There's so much to think about as we head toward our golden years. Are we saving enough of our hard-earned paychecks to enjoy a comfortable retirement? When is the right time to sign up for Social Security? Our to-do list is undoubtedly quite long. Adding the need for companion care can feel overwhelming, especially as we consider the financial impact.
In this article, we'll explore companion care costs and the factors that affect the total cost of care. We'll also discuss ways to pay for these expenses and potential tax deductions to tap into.
How Much Does Companion Care Cost?
Genworth Financial, Inc., reported that in-home care was on the rise, in part due to the Covid-19 pandemic. According to Genworth's 2020 Cost of Care Survey, the median hourly cost of homemaker services is $23.50, and the median hourly price of home health aide services is $24.00.1
Quick Tip: Our senior companion care services guide includes essential questions to ask as you search for a companion care provider.
Companion care costs vary substantially by location. The monthly median cost for in-home care in the Orlando, Florida, area is $3,813, for example, while the cost in the Los Angeles area is $5,529 per month. In addition to location, personal needs and the amount of care time per day are significant factors.
Companion Care Cost Comparison
As you research companion care, it's essential to understand all available options. No matter which care type you choose, independence isn't lost and much-needed support is gained. The chart below breaks down common care types (in and out of the home) and estimated costs.
|Care type||In-home care (homemaker services)||In-home care (home health aide)||Assisted living facility||Nursing home facility|
|Annual median cost2||$53,768||$54,912||$51,600||$93,075|
*Homemaker and home health aide in-home care cost based on 44 hours per week. Nursing home facility cost based on a semi-private room.
FYI: There are pros and cons to all types of care. Head over to our nursing home vs. home care comparison for an in-depth analysis.
Factors That Impact the Cost of Companion Care
We've covered the cost component, but other factors play a role in your companion care expenses. Your needs are unique, so let's look at the top four potential factors that impact the cost of companion care.
- Part time vs. full time: The amount of companion care hours per day affects your costs. The price for 24/7 live-in care is higher than employing a sitter for a few hours each day to help with activities of daily living.
- Specialized care: Companion care can be as straightforward as having company during the day and keeping your mind active through brain games and conversation. Specialized care, such as memory care for dementia or Alzheimer's disease, involves a distinct home-care skill set — at an increased cost.
- At home vs. facility: Both aging in place and moving to an assisted living facility create distinct companion care circumstances. In-home care costs slightly more than assisted living. If remaining at home is feasible from a safety and financial standpoint, at-home care may be the smoothest care transition.
- Homemaker vs. nurse: Pay rates for homemakers are lower than nurses, since homemakers do not require a license or certification. If your care needs go beyond basic companion care, a licensed nurse (such as a nurse for someone who is hard of hearing) is preferable.
From the Pros: Our senior living directory makes it easy to search for companion care in your area and compare costs.
How to Pay for Companion Care
Medicaid offers benefits not typically covered by Medicare, such as nursing home care and personal care services.3 Medicaid's Home- and Community-Based Services provide opportunities for Medicaid beneficiaries to receive services in their own home.
Medicaid is a joint federal- and state-run program for people with limited income and resources. Benefits vary by state, so contacting your state Medicaid office is a great starting point to explore companion care benefits.
The U.S. Department of Veterans Affairs supports eligible veterans and their caregivers through the VA Home and Community-Based Services. Coverage includes:4
- Homemaker and home health aides
- Adult day health care centers
- Home-based primary care
- Home hospice care
- Respite care for caregivers
- Skilled home care
Family caregivers may qualify for stipend payments through the Program of Comprehensive Assistance for Family Caregivers.
Long-Term Care Insurance
Home-based long-term care includes health, personal, and support services to help people stay at home and live as independently as possible.5 If you have a long-term-care insurance policy, it may cover paid home care. Contact your policy adjuster to confirm what is covered and how to obtain your long-term-care insurance funds.
Check out the video below with our editor-in-chief, Jeff Hoyt, for more details on long-term-care insurance.
Out of Pocket
Paying for companion care out of pocket is a common way to cover expenses. Sources include savings, retirement funds, home equity loans, and reverse mortgages. Before cashing in on any of these funds, sit down with a financial planner to ensure you're making the best long-term decision for yourself and your family.
Companion care falls under Medicare's home health services category. If it's the only care you need, Medicare doesn’t pay for 24-hour-a-day care at home; homemaker services such as shopping, cleaning, and laundry; or custodial or personal care such as bathing, dressing, and using the bathroom.6
Did You Know: About one in seven U.S. adults provides unpaid care of some kind to another adult.7 Explore our Help for Family Caregivers of Seniors Guide for practical ways to make caregiving for your loved one safer, more affordable, and less stressful.
Is Companion Care Tax Deductible?
According to the Internal Revenue Service, certain aspects of companion care can be claimed under medical expenses on your tax return. Claiming companion, nursing, and other medical care can be complex and confusing, so you may want to seek the advice of an accountant to make sure you're completing (and maximizing) your return properly.
Below are some key takeaways for claiming companion care medical expenses as detailed in the IRS Publication 502: Medical and Dental Expenses.
You can’t include the cost of household help, even if a doctor recommends such support. It's considered a personal expense, which isn’t deductible. You may, however, be able to include certain expenses paid to a person providing nursing-type services.
You can include wages and other amounts you pay for nursing services in medical expenses. The services don't have to be provided by a nurse as long as they're the kind a nurse would typically provide. These services can be provided in your home or another care facility. A few examples include services involved with caring for a patient's condition, such as administering medications and changing dressings, as well as bathing and grooming.
Some expenses for household services or for care of an individual to allow you to work may also qualify for the child and dependent care credit.
Long-Term Care Including Maintenance and Personal Care Services
The cost of qualified long-term-care services and certain amounts of premiums paid for qualified long-term-care insurance can be included in medical expenses.
Did You Know: Older adults may be eligible for free tax-return preparation through the IRS's Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.