Home Care and Home Services

Home care services may be paid for out-of-pocket, meaning paid privately by the recipient of service or family members, or by third parties (e.g., insurance companies). In many cases, home care services are covered by both a third party and the patient, with the patient covering the difference between the amount reimbursed and the actual cost of care. According to the Health Care Financing Administration (HCFA), in 1997 out-of-pocket expenditures represented approximately 22 percent of all home care payments. Among third-party payers, Medicare was the primary single source of home care payments, covering about 40 percent, followed by Medicaid at almost 15 percent and private insurance at approximately 11 percent (National Association for Home Care, "Basic Statistics"). HCFA projects that the portion paid by Medicaid will increase and Medicare's share will decrease through the year 2008.

Medicare, a federal program providing benefits to most Americans sixty-five years of age and older, will cover home care services for homebound persons with medical conditions requiring skilled nursing or therapy services. To qualify for reimbursement, the patient must be under the care of a physician, who authorizes and periodically reviews the patient's plan of care. The patient must receive service from a Medicare-certified home health agency. In addition to skilled nursing care, Medicare may provide coverage for home health aide services, physical therapy, occupational therapy, speech therapy, medical social work, and medical equipment and supplies. Medicare coverage is also available for hospice care for the terminally ill.

Medicaid, a program for low-income individuals, is a joint federal-state medical assistance program. Because it is administered by individual states, there are differences in eligibility requirements and covered services from state to state. All states, however, are mandated by federal Medicaid guidelines to cover part-time nursing, home health aide services, and medical equipment and supplies. States may optionally provide payment for a variety of therapies and medical social work services. The majority of states also provide Medicaid-covered hospice care.

Various types of private insurance policies provide home care benefits, each with its own eligibility requirements and array of covered services. Commercial health insurance companies often provide some coverage for short-term acute care in the home, but availability of reimbursement for long-term home care is less common. Such policies frequently have cost-sharing provisions requiring that the insured pay some part of the cost of home care services.

Long-term care insurance, which has grown in popularity in recent years, varies greatly from company to company. While initially intended to provide benefits for extended nursing home care, such policies now routinely offer benefits for a variety of in-home services.

Medigap insurance, as the name implies, is designed to bridge many of the gaps in Medicare coverage. Medigap policies vary with regard to eligibility and benefits, but do often provide coverage for short-term in-home recovery care. Medigap insurance policies are typically not designed for long-term care.

Veterans in need of in-home care due to a service-related disability or condition are eligible for home health care benefits through the Veterans Administration (VA). These home care services must be provided by one of the VA's own home care programs.

Other smaller sources of home care payments include the Older Americans Act which provides federal funding to state and local programs serving frail and disabled older adults; federal social services block grants to states; managed care organizations; Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); and workers' compensation.