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How to pay for in-home care for a parent: Comparing your options
In this article:
Quick answer: There are several ways to help pay for a parent’s in-home care, including insurance, government assistance, and home equity. The options available depend on your parent’s financial situation, eligibility, and the type of care they need.
Key points
In-home care costs can add up quickly, especially when a parent needs regular or increasingly frequent assistance.
Medicare, Medicaid, long-term care insurance, and veterans’ benefits may help cover certain services, but what’s available and who is eligible vary.
Comparing expected care costs with available resources may help families identify funding gaps and plan for changing care needs.
This article is not financial planning advice. Consult a financial professional.
For years, your parent was the one looking after you. Now, the roles may be starting to reverse. They want to stay in the home they know and love, but they’re beginning to need help with everyday activities. Maybe it’s a few hours a week with meals and household tasks, or perhaps they need more extensive care.
Accepting help isn’t always easy, though. Your parent may worry about losing their independence, having someone unfamiliar in their home, or becoming a financial burden. Talking openly about their concerns and involving them in decisions about care may help you figure out what works for everyone.
Then there’s the question of how to pay for that care. Covering the costs doesn’t necessarily mean paying for everything yourself. Your parent may have insurance coverage or other financial resources that could help.
Figuring out how to make those resources work together starts with understanding what care might cost and which expenses could be covered. In this guide, we’ll explore different ways to pay for in-home care, how to estimate expenses, and what to consider when putting together a plan for your parent.
How much does home care cost?
The cost of in-home care depends on where your parent lives, the type of assistance they need, and how often they need it. Someone who needs help with household tasks a few afternoons a week will likely pay less than someone who requires daily assistance.
To give you an idea of what that might look like, CareScout’s 2025 Cost of Care Survey puts the national median cost of nonmedical in-home care at approximately $35 per hour. Even at just 10 hours per week, that adds up to roughly $1,500 per month—or more than $18,000 a year.
This example offers a starting point for estimating what your family might need to budget for in-home care. For a more detailed approach, see How can you plan for a parent’s home care costs? later in the article.
What’s the difference between home care and home health care?
Nonmedical in-home care services typically include help with everyday activities, such as bathing, dressing, meal preparation, and light housekeeping. Home health care, on the other hand, involves medical services such as skilled nursing, physical therapy, and other care provided by qualified healthcare professionals.
This distinction matters because Medicare and other insurance plans may cover certain home health services but generally don’t cover ongoing nonmedical assistance when that’s the only care needed. Understanding which services your parent needs may help you identify what insurance covers and which expenses you’ll need to pay for separately.
What are the main ways to pay for a parent’s home care?
The best way to cover home care expenses depends on the type of assistance needed, how often your parent needs care, and the financial resources available. Here are some options to explore, starting with resources your parent may already have.
Personal income and savings
One option is private pay, which means covering home care expenses using personal funds rather than insurance or government assistance. Depending on their circumstances, your parent may be able to use Social Security income, pension payments, retirement savings, investments, or other assets.
Using personal resources could mean that your parent won’t need to borrow money or meet eligibility requirements for outside assistance. However, it’s important to consider how ongoing care expenses could affect the funds they’ll need for other living costs and future needs.
Long-term care insurance
If your parent has a long-term care insurance policy, it may help pay for certain types of in-home care, including assistance with everyday activities.
Coverage depends on the specific policy, so it’s worth reviewing the terms. Some policies require your parent to need help with a certain number of activities of daily living, such as bathing or dressing, before payments begin. There may also be waiting periods, payment limits, and restrictions on covered services.
Long-term care insurance typically requires medical underwriting, so older adults who already need assistance may have difficulty obtaining coverage. Premiums also tend to increase with age.
Medicare
Medicare may help pay for certain medical services your parent receives at home, but it generally won’t cover ongoing assistance with everyday activities when that’s the only care they need.
Covered home health services may include part-time or intermittent skilled nursing care, physical therapy, occupational therapy, and certain other medically necessary services. Your parent generally must be considered homebound, need qualifying skilled care, and receive services through a Medicare-certified home health agency. Medicare may also cover limited home health aide services alongside qualifying skilled care.
Some Medicare Advantage plans offer additional in-home support services, so coverage may vary depending on your parent’s plan. For more information about Medicare’s home health coverage requirements, visit Medicare.gov.
Medicaid
Unlike Medicare, Medicaid may provide financial assistance to eligible individuals who need long-term care at home, including help with everyday activities.
State Medicaid programs may offer this support through Home and Community-Based Services (HCBS) or waiver programs, which help eligible individuals receive care at home or in their communities rather than in institutional settings.
However, Medicaid eligibility, covered services, and available programs vary by state. Some programs also have enrollment limits or waiting lists, so assistance may not be immediately available even if your parent meets the requirements.
Contact your state Medicaid agency to learn what home care assistance may be available and how to apply.
Veterans benefits
If your parent is a veteran or surviving spouse, they may be eligible for assistance through the U.S. Department of Veterans Affairs (VA).
One option is the VA’s Aid and Attendance benefit, which provides additional monthly payments to eligible veterans and surviving spouses who receive a qualifying VA pension and meet certain requirements, such as needing help with daily activities.
The VA also offers certain home and community-based care services for eligible veterans. Availability and eligibility requirements vary depending on the type of assistance.
Visit the VA website to explore available benefits and determine whether your parent may be eligible.
Life insurance
Some life insurance policies may allow your parent to access funds while they’re still living, which could provide another way to help pay for home care.
Depending on the policy, your parent may be able to borrow against its cash value, make a withdrawal, or access certain living benefits, such as an accelerated death benefit. Not all policies offer these options, and eligibility and terms vary.
Unlike borrowing against or withdrawing funds from a policy, a life settlement involves selling the policy to a third party. The buyer becomes the new owner, and the policyholder receives a cash payment that’s typically less than the full death benefit. Some estimates suggest life settlements pay approximately 10% to 40% of that amount.
Whether your parent accesses funds through an existing policy or sells it, there may be tax and other financial consequences. Before making changes, review the options with the insurer and consider speaking with a financial or tax professional.
Home equity
If your parent owns a home, its equity may provide another potential source of funds to help pay for care.
Options include a home equity loan, home equity line of credit (HELOC), or cash-out refinance. Each allows homeowners to borrow against their home equity, although they differ in how funds are accessed, interest rates, costs, and repayment requirements.
These options typically require monthly payments, so it’s important to consider whether your parent could manage them alongside their care expenses. Keep in mind that borrowing against home equity increases the debt secured by the property and may reduce the equity your parent has available later.
If Medicaid is part of your parent’s current or future care plan, consider speaking with an elder law attorney or Medicaid planning professional before making significant decisions involving home equity or other assets.
→ Read more: How to get equity out of your home without refinancing
Finance of America does not currently offer home equity loans or HELOCs.
Reverse mortgage
A reverse mortgage may allow eligible older homeowners to access a portion of their home equity without selling their home or making required monthly mortgage payments. Funds may be used to help pay for in-home care, with payout options varying by loan type.
However, reverse mortgages have costs and eligibility requirements. Borrowers must live in the home as their principal residence, pay required property charges, and maintain the home. If the loan terms are not met, the loan may become due and payable. The loan balance generally increases over time as interest and fees accrue, and a permanent move into a care facility may cause the loan to become due and payable.
To learn more, please visit the CFPB’s “Reverse Mortgages: A Discussion Guide.”
Each option has different requirements and considerations. Here’s a quick comparison of what we’ve covered.
| Funding source | What to consider |
| Personal income and savings | Other expenses and future needs may limit available funds. |
| Long-term care insurance | Coverage depends on the policy and may require advance planning. |
| Medicare | Primarily covers qualifying medical care at home, not ongoing nonmedical assistance alone. |
| Medicaid | May cover home care, depending on eligibility and state requirements. |
| Veterans benefits | Certain veterans and surviving spouses may be eligible for assistance. |
| Life insurance | Some policies allow access to funds while living, which can reduce the death benefit. |
| Home equity financing | Typically requires monthly payments and increases the debt secured by the home. |
| Reverse mortgage | No required monthly principal and interest payments, but loan costs and ongoing obligations apply.* |
*The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
How can you plan for a parent’s home care costs?
Understanding your payment options is one thing. Figuring out how to use them is another. These steps may help you estimate expenses, identify potential funding gaps, and plan for changing care needs.
- Estimate the care your parent needs: Talk with your parent about what kind of assistance they need and what they’re comfortable receiving. Then consider how many hours of care they may need each week and what local providers charge. Getting estimates from providers in your area could help you build a more realistic budget.
- Review available coverage and assistance: Check your parent’s insurance policies, existing benefits, and eligibility for government assistance. Your local Area Agency on Aging may help you find services funded by the Older Americans Act, while the State Health Insurance Assistance Program (SHIP) offers free Medicare counseling.
- Calculate any remaining expenses: Compare estimated care costs with the amount your parent’s income, savings, and other resources may cover. If there’s a shortfall, explore whether additional funding sources or voluntary contributions from family members could help.
- Consider the role of family caregivers: If relatives plan to provide some of the care, factor that into the amount of paid assistance needed. Family caregiving arrangements may also affect work schedules and other responsibilities, so consider what’s manageable for everyone involved.
- Think about future care needs: Your parent may need more assistance over time, which could increase expenses or change their living arrangements. Consider how using certain resources now might affect their ability to pay for care later.
Example: How one family might budget for home care
Matthew, 78, needs help with meals, housekeeping, and other daily activities. His daughter is helping him figure out how to pay for 20 hours of nonmedical home care each week.
At an illustrative rate of $35 per hour, Matthew’s care would cost approximately $3,033 per month. After accounting for his regular living expenses, he has $1,800 in monthly income and savings available to put toward care.
Here’s how his budget breaks down:
| Monthly home care budget | Amount |
| Estimated care expenses | $3,033 |
| Income and savings available for care | $1,800 |
| Remaining funding gap | $1,233 |
Matthew and his daughter explore local assistance programs and, for this example, find one that provides $400 per month toward his care. That reduces the remaining gap from $1,233 to $833.
After reviewing their finances, his daughter decides she can contribute $833 per month to cover the difference. Together, the two sources close the funding gap, allowing Matthew to receive the 20 hours of weekly care he needs. They also plan to revisit the arrangement if his care needs or their financial circumstances change.
This fictional example is for illustrative purposes only. Actual care costs, available resources, and eligibility requirements vary.
Finding a way to pay for your parent’s care
Helping your parent remain at home may involve some financial planning, especially if their care needs change over time. Understanding the available payment options and how they might work together may help you make informed decisions about the care they need.
If home equity is one of the options you’re exploring, Finance of America’s reverse mortgage calculator could help estimate how much equity an eligible homeowner may be able to access.
FAQs about paying for home care
What if my parent can’t afford home care?
If your parent’s income, savings, and insurance aren’t enough to cover home care, start by exploring Medicaid eligibility and local assistance programs. Your Area Agency on Aging may help you identify services available in your community. You might also consider adjusting the care schedule or exploring alternative care arrangements that better fit your parent’s needs and budget.
Are there free or low-cost home care services for seniors?
Some communities offer free or reduced-cost services for older adults, including meal delivery, transportation, adult day services, and limited assistance at home. Availability may depend on your parent’s location, income, age, or care needs. Your local Area Agency on Aging may help identify programs, although these services may not replace ongoing professional home care.
Can you get paid to care for an aging parent?
Yes, some Medicaid programs allow eligible family members to receive payment for providing care. These arrangements may be available through self-directed care options, which let participants choose who provides certain services. Veterans’ benefits and some long-term care insurance policies may also offer financial support. Contact your state Medicaid agency or local Area Agency on Aging to explore available options.
Can you deduct home care expenses on your taxes?
Some home care expenses may be eligible for a medical expense deduction under Internal Revenue Service (IRS) rules. Whether you can claim a deduction depends on the type of care, who pays for it, and other tax requirements. Consult a tax professional about your circumstances.
Can you use an HSA to pay for home care?
Yes, health savings account (HSA) funds may be used for certain medical and long-term care expenses, including some services provided at home. However, routine household assistance, such as cleaning or meal preparation, generally isn’t covered unless it meets IRS requirements for medical care. Consult a tax professional or review IRS guidelines to understand which expenses may be paid for using HSA funds.
Can your home’s value affect Medicaid eligibility for home care?
Yes, although Medicaid rules vary by state. A primary residence may be excluded from certain asset calculations if specific requirements are met. Home equity limits and other rules may also apply, depending on the type of Medicaid assistance. Consult your state Medicaid agency or an elder law attorney before making decisions involving the home.
What is the difference between hiring a home care agency and a private caregiver?
A home care agency typically handles caregiver screening, scheduling, and employment responsibilities, although services and fees vary. Hiring a caregiver privately may offer more control over arrangements, but families may be responsible for background checks, payroll taxes, insurance, and finding replacement care when needed.
Can home care be less expensive than assisted living?
Yes, particularly when someone needs only a few hours of assistance each week. However, costs may increase substantially when daily or around-the-clock care is required. Comparing local home care rates with assisted living costs may help you evaluate which arrangement makes financial sense for your parent’s needs.
What are some alternatives to home care?
Alternatives include adult day services, assisted living, and residential care facilities. Community programs and family caregiving arrangements may also provide support, depending on the type of assistance needed and the available resources.
About the author
is a Senior Web Content Writer at Finance of America and a journalist with more than 20 years of experience specializing in business, and technology. Her work has been published in The Wall Street Journal, The Financial Times, and numerous other leading outlets.
Disclaimer
This article is intended for general informational and educational purposes only and should not be construed as financial or tax advice. For tax advice, please consult a tax professional. For more information about whether a reverse mortgage fits into your retirement strategy, you should consult your financial advisor.
