How to Pay for Adult Foster Care

Adult foster care requires advanced planning involving daily living care for seniors and adults who need a supportive, home-based environment for long-term care. When you consider how to pay for adult foster care, there are various funding options such as investments, insurance, and government assistance. In many situations, families plan arrangements that usually combine both self-funding and government programs.

When you determine how to pay for adult foster care, it’s essential to understand the care levels required, such as ongoing supervision, assistance with daily living and tasks, and additional non-medical support. Considering how to pay for adult foster care requires reviewing the level of care needed in the short and long term, your current financial circumstances, and government assistance that may be available for consideration.

What Does Adult Foster Care Costs Involve?

A picture of an elderly woman in a chair holding a young woman's hand.

The level of care provided in an independent living community or residence is much different from adult foster care, including a broader scope of support that includes nursing care and connections to medical assistance. Most levels of care include a wide range of services for residents, such as transportation to and from appointments, recreational events, shopping, housekeeping services, and personal care that includes bathing, mobility support, and eating.

A facility that requires a high level of care may include 24-hour staff on-site for emergencies. Adult foster care is a more flexible option for families who have parents or grandparents in need of ongoing progressive care for conditions such as dementia and Alzheimer’s. The overall cost of care for adults varies depending on the location and care needs of each resident. The level of assistance available outside of home care agencies or private residences depends on the state and the type of facility.

Government Assistance Programs for Adult Foster Care

Financial assistance payments for long-term adult foster care often involve applying both care and support costs separately from room and board or living space arrangements. Each type of funding requires specific eligibility criteria to qualify for various types of funding. Medicare is often one of the first options for adult foster care. 

Medicaid and State-Approved Assistance Options

Medicaid may offer some funding to pay for adult foster care, though the level of assistance varies from state to state. Most states provide adult foster care, whether through payments that cover a portion of the monthly expenses or access to other state assistance outside of Medicaid. The partial coverage, if approved, will not cover the rent or board costs of care but may cover other forms of support. 

When you apply for a state Medicaid program that covers a portion of adult foster care, there are several ways that a senior adult may receive assistance to cover their financial costs. One option for receiving funding is through a Medicaid Waiver, which offers approved participants assistance to support adult foster care. Many waivers are limited and often come with waiting lists and enrollment caps.

Some states offer Medicaid State Plans to support adult foster care. These plans differ from waivers, as they do not contain any enrolment caps, and there are no waiting lists. For some individuals, the criteria are more restrictive in terms of financial eligibility. Consumer Directed or CD Waivers are other options in some states, where a budgeted amount is provided instead of care services. Although these waivers do not specifically cover adult foster care, they offer financial support to cover only the cost of care, including rent or board.

States with Flexible Care Options

Some states offer a more flexible approach to finding adult foster care through Medicaid waivers, which an assisted living waiver may issue, can be used for adult foster care or assisted living. Some states do not explicitly recognize the difference between both types of care, which means the waiver could apply to both.

Reverse Mortgage as a Funding Option

A reverse mortgage is an option that may help fund adult foster care. This plan offers the release equity from your home, usually up to half, while allowing you (or someone from your household) to continue living in the home. By releasing the funds, individuals or families can keep up with other payments while funding adult foster care and related expenses.

Insurance Options for Adult Foster Care

Long-term care insurance is an excellent way to plan for adult foster care and assisted living expenses. It’s essential to include the various types of long-term care in the insurance policy, such as adult foster care. The costs are significantly more expensive and may not be affordable. It’s essential to thoroughly review the insurance policy, including clarifying what’s covered, before you seriously consider purchasing a plan.

Selling a Life Insurance Policy

A picture of a paper that has the word life insurance on it. Picture to add to the paragraph regarding selling life insurance to fund adult foster care.

When you sell a life insurance policy to a third party, you’ll receive a specific amount of funds to fund long-term care, assisted living, and the cost of adult foster care. This program provides funding until the participant becomes eligible for another form of assistance, such as Medicaid or other personal funds available to contribute to care. If the individual or policyholder passes before the funds are exhausted, the remaining amount will be distributed to the beneficiaries.

Loans for Adult Foster Care

Applying for a loan to pay for foster care is an option that can offer immediate assistance until another source of funding is an option. If a reverse mortgage is in progress, or the sale of property or a home, a loan can cover the costs in the interim. The amount borrowed may vary depending on the urgent costs needed or the first few months of adult foster care. Some short-term solutions may include funds from a line of credit or credit card.

Assistance from Veteran’s Programs

Support for adult foster care is not directly funded by the Department of Veterans’ Affairs, though there are some advantages to veterans who apply for benefit programs. The Aid and Attendance Benefit is one of the best options for adult foster care, while other options including Veterans Directed Care and supplemental programs.  

The Veterans Directed Care program offers a budget of care as an alternative to receiving care from a Veterans Affairs Medical Center. While there is no direct funding to adult foster care, additional options are worth considering for veterans who need long-term assistance.

Family Members Providing Adult Foster Care

The option of taking care of aging parents and providing adult foster care at home is standard for many families. For many years, families choosing their relatives at home did not qualify to receive financial assistance from Medicaid or other state programs. Recently, some states have relaxed the rules and have since permitted compensation to support adult foster care in families’ homes. One of the primary reasons for taking this step towards funding is the overall savings in long-term care costs.

When families take on a significant role in caring for aging parents or relatives, they reduce the overall costs and the number of admissions in Medicaid nursing homes. Private homes may provide housing for several individuals, requiring they meet specific criteria, which varies by state. In some states, caregivers require training, safety inspections, and licensing fees. When you provide compensation, a contract is necessary to ensure that the care follows all safety and care guidelines.

Summary

There are various options to consider when you plan how to pay for adult foster care. In all cases where long-term care solutions are necessary, it’s essential to establish and review agreements and contracts for adult foster care arrangements. A contract must include the level of care, including which services are covered explicitly in the monthly fees and which items or additional care is needed. The agreement defines the line between the facility’s level of care and staff and family.

Finding the right long-term care solution for relatives is a challenge initially, though there are plenty of resources and more funding programs today to make the process easier. With more long-term care options available and flexible funding provisions for various types of care, planning adult foster care will make the transition process much easier for families and their aging relatives.

You’ll find affordable, sustainable adult foster care with research and resources that may offer free services and guides to the best care for your relatives. The most common methods of paying for adult foster care are often combinations of state-approved programs or supplements and personally funded plans. Finding the right match for care and affordability works well with advanced planning and consideration for all financial options. 

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