There's No Place Like Home

The elderly qualify for a wide range of services that help them stay put.

By Jane Bennett Clark, Senior Associate Editor

From Kiplinger's Personal Finance magazine, November 2009

Charles McCarthy has a lot of good reasons to live out his life in his home in Phoenixville, Pa., but one of them stands out: He is the local tax collector. If he were to move outside the area, he would no longer be eligible for the job. "What would I do?" says McCarthy, who has held the post for 20 years and, at 87, is running for reelection. "It keeps me busy."

McCarthy has lived in his home for 35 years. Five years ago, he suffered complications from knee-replacement surgery that left him wheelchair-bound and unable to drive. Now he gets around with the help of paid companions, wheelchair-accessible public transportation, and assistive devices and renovations that let him navigate his home and keep him safe. Leave home and job for a retirement community? No way, says McCarthy, rocking gently in his brown-corduroy glider. "I'm settled."

Like McCarthy, the overwhelming majority of people 60 and older prefer to grow old in their homes and communities, according to an AARP survey. Although aging in place presents myriad challenges, an array of resources exist to make it possible.

Set up home care

However independent they hope to be, most adults who grow old at home eventually need help with housekeeping and transportation -- and sometimes with daily activities, such as dressing and bathing. The most likely helpers will be family and friends (usually spouses and daughters), according to the Family Caregiver Alliance. Informal caregivers provide unpaid services worth more than $257 billion per year.

For McCarthy, daily care from his family isn't an option: His wife, Helen, died years ago, and the nearest of his five children lives in Philadelphia -- a 45-minute commute at best. For three hours a day, five days a week, he receives help from employees of Home Instead Senior Care, a franchise company that provides mostly nonmedical services. McCarthy pays $23 an hour, or about $1,500 a month, for Ron Murphy and Sharon Crawford to prepare his evening meal, do laundry, vacuum and run errands.

That may sound pricey, but it's cheap compared with the cost of an assisted-living facility, for which the median price is $2,825 a month, according to a 2009 survey by Genworth. The median rate for homemaking services through agencies such as Home Instead runs about $17 an hour, reports Genworth. Care that includes personal services, such as help with bathing, costs a bit more, and personal care with some skilled nursing from a Medicare-certified agency approaches $50 an hour. Most long-term-care policies cover home care, including homemaking and personal services, but only a small portion of U.S. adults carry private insurance to pay for nonmedical services. Medicare picks up the tab for home health care and skilled nursing only under limited circumstances.

Hiring a caregiver can be less expensive than going through an agency, but it involves vetting candidates and doing a lot of paperwork. As an employer, you must pay Social Security, Medicare and unemployment taxes on the wages you pay the caregiver. You will also need liability insurance -- often included in homeowners policies -- in case the caregiver is injured. Some states require disability insurance as well. And you are responsible for having employees fill out an Employment Eligibility Verification form, which affirms that they are legally entitled to work in the U.S.

The most comfortable and equitable arrangement is often to pay a family member to provide care. But even when that's the case, the duties should be spelled out in a formal contract and payments should be in line with rates for the area. Drawing up such a contract can help shrink an elderly person's estate without jeopardizing future Medicaid eligibility for government-subsidized nursing-home care. In recent years, Congress has made it harder to qualify for Medicaid, requiring seniors who give money to relatives to wait at least five years before applying for government aid. Wages paid under caregiver contracts are not considered gifts, although payments that are deemed excessive could jeopardize a parent's eligibility.

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