If you or someone in your family has a debilitating health condition, do you know how to pay for home health care?
Our health care needs change as we grow older. Many seniors will eventually require some type of medical or personal home care. According to a recent study, approximately 12 million Americans currently receive some type of health-related assistance at home.
Very few individuals ever include long term care in their financial planning. When it is needed, it is usually paid for out-of-pocket.
What is Home Health Care?
Seniors with health conditions can remain independent longer with home-based medical care and daily living assistance.
Home health care includes many different types of services, such as:
- Medication management
- Therapy and rehabilitation
- Wound dressing
- Help with getting in and out of bed
- Bathing and dressing
- Meal preparation
- House cleaning
The care is provided by licensed professionals such as nurses, therapists and home health care aides, as well as custodial care workers.
In some cases, the purpose of the care will be to help a senior recover from an injury or illness. Home care may also be necessary when a person is disabled or suffering from a chronic condition such as heart disease, endocrine disorders, metabolic diseases and diabetes. Hospice care for terminally ill patients can also be provided at home.
Home Health Care Payment Options
There are several ways to pay for home health care. Government programs such as Medicare will pay for short term, acute care on a limited basis. Medicaid will pay for home care if you meet very specific low income financial criteria.
You can also pay for home health care – without depleting bank accounts – by selling your life insurance policy.
Paying for Home Health Care with Life Insurance
You can use your life insurance policy to pay for home health care with a cash surrender, Accelerated Death Benefits (ADB), life settlements, viatical settlements or a Long Term Benefit Care Plan.
In a cash surrender, the policy is terminated and the life insurance company pays the policyholder a small percentage of its value.
Accelerated Death Benefits (ADB) is a provision in some insurance policies that allows benefits to be paid while the policyholder is still living. To qualify for the benefit, the individual must be terminally ill, confined to a nursing home and unable to perform daily living tasks.
A life settlement involves the selling of a policy to a third party. In most cases the policyholder must be 65 years of age or older. The money generated from the sale will be more than the cash surrender value, but less than the death benefit. It is also taxed.
Viatical settlements are life settlements for policyholders with a terminal illness, usually with a life expectancy of less than 2 years. Some viatical companies will offer settlements to terminally ill policyholders with a 5 year life expectancy.
Long Term Care Benefit Plans fall under the category of life settlements, and usually provide the highest percentage of cash – sometimes as much as 40% – 50%. The money is deposited into an irrevocable Benefit Account. Payments are made directly to caregivers by an account administrator. Medicaid considers a Long Term Care Benefit Plan a spend down of assets.
Once a life insurance policy is sold to a third-party or converted to a Long Term Care Benefit Plan, premiums will no longer need to be paid.
Paying for home health care can be costly. Elder Care Funding can help you or a loved one determine the best method of elder care financing, including how to pay for home health care. To find out if you qualify for a Long Term Benefit Plan, complete the form below or call 1-844-814-6511.