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Getting Financial Help for Dementia & Alzheimer’s Care

Last Updated: November 04, 2019

 

Introduction

Caring for an individual with Alzheimer’s or other form of dementia can be very expensive. Costs are magnified by the location in which the individual receives assistance and as one’s condition progresses. Fortunately, there are federal programs that offer financial assistance, nearly all states provide some level of help and there are programs for veterans, non-profit assistance, tax credits and even loans intended to help families afford the cost of care.

In this article we summarize the benefits one can expect to receive from common insurance such as Medicare, Medicaid and Medicare Supplemental Insurance and explore many lesser known financial assistance options for Alzheimer’s and other dementias such as Parkinson’s. In some cases, we link out to other articles in which the subjects are more fully examined. Eligibility requirements for assistance are discussed when relevant.

 

 Did You Know? There are programs that offer to pay family members to provide care for their loved one with Alzheimer’s or other dementias. Learn more

 

Financial Assistance by Source

Medicare

Unfortunately, Medicare provides limited assistance for the costs incurred by families for Alzheimer’s and dementia care. Medicare’s benefits are strictly for medical needs and so much of providing care to individual with Alzheimer’s or dementia is non-medical in nature. Supervision, assistance with dressing, bathing or eating, transportation are all time-consuming activities but are non-medical in nature and therefore Medicare does not provide coverage or financial assistance. To be clear, in-home care and memory care (assisted living) are not paid for by Medicare.

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, unfortunately, these policies offer little additional assistance over Medicare.

Having said that, Medicare does provide help with diagnostic procedures, prescriptions and some assistance as these conditions progress and needs become more severe. Read a complete analysis of Medicare’s dementia benefits.

 

 Some Good News – In 2020, Medicare Advantage Plans are changing and some plans may begin to cover some of the non-medical care that persons with dementia require. More on Advantage Plans.

 

Medicaid

Medicaid is a state-specific program for persons with limited income as well as limited financial resources or “assets”. Having a diagnosis of Alzheimer’s Disease or other dementia does not automatically make an individual eligible for Medicaid assistance. However, given that most individuals with Alzheimer’s / dementia have very limited or no ability to work and therefore have limited income, many will qualify for benefits. Furthermore, certain Medicaid programs allow candidates to deduct their care expenses from their income when calculating income for eligibility purposes. Assets, such as one’s home can also be deducted.

Medicaid’s benefits, unlike Medicare’s benefits, are significantly broader for persons with Alzheimer’s or dementia. For example, while Medicare does not pay for assisted living, Medicaid (in most states) does offer some level of assisted living benefit. Another example, Medicare will pay for nursing home care, but only for 80-100 days, while Medicaid will pay for nursing home care on an ongoing basis. Read about Medicaid eligibility and benefits.  Read more about Medicaid eligibility and benefits.

 

 Did You Know? There are financial planners that specialize in Alzheimer’s care. These organizations can help families qualify for financial assistance programs through their creative planning processes. Learn more

 

Veterans’ Programs

The VA has multiple programs that provide financial assistance for persons with Alzheimer’s or other dementia. The further good news is that their disease does not need to be related to their military service. Therefore, veterans and their spouses who develop Alzheimer’s or dementia for any reason will very likely find some type of financial assistance for their care from the Veteran’s Administration. That said, 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 less so the non-medical assistance that so many persons with Alzheimer’s or dementia require. However, VA Pensions, such as Aid & Attendance provide a cash allowance that can be used for any type of care including simple assistance or supervision. More on A&A eligibility for persons with dementia.

Veterans-Directed Home and Community Based Services (sometimes called simply Veteran Directed Care) is another option that gives that veteran great control over what type of care they receive and by whom it is provided. HISA Grants provides financial assistance for home modifications that can help an individual with dementia continue to live at home. Read a complete explanation of these VA programs and their eligibility requirements.

 

State (Non-Medicaid) Programs

Many states offer financial assistance for persons with Alzheimer’s / dementia paid for by the state’s “general fund”. Some of these programs are specifically for dementia (and require a formal diagnosis) and others are simply intended for individuals with age-related care needs. Further complicating the eligibility picture is that these programs are typically not entitlement programs. Rather the programs receive a limited amount of funding and are only able to help a limited number of persons. Waiting lists are common. Each state program is different, some prioritize their waiting lists by severity of need and others simply based on one’s position in the wait list.

These state-based assistance programs tend to provide 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. It is recommended that one 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 persons with Alzheimer’s or dementia. The Tax Credit for the Elderly or the Disabled is one such option that can save a family 1000s of dollars per year. Read the IRS publication. This tax credit is for persons 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 which 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. Finally, 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 wheel chair ramp are deductible. Read more.

Reverse Mortgages
While a reverse mortgage is not financial assistance, they can be a source of funds for Alzheimer’s or dementia care. To be clear, a reverse mortgage is not necessarily the right financial decision for many families. For example, because a reverse mortgage becomes due when the homeowner leaves the home, a reverse mortgage would not be a good option for single persons with Alzheimer’s who may be moving to a memory care home or a nursing home in the near future. While 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 like a type of reverse mortgage where a parent (for example) uses their home equity to pay their adult child (also as an example) for providing care. In doing so, several benefits are achieved. If done properly, the adult children / caregiver is compensated, 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 name, caregiver mortgages are complex and professional consul should be sought prior to simply initiating such an agreement.

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, persons who are 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 another potential source of financial assistance. These organizations tend to provide services in lieu 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 persons with Alzheimer’s or dementia. The vast of majority of long term nursing home care in the Unites States is paid for by Medicaid. To a lesser extend the Veteran’s Administration has programs specifically for veterans require that 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). Medicaid 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 long term (ongoing) nursing home care for persons with Alzheimer’s or dementia. The Medicare program limits beneficiaries to 100 days of nursing home care and pay for only 80% of the cost.

 

Memory Care / Assisted Living Residences

Assisted living specifically for persons with Alzheimer’s or other dementia is called “Memory Care”. Financial assistance for memory care comes from a variety of sources. Medicaid, through a state’s HCBS Waivers will pay for memory care or at least for a portion of the individual’s memory care costs (Medicaid will not pay for room and board in memory care homes). Readers should be aware that Medicaid-funded memory care is not an entitlement like nursing home care. Rather enrollment is limited and wait lists 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 exists. However, these are only relevant to persons awaiting another source of funding such as when 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 (as oppose to through their Medicaid programs). However, these states are limited, enrollment in the programs are limited and the amount of financial assistance they provide is limited. One should not expect any state program to cover the full cost of memory care. Also, traditional assisted living / memory care may not be covered but adult foster home care may be covered (adult foster homes typically have 1-5 residents).

State Memory Care Assistance Programs (Updated Feb. 2019)
Alaska Pioneer Homes
Colorado Adult Foster Care Program (not available in all counties)
Connecticut Adult Family Living (a service under the Home Care Program for Elders)
Hawaii Community Care Foster Family Home Program
Indiana Residential Care Assistance Program
Maryland Senior Assisted Living Group Home Subsidy
Massachusetts Supportive Senior Housing Initiative
Minnesota Housing Support Program
New York Assisted Living Program
North Carolina Adult Care Home Special Care Unit
North Dakota Expanded Service Payments for the Elderly and Disabled
Pennsylvania Domiciliary Care Program
Rhode Island SSI Enhanced Assisted Living Program
Texas Adult Foster Care (under the Community Care for Aged/Disabled program)
Virginia Auxiliary Grants for Assisted Living

 

 

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 provide assistance at home and therefore prevent or delay 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 and Housebound pensions 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 funds. Reverse mortgages are relevant to paying for home care, but less so assisted living / 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 persons 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 funded, their programs are full and wait-lists 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

Since many families want to care for a loved one at home, but cannot do so during work hours, adult day care (also called Alzheimer’s Day Treatment) is a good and affordable option when compared to residential memory care or private home care.

Medicaid, again, will cover the cost of adult day care for low income seniors with Alzheimer’s and dementia in all 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 and therefore families can elect to spend that 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 specifically for 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.