one. Here’s how each option works and who qualifies.
What Medicare Does and Doesn’t Cover
Medicare covers skilled nursing visits and therapy in your home, but it is not a long-term care benefit. If you need a nurse to change a wound dressing or a physical therapist to work on mobility after a hip replacement, Medicare will pay for those visits under a plan of care that lasts 60 days at a time and can be renewed by your doctor.
What Medicare won’t cover is the kind of help most people mean when they search for “home care”: assistance with bathing, dressing, cooking, and housekeeping. These custodial services are excluded unless they happen during an already-covered skilled nursing or therapy visit. Medicare also won’t pay for 24-hour care, meal delivery, or a companion who checks in daily. If your needs are primarily custodial, you’ll need to look beyond Medicare.
Medicaid Home and Community-Based Services
Medicaid is the single largest payer of long-term home care in the country, and it does cover custodial help. Coverage comes through Home and Community-Based Services (HCBS) waiver programs, which are designed as alternatives to nursing home placement. These waivers can pay for personal care aides, adult day programs, home modifications, and other supports that let you stay in your own home.
Eligibility depends on where you live. Each state sets its own income and asset limits, though a common threshold is income below 300% of the federal Supplemental Security Income (SSI) payment, with countable assets under $2,000 for a single person. Many states also require that you meet a nursing-facility level of care, meaning a clinical assessment shows you need the kind of help a nursing home would provide. The biggest drawback is waitlists. HCBS waivers are capped, and in many states the wait for a slot can stretch months or even years.
VA Aid and Attendance Benefits
Veterans and surviving spouses who already receive a VA pension may qualify for an additional monthly payment called Aid and Attendance. This benefit is specifically meant for people who need help with daily activities like bathing, feeding, and dressing, or who are largely confined to bed due to illness. Veterans with severely limited eyesight (5/200 or worse in both eyes) also qualify.
The money comes as a supplement to your existing pension check, and you can spend it on any home care services you choose. A separate benefit called Housebound is available if you spend most of your time at home because of a permanent disability, though you cannot receive both Aid and Attendance and Housebound at the same time. To apply, contact your regional VA office or file through the VA’s online portal.
Long-Term Care Insurance
If you purchased a long-term care insurance policy before you needed care, it can be one of the most straightforward funding sources. Most policies begin paying benefits when you can no longer perform at least two of six basic activities of daily living (bathing, dressing, eating, toileting, transferring in and out of a bed or chair, and maintaining continence) or when you have a cognitive impairment such as dementia.
You won’t receive payments the day you qualify, though. Policies include an elimination period, similar to a deductible but measured in time rather than dollars. When you bought your policy, you likely chose an elimination period of 30, 60, or 90 days. During that window, you pay for all care out of pocket. Some policies require that you actually receive paid care during the elimination period for the days to count, so check your contract language carefully before assuming passive waiting satisfies the requirement.
Once the elimination period passes, the insurer sends a nurse or social worker to assess your condition and confirm you meet the benefit triggers. After that, payments typically flow monthly up to the daily or monthly maximum your policy specifies.
Using Life Insurance to Fund Care
A life insurance policy you no longer need for its original purpose can become a source of home care funding in two ways.
Accelerated Death Benefits
Some life insurance policies include a feature that lets you draw on the death benefit while you’re still alive if you need long-term care, have a terminal illness, or can no longer perform activities of daily living. For policies that cover long-term care services, the monthly home care payout is typically about 1% of the policy’s face value. On a $200,000 policy, that means roughly $2,000 per month for home care. Every dollar you withdraw is subtracted from the death benefit your beneficiaries will eventually receive, so this is a trade-off between your care needs now and the inheritance you leave behind.
Viatical Settlements
If you are terminally ill with a life expectancy of two years or less, you can sell your life insurance policy outright to a viatical company. The company pays you a lump sum, takes over the premium payments, and collects the death benefit when you pass away. The percentage you receive depends on your life expectancy. Guidelines from the National Association of Insurance Commissioners suggest payouts of 80% of the death benefit for someone with one to six months to live, dropping to 60% for someone with 18 to 24 months. The proceeds are tax-free as long as you meet the life-expectancy requirement and the viatical company is licensed in your state.
Paying Out of Pocket
Many families fund at least some portion of home care with personal savings, retirement accounts, or help from family members. Private pay gives you the most flexibility in choosing caregivers and setting schedules, with no eligibility hoops to clear.
A few strategies can stretch your dollars. Hiring a caregiver directly rather than going through an agency typically costs less per hour, though you take on the responsibilities of being an employer, including payroll taxes and workers’ compensation coverage. Starting with part-time help for the tasks that matter most, like bathing assistance in the morning or meal preparation, keeps costs manageable while preserving independence. Some families combine a few hours of paid help with unpaid care from relatives, covering the gaps when family members are at work.
If you own your home, a reverse mortgage is another option. It converts home equity into cash (either a lump sum or monthly payments) that you can use for care, with no repayment required until you move out, sell, or pass away. The loan balance grows over time, so this works best as a bridge strategy rather than a decades-long plan.
State and Local Assistance Programs
Beyond Medicaid, many states run their own programs aimed at keeping older adults out of nursing homes. These go by different names, but they generally fall into two categories: waiver programs that serve people who meet a nursing-facility level of care, and more limited programs that offer services like meal delivery, transportation, or respite care to a broader group. The Program of All-Inclusive Care for the Elderly (PACE) operates in many states and bundles medical care, therapy, and personal support services for adults 55 and older who qualify for nursing home-level care but want to remain at home.
Your local Area Agency on Aging is the best starting point for finding what’s available near you. These agencies maintain directories of every federal, state, and nonprofit program in your region, and caseworkers can help you figure out which ones you qualify for. You can find yours by calling the Eldercare Locator at 1-800-677-1116 or searching online by zip code.
Combining Multiple Sources
In practice, most families layer several of these options. A common pattern looks like this: Medicaid HCBS covers a set number of aide hours per week, a family member fills in on evenings and weekends, and the family pays out of pocket for any extra hours during especially difficult stretches. Or a veteran uses Aid and Attendance to cover part-time help while drawing on savings for the rest.
The key is knowing what each source will and won’t pay for, then filling the gaps. Start by figuring out how many hours of care you actually need per week and what type (skilled medical care versus help with daily tasks). Multiply those hours by the going rate in your area to get a realistic monthly cost. Then work through the funding sources above to see how much of that total you can cover before dipping into personal funds.