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How to Pay for In-Home Care for the Elderly: Medicare, Medicaid, VA, and More
The biggest surprise for most families is that Medicare doesn't pay for long-term help with daily living. Here's what does.
"In-home care" covers two very different things, and the difference decides who pays:
- Home health care is skilled, medical care: nursing, physical or occupational therapy, wound care. It's usually short-term, after an illness or hospital stay.
- Personal or custodial care is help with daily living: bathing, dressing, toileting, meals, supervision. This is what most aging parents need, often for years.
Medicare: covers home health, not long-term personal care
Medicare covers home health services for eligible people. Medicare says you pay nothing for covered home health services. Covered services include part-time or intermittent skilled nursing, therapy, and medical social services. Home health aide visits are covered only if the person is also getting skilled care at the same time.
Medicare says it doesn't pay for:
- 24-hour-a-day care at home
- Home meal delivery
- Homemaker services unrelated to the care plan
- Custodial or personal care (bathing, dressing, using the bathroom) when that's the only care needed
Medicare is also clear that it doesn't pay for long-term care, and points people to Medicaid or private long-term care insurance. Medicare Advantage plans may offer some extra in-home supports. Check the plan's benefits.
Hospice is the other Medicare route. For people who qualify, Medicare hospice covers care at home focused on comfort, including some aide services and short respite stays.
Medicaid: the largest payer for long-term home care
KFF reports that Medicaid paid for two-thirds of home care spending in the US in 2022. Medicaid home- and community-based services (HCBS) can cover personal care aides, adult day care, home modifications, respite, and more. In every state that responded to KFF's survey, at least one program can pay a family caregiver.
- Eligibility has two parts: financial (income and assets) and functional (how much help the person needs). Rules for long-term care are often different from regular Medicaid. Spouses at home have protections.
- Waivers may have waitlists. Apply early.
- Self-direction lets the participant hire their own caregiver, often a family member. See your state guide.
PACE
The Program of All-Inclusive Care for the Elderly (PACE) is a Medicare and Medicaid program, available in some areas, that coordinates medical care and long-term services so older adults who need a nursing-home level of care can stay in the community. Check Medicare's page for eligibility and whether there's a PACE organization near you.
Veterans benefits
- Veteran-Directed Care: a flexible budget to hire help, including family in many cases.
- Aid and Attendance or Housebound: added to a VA pension for eligible veterans and survivors who need help with daily activities.
- Caregiver programs, including a monthly stipend for some family caregivers.
- Respite care and home-based services through VA health care.
More detail is in our VA caregiver programs guide.
Long-term care insurance
If there's a policy, find it and read the benefit triggers. These are usually needing help with a certain number of daily activities, or having a cognitive impairment. Also check the elimination (waiting) period, daily or monthly maximums, and whether home care and informal or family caregivers are covered. Call the insurer early. Claims take time.
Private pay options
- Savings and income: the most common source. A written budget helps the money last.
- Paying a family member directly: use a written personal care agreement, and see the IRS Household Employer's Tax Guide. Ask an elder-law attorney how this could affect future Medicaid eligibility.
- Home equity: some families use home equity to pay for care. Talk to a HUD-approved counselor or financial professional first. These products have significant costs and risks.
- Tax help: some care costs may count as deductible medical expenses, or qualify for dependent-care credits. Ask a tax professional.
Lower-cost local help
Your local Area Agency on Aging, found through the Eldercare Locator (800-677-1116), may offer homemaker help, meals, transportation, and caregiver support on a sliding scale or for free, including through the National Family Caregiver Support Program.
A simple decision path
- Is the need skilled and short-term after an illness? Ask the doctor about Medicare home health.
- Is the need long-term daily help? Check Medicaid eligibility (even if you think the answer is no), PACE, VA benefits, and any long-term care insurance policy.
- Waiting on approval? Look at local aging services and private pay, possibly through a written agreement with a family caregiver.
- Is a family member doing the care already? See whether they can be paid: how family caregivers get paid.
Questions to ask before choosing an agency
- Do you accept Medicaid, the VA, the person's long-term care insurance, or local program funding?
- What's the hourly rate, minimum shift length, and charge for nights, weekends, and holidays?
- Are caregivers employees of the agency (with taxes, insurance, and supervision handled) or independent contractors?
- How do you handle missed shifts?
- Can we interview caregivers, and request the same person each time?
Documents to gather now
Whichever route you take, applications ask for many of the same things: ID and Social Security number, Medicare and Medicaid cards, income records (Social Security letters, pensions), bank statements, property records, insurance policies, a medication and diagnosis list, any power of attorney, and a DD-214 for veterans. Gathering them in one folder before you apply can save weeks. Our application checklist lists them.
Don't wait for a crisis
Medicaid waivers can have waitlists, VA applications take time, and insurance claims have waiting periods. Families who start applying while needs are still moderate usually have more choices than those who start after a hospital discharge. If there's a chance your loved one will need long-term help, begin the paperwork now.
Combining sources
Most families end up using more than one way to pay. A common pattern is Medicare home health after a hospital stay, then local aging services and private pay while a Medicaid or VA application is pending, then a long-term program once approved. Keep careful records of what each source pays for, so nothing is billed twice and you can show the history if a program asks. A care manager or social worker can help you put the pieces together.
When a family member provides the care
If a relative is already providing most of the care, ask every program specifically: "Can a family member be the paid caregiver, and are there rules about spouses, people living in the same home, or the representative?" The answers vary a lot. Our state guides summarize them from official sources and mark anything unconfirmed.
Get your free state Pay Checklist
The programs to ask about, documents to gather, and who to call. We'll also email you if your state's rules or pay rates change.
Frequently asked questions
Does Medicare pay for in-home care for the elderly?
Medicare pays for medically necessary, part-time home health care for eligible people. It doesn't pay for long-term custodial care, 24-hour care, or personal care alone.
What pays for long-term in-home care?
Mainly Medicaid home- and community-based services, plus VA benefits for eligible veterans, PACE where available, long-term care insurance, and private funds.
Can Medicaid pay a family member to provide in-home care?
Yes, in many states, through self-directed or family caregiver programs. Spouses are often excluded or limited. Check your state guide.
Sources
| Source | Link |
|---|---|
| Medicare – Home health services | www.medicare.gov |
| Medicare – Long-term care | www.medicare.gov |
| Medicare – Hospice care | www.medicare.gov |
| Medicare – PACE | www.medicare.gov |
| KFF – Medicaid home care and family caregivers | www.kff.org |
| VA – Veteran-Directed Care | www.va.gov |
| VA – Aid and Attendance | www.va.gov |
| IRS Publication 926 | www.irs.gov |
| Eldercare Locator (ACL) | eldercare.acl.gov |
Last checked October 15, 2026. Found an error? Email partners@paidtocare.org.