Getting Financial Help for Dementia & Alzheimer’s Care

Introduction

The cost of caring for a loved one with Alzheimer’s disease or other dementias can change depending on the location – nursing home, assisted living, memory care, adult day care, at home. No matter the setting, the care is expensive. Fortunately, there are federal and state programs that can provide financial assistance for dementia patients and their caregivers, like Medicaid, Medicare and Veterans Affairs. There are also other forms of assistance, such as tax credits and loans. All of these options are discussed below.

Financial Assistance by Source

Medicaid

Medicaid is a public insurance program for Americans of all ages with limited finances. There are Medicaid programs designed for seniors, including those with Alzheimer’s disease and other dementias. Medicaid is the only one of these public programs that will pay for long-term nursing home care (anything beyond 100 days), which may be necessary for late-stage dementia patients. This includes nursing home room and board expenses, as well as medical care, prescription medication, medication management, social activities and mental health counseling.

Medicaid will also cover medical and long-term care needs for seniors who require a high-level of care but live in the community instead of a nursing home. This could be in their own home or the home of a loved one, and in most states Medicaid will also cover care in assisted living residences and memory care facilities for people with Alzheimer’s disease and other dementias. It should be noted Medicaid will not cover room and board in these community settings.

Medicaid will cover both medical needs as well as non-medical, long-term care needs for beneficiaries living in the community. This long-term care coverage can be critical for dementia patients and their families. The benefits can vary by state and program, in general they can include:

• In-home nursing
• Adult day care
• Medication management
• Home modifications for safety and accessibility
• Medical alert devices
• Assistive technology
• Meal delivery
• Transportation
• Personal care assistance with the Activities of Daily Living (mobility, bathing, dressing, eating, toileting)
• Personal care assistance with the Instrumental Activities of Daily Living (shopping, cooking, cleaning, paying bills, etc.)

Medicare

Medicare is a public insurance program for any American age 65 and over. It provides medical coverage, but it does not cover the long-term care services and supports that can be so critical for dementia patients and their families, such as adult day care, assistive technology and personal care assistance with the Activities of Daily Living, as described above. And Medicare will not cover nursing home stays longer than 80-100 days.

Medicare does help with the cost of diagnostic procedures and prescription medication, which can he helpful for seniors showing signs of dementia or in the early stages. People can have both Medicaid (which does cover long-term care at home, in assisted living and in nursing homes), and Medicare. This is known as being dual-eligible, and that can be beneficial for dementia patients.

Medicare Supplemental Insurance policies, as a rule, do not offer areas of coverage that Medicare does not cover. Instead, Medicare Supplemental Insurance simply helps with co-payments. Therefore, these policies also offer little financial assistance.

Learn more about Medicare’s dementia benefits.

Veterans Affairs Programs

Veterans Affairs (VA) has multiple programs that provide financial assistance for people with Alzheimer’s disease or other dementias. The disease does not need to be related to their military service. So, veterans and their spouses who develop dementia for any reason will very likely find some type of financial assistance for their care from the VA, although one should not expect the VA to cover the complete cost of caring for a loved one with dementia.

The VA Health Care program provides medical care, but it typically does not provide enough non-medical, long-term care for people with Alzheimer’s or dementia. VA Pensions like the Aid & Attendance program provide a cash allowance that can be used for any type of care, including assistance or supervision, but this pension usually isn’t enough to cover all of the care needs for mid- to late-stage dementia patients.

Veterans-Directed Home and Community-Based Services (sometimes called Veteran Directed Care) is another option that gives veterans control over the type of care they receive and their caregivers. And HISA Grants provide financial assistance for home modifications that can help veterans with dementia continue to live at home.

Learn more about VA programs for dementia patients.

State (Non-Medicaid) Programs

Many states offer financial assistance for people with Alzheimer’s disease or dementia that is paid for by the state’s general fund. Some of these programs are specifically for dementia, while others are simply intended for individuals with age-related care needs. These programs typically receive a limited amount of funding and are only able to help a limited number of people. So, waitlists are common for these programs. These waitlists can can be organized by different means – some are prioritized based on need, while others are simply first-come, first-served.

These state-based assistance programs normally offer assistance for Alzheimer’s caregivers by paying for adult day care or for in-home respite care. For example, California, Delaware, Kentucky and West Virginia have programs for adult day care. Wisconsin, Vermont and Oregon have programs that pay for in-home dementia care.

Finding these programs can be a challenge. One should begin by contacting their local Area Agency on Aging (AAA). Typically, AAAs are county-specific. One can locate their AAA here.

Other Sources and Options

Tax Credits & Deductions for Alzheimer’s / Dementia

There are tax credits and deductions that are relevant, but these are not specifically designed for people with Alzheimer’s or dementia. The Tax Credit for the Elderly or the Disabled is one such option that can save families thousands of dollars per year. Read the IRS publication. This tax credit is for individuals or married couples filing their own taxes. It may be more advantageous for an adult child to claim a parent with dementia as a dependent. In this case, the Child and Dependent Care Credit is relevant, provided the adult child (or children) provide at least 50% of the financial support their parent requires. Read more. It is worth noting that many states also have a state version of the Dependent Care Credit. Medical and dental expenses can be deducted and, in some cases, costs associated with residential memory care homes (assisted living) are eligible to be deducted. Even home modifications such as a stair-lift or wheelchair ramp are deductible. Read more.

Reverse Mortgages
To be clear, reverse mortgages are not a form of financial assistance, but they can be a source of income for Alzheimer’s or dementia care. However, they may not make financial sense for many families. For example, since a reverse mortgage becomes due when the homeowner leaves the home, it would not be a good option for a single person with Alzheimer’s who may be moving to a memory care home or a nursing home shortly. In contrast, a reverse mortgage could be a good option for a married couple if one spouse intends to reside in the home for many years.

Caregiver Mortgages

A caregiver mortgage is a type of reverse mortgage where a parent can use their home equity to pay their adult child for in-home care. This can be beneficial in many ways. If done properly, adult children are compensated as caregivers, the parent receives the care they require, the home is protected from a Medicaid estate recovery, and inheritance taxes may be minimized. There are many variations of caregiver mortgages and they may be referred to by different names including Family Funded Reverse Mortgages, Caregiver Contracts, and Personal Care Agreement. Regardless of the name, caregiver mortgages are complex and a professional should review and assist before entering into any agreements.

Alzheimer’s Care Loans
There are loans that are specifically designed to help families with the cost of elder care. These loans are bridge loans meant for periods of time less than two years. These loans are given to families that have an immediate need for care (such as moving to a memory care / assisted living residence) and will have funds in the future but do not have immediate access to those funds. For example, take a person who is applying for a Veterans’ Pension. The application process can take up to a year, but when approved, the funds are paid retroactively back to the application date in a lump sum. In this example, a loan is made and re-paid when the applicant is approved and paid back from the lump sum they receive. Another common scenario for elder care loans is when a person moves to memory care and is selling their home. It can take months or even a year to prepare and sell a home, but when it is sold, the borrower will have funds available to repay their loan.

Non-Profits and Foundations

Local non-profits organization and national foundations are other potential sources of financial assistance. These organizations tend to provide services instead of cash assistance. Commonly, an organization will provide respite care free of charge or for highly reduced rates (when compared to hourly home care costs).

Financial Assistance by Care Location

Nursing Homes

There are very few sources of financial assistance for long-term nursing home care for people with Alzheimer’s or dementia. The majority of long-term nursing home care in the United States is paid for by Medicaid. To a lesser extent, the Veteran’s Administration has programs specifically for veterans who require a higher level of care. However, the veteran’s need for nursing home care must typically be related to their military service, not due to Alzheimer’s or dementia (unless it can be proven that their dementia was related to their military service). Veterans nursing home care is an entitlement and for the vast majority of individuals with Alzheimer’s or dementia who require nursing home care, Medicaid is the best option. More on Medicaid eligibility for nursing home care.

Medicare does not pay for ongoing long-term nursing home care for people with Alzheimer’s or dementia. The Medicare program limits beneficiaries to 100 days of nursing home care and pays for 80% of the cost.

Memory Care / Assisted Living Residences

Assisted living facilities specifically for people with Alzheimer’s or dementia are called Memory Care. Financial assistance for memory care comes from a variety of sources. Medicaid, through a state’s HCBS Waivers, will pay for a portion of memory care costs. Remember, Medicaid will not pay for room and board in memory care homes. Medicaid-funded memory care is not an entitlement like nursing home care. Rather, enrollment is limited and waitlists are common. One can take a non-binding Medicaid eligibility pre-screen here.

The Veterans’ Aid and Attendance Pension is another popular program that helps pay for memory care for war-time veterans with Alzheimer’s or other dementias. This program also assists the surviving spouses of war-time veterans. Veterans-Directed Home and Community-Based Services (VD-HCBS) is another potential source of financial assistance for memory care. While VD-HCBS will not pay for assisted living directly, these programs will pay for an outside caregiver to come to an assisted living residence and provide assistance with the activities of daily living such as bathing and grooming. Learn more about these programs here.

Loans for memory care exist. However, these are only relevant to people awaiting another source of funding. This can be relevant if your loved one is waiting for a VA Pension to be approved or waiting for a home to sell.

Some states provide financial assistance for memory care from their general fund instead of through their Medicaid programs. However, these states are limited, enrollment in the programs is limited and the amount of financial assistance they provide is also limited. One should not expect any state program to cover the full cost of memory care. Also, traditional assisted living or memory care may not be covered while adult foster home care may be covered. Adult foster homes typically have 1 to 5 residents.

In-Home Care

There are many sources of financial assistance for dementia care in the home. Medicaid through Home and Community Based Services provides home care. Medicaid is primarily thought of as a source of funds for nursing home care but administrators have found it can be less expensive to assist at home preventing and even delaying the need for more expensive nursing home care. Medicaid at home has different eligibility criteria than nursing home Medicaid, and the financial and functional need eligibility criteria are different in every state. See state specific Medicaid home care eligibility criteria.

The VA also offers financial assistance for veterans with Alzheimer’s or other dementia. Most relevant are the VA Aid & Attendance pension, the Housebound pension, and the Veterans Directed Home and Community-Based Services. More information on both programs is available here.

Reverse mortgages, while not financial assistance, are a source of funding. Reverse mortgages are relevant to paying for home care, but less so in assisted living or memory care because when the homeowner moves from the home, their reverse mortgage becomes due.

State-specific, non-Medicaid programs are common. Many of these programs are not specifically designed for people with Alzheimer’s or dementia but can be used for their care. Nearly all states offer some form of assistance, but typically these programs have income eligibility criteria set fairly low. Another drawback to these programs is that often they have limited funding, their programs are full and waitlists for assistance exists. The best way to determine if your state offers a program for dementia home care and to determine if a wait list exists is to contact your local Area Agency on Aging.

Adult Day Care

Many families want to care for a loved one at home but need extra help and looking at adult day care (also called Alzheimer’s Day Treatment) is a good and affordable option. This is ideal for families who need support during work hours and is more cost-effective than residential memory care or private home care.

Medicaid will cover the cost of adult day care for low-income seniors with Alzheimer’s and dementia across the United States. More on Medicaid eligibility. VA Pensions and Veterans-Directed Home and Community-Based Services allow the beneficiary to choose the type of care they require so families can elect to spend the extra assistance on adult day care.

Most states offer some financial assistance for adult day care, although these programs may not be specifically for adult day care or individuals with dementia. The table that follows is not comprehensive of all state-based assistance that can be used for adult day care but includes programs that are specifically intended for that purpose.