It’s no secret that in-home care for seniors generally isn’t cheap. However, depending on factors like insurance coverage, location and the level of care required, in some cases, it may wind up being more affordable than long-term care facilities.
According to homecare.co.uk, the cost for home health aides varies depending on where you live, but you can expect to pay £20 to £30 per hour on average. If you don’t require around-the-clock care, this may be more cost efficient than paying large sums for a place in a nursing home or care home. That being said, home care can come with additional expenses, such as food and supplies. There can also be a hefty personal cost for family caregivers, including time off from work.
All of these numbers vary immensely depending on circumstance and/or location, and most people don’t commit to a home care financial plan. Few people are really prepared for their own financial emergencies, much less for that of a relative or ageing parent. But there are ways to work it into your budget.
Here, we share the steps to understanding and choosing how to pay for home care.
Assess how much—and what kind of—help an ageing adult needs
The first thing a potential caregiver should ask themselves is: “What do I need?” A challenge for family caregivers is a lack of respite. In order to have any respite, you’re going to have to bring in a home care worker.
Home care covers a broad spectrum. A senior relative may need occasional help cooking or toileting, or they may need 24/7 care with complex medical services. Typically, the higher the need, the more home care will cost.
The level of care will determine whether or not a family chooses to hire help, how often they use that help and the type of professionals they need. A senior might be looking for someone with experience managing a household and a sunny personality, or they may need an aide with a nursing degree and specific dementia training.
It’s also important to consider the type of care they will need. Is it medical or non-medical, which involves more companionship and grooming? Getting in-home care through an agency usually costs slightly more than private care, since the agency will also be looking to make a profit in addition to paying the carer, but there are definite benefits to the former, such as having a wide network from which you can choose.
Quick tips
- If possible, have a conversation with the senior about their needs. Respect their wishes.
- Write down all the tasks that must be performed on behalf of the senior, including grooming, bill paying, assistance getting up and down stairs or administering pills. Try not to leave any stone unturned, since even small chores can have financial or legal consequences.
- Calculate how much time during the day the senior will require assistance.
Research government benefits
When considering how you’ll foot the bill for home care, you might want to explore potential government benefits. Some are even free and not means-tested.
Attendance Allowance
This government benefit helps with the extra costs of caring for someone with a severe disability or illness who is of the State Pension age or over. How much Attendance Allowance recipients receive depends on the severity of the disability and the level of care required as a result.
Personal Independence Payment
PIP is a benefit available to people who need help with extra living costs if daily activities or getting around are difficult because of a long-term illness or disability.
Carer’s Allowance
Carers who look after someone for at least 35 hours a week may be eligible to claim this benefit. They do not have to be related to or live with the person they are caring for.
Quick tips
- Find out which benefits and/or support you can claim.
- Lean on local support. Senior-based agencies, such as ageuk may be able to help families navigate the benefits system.
Consider private insurance options
If you’re not eligible for government benefits or if you need broader coverage, private insurance could be a way to fill the gaps. Policies vary widely, however, so it’s important to know your options before you buy, and it’s important to plan early. Unfortunately, there are currently no mainstream insurance products offering long-term care cover. The closest thing, and the next best option, is the immediate care plan, also known as immediate needs annuity. This can be set up to pay out a lump sum that covers the shortfall between income and care costs for the rest of the care recipient’s life. This lump sum is paid directly to the carer.
Private health or life insurance
If an older loved one has private health or life insurance, their policies may offer home care coverage. Private health insurance plans may also cover prescription and home care supply costs, so it’s worth looking into the ins and outs of a policy.
Additionally, older adults can buy insurance products, while a proxy with financial Power of Attorney may be able to change or choose insurance plans on their behalf.
You can work with your insurance agent to find a policy that offers different, individualised long-term care benefits.
Quick tips
- Find out if an ageing adult has private medical insurance or any life insurance policies. Review all terms pertaining to caregiving.
- Review additional insurance policy and product options. Individual insurance companies usually offer quote calculators on their websites. These websites will also refer you to life insurance agents in your area.
- Find a reliable life insurance broker by consulting trusted advisers in your life, such as your CPA, your financial planner or lawyer. Try multiple brokers before deciding on a policy.
- Ask trusted family members and friends what they’re doing about private insurance vis-a-vis caregiving.
Review personal assets
Unfortunately, many caregivers are forced to use their own or their ageing loved one’s personal assets to pay for home care. The reason: A lot of people are not prepared, and they have not purchased insurance. They find themselves in a situation where they need to find money immediately.
That’s why, if possible, people with ageing family members should consider saving money for the express purpose of long-term care at home.
Without savings to fund long-term care, you might want to consider the following options:
Get an equity line of credit on your home
For a short-term cash infusion, you can basically take out a loan on your own home—with interest paid to a bank. You can also do this on your senior loved one’s home if you have POA.
Take out a personal bank loan
Caregivers can take out a personal bank loan to front-load expenses. Interest rates varied in 2022, so it’s important to shop around through different lenders. Your rate will improve depending on your personal financial situation, including your credit score and annual income.
Take a loan from your retirement funds
You may be able to take a loan from your retirement funds, rather than withdraw from them (a big no-no).
But retirement accounts should still be a last resort.
Tapping your retirement funds is never a good idea. If you spend all your money on your ageing parents, you’re going to be relying on loved ones to pay for you. It’s a downward spiral, and may leave you with less to live on in the future.
Quick tips
- Consider opening a high-yield savings account reserved for home care only.
- Assess all of your government and private benefits options before you dip into personal assets.
- Seniors and family caregivers should collectively review assets, including savings, equity and—if absolutely necessary—retirement accounts.
- Family members with the best credit and financial history may consider reviewing bank loan options.
Paying for at-home senior care can be a challenge. However, caregivers will be much more prepared if they arm themselves with research, thorough self-assessments and the right professionals.
For general informational purposes only: not a substitute for financial or legal advice from a licensed professional based on your particular circumstances.
