Paying for Private Home Care: Private Pay, Insurance, Veterans and Medicaid
What families actually use to pay for non-medical home care, and how Texas and California programs differ.
Non-medical home care is usually paid for out of pocket, which is why it is called private-pay care. Agencies bill by the hour, so the total depends on how many hours you need. This guide walks through the ways families pay, and the programs that can take over part of the cost. It gives no price figures because rates vary widely by city and agency; ask each agency for its current rate sheet.
Private pay
Paying directly from savings, income or family contributions is the most flexible route and the only one that needs no approval process. Ask agencies about the hourly rate, the minimum shift length, higher rates for nights, weekends and holidays, and whether live-in care is billed by the hour or as a daily rate. Ask for the service agreement in writing and read the cancellation terms before you sign.
Long-term care insurance
If the person has a long-term care insurance policy, call the insurer before choosing an agency. Most policies pay after a waiting period called the elimination period, and after a licensed health care practitioner certifies that the person cannot perform a set number of activities of daily living (often two of six) or has a severe cognitive impairment. Some policies reimburse the family, some pay the agency directly, and some require the agency to be licensed. A state-licensed agency is often a condition, which is one reason to check the license.
Veterans benefits
The Department of Veterans Affairs offers Aid and Attendance and Housebound benefits as an addition to a VA pension for eligible wartime veterans and surviving spouses who need help with daily activities. The benefit is a monthly payment that can be used toward home care. Eligibility depends on service, income, assets and medical need, so read the current rules on VA.gov and consider getting free help from an accredited Veterans Service Officer. The VA also runs separate home and community-based programs through its medical centers.
Medicaid and state programs
Medicaid pays for long-term care at home for people who meet financial and functional requirements, and the programs differ a lot by state.
- California: In-Home Supportive Services (IHSS) is a county program that pays for in-home help for eligible older adults and people with disabilities. In most cases the recipient hires and directs their own caregiver, who may be a relative, instead of using an agency. Medi-Cal also offers other home and community-based services in some areas.
- Texas: HHSC runs Medicaid long-term services and supports, including attendant care and home and community-based waivers, largely through managed care plans. Some waivers have long waiting lists called interest lists. See HHSC aging services and call the local Area Agency on Aging for guidance.
Many agencies that do private-pay care also hold contracts with Medicaid programs, and some do not. Ask.
Other sources
- Area Agencies on Aging arrange free or low-cost services, respite care and caregiver support. Find yours through the Eldercare Locator, a federal service.
- Life insurance and annuities: some policies have long-term care riders or allow benefits to be accelerated. Ask the insurer.
- Tax help: some care costs may count as medical expenses on a federal return, and a household employer has payroll tax duties. The IRS explains these in Publication 926, Household Employer's Tax Guide; a tax professional can advise on your situation.
Agency or independent caregiver?
Hiring a caregiver directly can cost less per hour, but the family may become the legal employer, responsible for payroll taxes, workers' compensation where required, and backup coverage when the caregiver is sick. A licensed agency handles employment, screening and replacement, and carries the licensing obligations. Neither choice is right for every family, but be clear about who is the employer before care starts.
A short planning checklist
- Write down how many hours per week you need now, and what might change in six months.
- Call the insurer and ask whether a licensed agency is required.
- Ask each agency for its rates and terms in writing.
- Check any veteran, county or Medicaid options before you commit to an open-ended private arrangement.