Helping You Afford Giving Your Loved One The Care They Need

A caregiver assists someone who may not be able to perform everyday tasks on their own. This could include older adults (especially if they have dementia or Alzheimer’s) or younger persons with disabilities or special needs.


Three out of five caregivers in the U.S. have a paying job on top of taking care of a loved one. Many of these provide unpaid caregiver services to family members. Providing in-home care to a loved one could place strain on their own work and finances – including saving for their retirement.


Families could consider employing a full-time, paid caregiver to provide services to an aging parent or person with special needs or choose to have a family caregiver provide those services. Either way, the financial implication could be daunting.


There are many caregiver benefit programs that can provide financial assistance and help with the financial burden that comes with providing caregiving services to your family member.


What are the financial costs of caregiving?

According to the American Association of Retired Persons (AARP), one in five American adults has provided caregiving services to an adult or child with special needs in 2020. On average, informal caregivers like family members or spouses spend more than $7,000 out of their own pockets each year to provide a loved one with caregiving services.


In 2018, employing a professional caregiver with medical training potentially required to assist their loved one costs around $50,000 a year.


Caregiving Costs and Medicaid Cover

Firstly, let’s clarify the difference between Medicare and Medicaid. Medicaid is state-run and considers a person’s income. Medicare is managed by the federal government and is usually based on a person’s age. Medicaid can cover children, pregnant women, elderly adults, persons with disabilities, and low-income adults who are eligible. Medicare covers persons over 65. Medicare could also cover individuals younger than 65 if they have a disability or meet other eligibility requirements.


Many Medicaid programs provide nursing home care. A few programs pay for caregiving to be provided in the care recipient’s home or primary place of residence. Medicaid programs vary from state to state, but generally, at least one program covers in-home care by a family member.


Home and Community Based Services Waivers.

Home and Community Based Services Waivers (HCBS Waivers) are sometimes called 1915(c) and Section 1115 Waivers. These Waivers make it possible for states to pay for caregiving services to those not living in a nursing home.


In most states, Medicaid Waivers have an option where program participants (the care recipient or beneficiary) can choose who can provide caregiving services to them. This is called ‘Consumer Direction’ in some states. It is sometimes also referred to as Participant Directed Services, Cash and Counseling, Self-Directed Care, Self-Administered Services, and Choice Programs.


These programs allow the care recipient to receive care in their own home or the home of family members. If a family member provides the care recipient with caregiving services, they can then be compensated. Medicaid has an approved hourly rate for in-home care, which could range from $9.00 to $19.25. Only a certain amount of people can be enrolled in the program at a time, and it is common for new applicants to be placed on a waiting list.


Medicaid Personal Care Services.

Often personal care is covered by regular Medicaid programs (which may also be called Medicaid State Plans). In some states, these programs are called Community First Choice (CFC) programs. They can also be called Personal Assistance Services (PAS), Personal Care Assistance (PCA), Personal Attendants, or Attendare Care.


Some states do not specify these programs; instead, they include them under the regular Medicaid program. In these cases, personal care benefits could include caregiving services.


These programs are available to anyone who meets the eligibility requirements. Care recipients can usually choose who should provide them with caregiving services.


When a participant is enrolled in one of these programs, the number of hours of care they will require each week is determined. These hours are paid for at an approved hourly rate.


Medicaid Caregiver Exemption.

The Medicaid Caregiver Exemption is also sometimes called the Child Caregiver Exception. This program offers indirect compensation instead of paying out an hourly wage. In some cases, a person’s home can be claimed by the state to recuperate monies spent on the person’s care. This is called Medicaid Estate Recovery and is often the case when the care recipient permanently moves into a nursing home, and the beneficiary’s spouse is no longer living in the home.


The Caregiver Exemption program allows caregiver children to inherit their parent’s home or part of its value if the parent co-owned the property. This is a form of delayed ‘compensation’ that the family receives instead of the home going to the state. The amount inherited will depend on the value of the parent’s home or the parent’s equity in the home.


There are a few minimum requirements to be eligible for the Caregiver Exemption program. The caregiver must be an adult child of the care recipient and live in the care recipient’s home for at least two years while providing caregiving services. Furthermore, the care received from the family caregiver should prevent the care recipient from needing to go to a nursing home. This should be confirmed and validated with supporting medical documentation.


Adult Foster Care.

Adult Foster Care programs are only available in some states. In these cases, the parent moves into the adult child’s home. The adult child caregiver provides caregiving services. These services include assistance with personal care, daily tasks, making meals, and transporting their parent to medical appointments or other engagements. Medicaid pays for the care recipient’s medical expenses, but not their room and board. However, some states provide supplemental funds (not related to Medicaid) to cover room and board in these situations.


Other State-Based Programs

Some states offer nursing home diversion programs. These programs are offered to elderly persons who can receive care in their own homes. The objective of these programs is to take care of persons in their own homes instead of placing them in nursing homes that are funded through Medicaid.


These programs are only offered in certain states. While some of these states allow the care recipient to choose who provides caregiving services to them, not all states allow family members to provide these services.


Nursing home diversion programs pay an average hourly rate for in-home care. These rates depend on the geographic location where the care is provided. In many cases, participation in one of these programs depends on the applicant/care recipient’s financial status.


Caregiver Benefits for Veterans

Ex-military service members could be eligible for caregiving funds if they were injured or disabled while on duty. In some cases, the veteran should have been medically discharged from service to use these benefits.


Veterans Directed Home and Community Based Services.

Veterans Directed Home and Community Based Services (VD-HCBS) is more generally known as Veterans Directed Care. Under this program, a veteran can choose who provides caregiving services to them.


In order to qualify for VA benefits under the Veterans Directed Care program, the veteran should be enrolled in the VA health care system. They should also require nursing home level care.


Caregivers (who could be adult children caregivers) are paid an hourly rate or receive a monthly stipend determined by the Veterans Health Administration. The hourly rate depends on the region where the care is provided and how much care is required.


Veteran’s Aid & Attendance and Housebound Benefits.

The Veteran’s Aid & Attendance and Housebound Benefits are essentially veterans’ pensions. These programs specifically involve veterans and their spouses. The amount of pension that a veteran and their spouse receive depends on their current household income, minus their pension.


Put simply: the VA pays veterans a specific pension. The veteran could receive additional compensation for any care-related costs that they may have. Thus, if a veteran employs a private caregiver (including an adult child caregiver), the VA could pay out this amount on top of the veteran’s normal pension amount.


Housebound benefits are slightly different from Aid and Attendance benefits. In this case, the veteran could be eligible to receive a pension supplement if they have suffered a permanent disability that confines them to their immediate premises.


Eligible veterans can only apply for either Aid and Attendance benefits or Housebound benefits, not both at the same time.


The Program of Comprehensive Assistance for Family Caregivers.

The Program of Comprehensive Assistance for Family Caregivers (PCAFC) allows a veteran to select one primary family caregiver and two secondary family caregivers. The primary family caregiver will be the main caregiver. The two secondary family caregivers will provide care when the primary caregiver is unable to do so.


Family caregivers should be a parent, stepfamily member, son, daughter, spouse, or extended family member of the veteran who is 18 years or older. Alternatively, the caregiver could be someone who lives with the veteran full-time.


In order to be eligible, the veteran should have a VA disability (or combined disabilities) rating of 70% or higher. The disability should have been caused or exacerbated during active-duty service on or after September 11, 2001, or before May 7, 1975.


The veteran should also be medically discharged from the U.S. military or have a date of medical discharge. They should also require at least six months of continuous and in-person care services.


Other Options to Pay for Caregiving Services

There are a few non-government-funded avenues that can be explored when looking for funding for a caregiver. These options include independent insurance policies. It also includes paid (or unpaid) time off from work for employed persons who need to look after a family member. 


Life Insurance.

If the care recipient has a life insurance policy with a death benefit valued at $50,000 or more, they can use this policy to pay for caregiving services. A family member or someone else the care recipient chooses can provide these services.


To follow this route, the policyholder should get a life settlement. Essentially, they sell the life insurance policy to a third party while the policyholder is still alive. The person who buys the life insurance policy does so by paying a lump sum of money to the policyholder. The third party also takes overpayment of the premiums for the policy. The third party then collects the death benefit once the original policy holder passes away. The lump sum that the original policy holder receives can then be used to pay for caregiving services. You can also use the full death benefits as future payment for caregiving services if the caregiver purchased the policy from the original policyholder.


By using this option, the care recipient could remain eligible to receive caregiving benefits from Medicaid if the money received from the life insurance policy is not enough.


Long-term Care Insurance.

You could use long-term insurance benefits to pay for an in-home caregiver. In some cases, depending on the policy, the care provider could be a family member. However, most long-term care insurance policies require the caregiver to be qualified and licensed to provide caregiving services.


In these cases, relative caregivers will need to get a business license and register with the local authorities to provide caregiving services. All income gained from these caregiving services will have to be declared, and taxes will need to be paid.


Paid Family Leave.

In some states, full-time employed persons can take time off work to take care of a family member. Under Paid Family Leave laws, the employee keeps their job and receives a percentage of their salary and some employee benefits like health insurance while taking time off to provide caregiving services to their family member.


Paid Family Leave usually allows employees between four and twelve weeks off work to take care of a family member. They can use these days to take care of a family member. Leave days can be taken sporadically and do not have to be on consecutive days. Multiple family members can combine their Paid Family Leave to provide their loved one with more extended and continuous periods of care.


The state-specific Paid Family Leave laws differ from the national Family and Medical Leave Act (FMLA). FMLA also allows employees time off to take care of a family member. In this case, the family member keeps their job and health insurance benefits but does not receive any compensation for this time off.


In some cases, a family caregiver could obtain a tax credit for the caregiving services provided for a loved one.


How do you apply for caregiver programs and services?

Most states have a similar process for individuals applying for self-directed care benefits.


The applicant will be assessed to determine what they are capable of and the extent of care they require. This will be done as directed by the Centers for Medicare & Medicaid Services.


The care recipient and a family member or representative then create a written care plan. This plan details all care services that the patient will require. It also makes provisions for secondary caregivers if the primary caregiver is unable to provide caregiving services. The care plan should also include a budget for goods and services.


Once the care plan is complete, the care recipient (or representative) chooses a caregiver.


Veterans can find information and apply to various programs through their local VA Medical Centers.


The financial aspect of providing your loved one with caregiving services is significant. This applies to employing a professional caregiver from an agency or if a family member provides those services.


There are a number of routes to consider when looking for options to get caregiving benefits to alleviate this strain on your or your loved one’s finances. Government-run programs through Medicaid usually have specific eligibility requirements that need to be met for a person to be eligible. Alternative state-based programs that focus on providing in-home care instead of using Medicaid funds to place the individual in a nursing home are available in some states.


There are dedicated funds for veterans who require in-home care. Alternatively, recipients could use life insurance and long-term care insurance policies along with Paid Family Leave days to provide in-home caregiving services.