How to Pay for Home Care After a Hospital Stay

The transition from hospital to home is a significant milestone—but for most families, it also arrives with an immediate and practical question: how do you pay for home care while you recover? 

Most assume a combination of Medicare and health insurance will cover it, only to discover that your “home care” needs include skilled nursing care and custodial care, but each is often funded through entirely different channels. 

This guide covers every major option for funding home care after a hospital stay, from government programs to personal finance options, including who qualifies, what it covers, and where it falls short. 

Overview

The table below summarizes the main options for paying for home care after a hospital stay. The sections that follow explain each one in detail.

Government-Backed Options to Pay for Home Care

Medicare

Medicare is often the first place people look for home care coverage, which covers some home health services, but only under specific conditions. 

To have home care covered by Medicare in 2026, you must meet four specific criteria:

1. The Homebound Requirement: A doctor must certify that leaving your house is “taxing and difficult” to do so, requiring an assistive device (like a walker or wheelchair) or the help of another person.
2. The Need for Home Health Services: You must require part-time or intermittent skilled nursing care or physical, speech, and occupational therapy.
3. The Plan of Care: Your care and recovery must follow a specific, written treatment plan that is established and regularly reviewed by a physician.
4. Medicare-Certified Agency: To trigger coverage, all home health services must be provided by an agency that is officially participating in the Medicare Program.

What’s Covered: 

• Intermittent skilled nursing visits at home
• Physical, occupational, and speech therapy
• Home health aide services, but only when paired with skilled nursing or therapy

What’s Not Covered:

• Around-the-clock or continuous nursing care
• Personal or custodial care when that’s the only need
• Private nursing care outside of a Medicare-certified agency model
• Meals delivery (such as Meals on Wheels)

Find more details on Medicare’s home health coverage at Medicare.gov. 

Medicaid

While Medicare is designed for short-term recovery, Medicaid is the primary safety net for long-term custodial care. Because Medicaid is a joint federal and state program, the specific rules changes depending on where you live, but the core principles remain the same. 

To qualify for Medicaid in 2026, you must meet strict income and asset limits:

1. Income Limits: In many states, a single applicant’s income cannot exceed $2,982 per month.
2. Assess Limits: In most states, you are limited to $2,000 in “countable” assets.
3. Exempt Assets: Your primary home (up to a certain equity limit), one vehicle, and personal belongings generally do not count toward this limit.

You also do not have to move into a nursing home to get Medicaid to pay for your care. Every state offers Home and Community-Based Services Waivers. These programs “waive” the requirement that you live in an institution, allowing Medicaid dollars to pay for care in your own home or an assisted living facility. 

What Medicaid covers via waivers:

• Professional caregivers assisting with ADLs
• Home modifications, including ramps or grab bars
• Adult day care
• Respite care for family caregivers

Find more details on Medicaid’s home health coverage at Medicaid.gov. 

Veterans’ Benefits

If your loved one is a veteran or the spouse of a veteran, several programs are available through the U.S. Department of Veterans Affairs (VA), and recent legislative changes in 2026 have made these benefits more accessible than ever. However, the application process takes time—often several months—so if you think your family may qualify, start your inquiry sooner rather than later.

To qualify for these VA benefits, your loved one must:

• Have served in the active military, naval, or air service
• Have received any discharge status other than dishonorable
• Meet service-length requirements (generally 24 continuous months for those who enlisted after 1980)
• Meet income and asset levels below the VA threshold
• Have a need that requires medical care or assistance with daily activities 
• Live in an area where that particular program is available

Programs available to veterans and their families:

• Home and Community-Based Services
• Aid & Attendance
• Veteran-Directed Care
• Homemaker and Home Health Aide Care
• Skilled Home Health Care
• Home-Based Primary Care
• Respite Care
• Survivors Pension

The benefit amounts will depend on which programs your loved one qualifies for and will be adjusted periodically. Find more details on the VA’s home health coverage at VA.gov. 

Personal Finance Options to Pay for Home Care

Long-Term Care Insurance

Long-term care insurance (LTCI) is one of the most underutilized funding sources in this situation because most families assume it is only for nursing home placement and don’t realize it can also cover home care. Most policies are designed specifically to cover the custodial care that Medicare doesn’t cover.

How it works:

If the patient has an LTCI policy, the hospital discharge is usually the “triggering event” that starts the claim process. A healthcare professional must certify that the patient cannot perform at least two of the six activities of daily living (ADLs) listed:

1. Bathing
2. Continence
3. Dressing
4. Eating
5. Toileting 
6. Transferring

Note: Cognitive impairment (like Alzheimer’s or dementia) also serves as a trigger, even if the patient is physically capable of completing their ADLs.

Most LTCI policies have a “waiting period” known as an elimination period (typically 30, 60, or 90 days). During this time, the patient must pay for care out of pocket before the insurance company begins reimbursements. 

Death Benefit from Life Insurance

If your loved one holds a life insurance policy, there may be a way to access part of the death benefit now to fund their care. 

There are two main mechanisms to access these funds:

1. Accelerated Death Benefit: This process allows the policyholder to access a portion of the death benefit while still living, typically in the event of a terminal or chronic illness diagnosis. The primary trade-off is that it reduces—sometimes significantly—what beneficiaries receive after your death.
2. Life Settlement: This process involves selling the life insurance policy to a third party in exchange for a one-time lump sum payout. The payout is generally greater than the policy’s cash surrender value but will be less than the total value of the death benefit.

For families facing high ongoing costs for care with no other clear funding source, it’s worth consulting a financial advisor or elder law attorney before pursuing either of these routes.

HSA and FSA Funds

According to the IRS (Publication 502), Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) can both be used to pay for qualified medical expenses, including in-home skilled nursing care or therapy, as well as custodial care if the patient has a physical or mental disability. 

How an HSA works:

In 2026, HSA contributions are limited to $4,400 for individuals and $8,750 for families. If you’re 55 or older, you can add an extra $1,000 “catch-up” contribution annually. These funds roll over year to year and can be used for IRS-defined qualified medical expenses. If a doctor has ordered home care—which is typically the case following a hospitalization—that documentation supports eligibility to use your HSA funds.

How an FSA works:

In 2026, the FSA maximum salary reduction is $3,400. These funds operate on a use-it-or-lost-it basis within the plan year, but the qualifying expense categories are similar to those of an HSA. A Dependent Care FSA is a separate account type that may still apply in some situations and will cover custodial care for qualifying dependents. 

Paying Out of Pocket

When insurance is exhausted or doesn’t apply, families must pay out of pocket, drawing funds from personal savings, income, retirement accounts, or social security benefits. 

The benefit here is that paying out of pocket provides the most flexible option, but it is also the most expensive. However, according to the IRS, if your total medical expenses (including home care) exceed 7.5% of your Adjusted Gross Income, you can deduct the excess from your taxes. 

For families paying with personal funds, the structure of care matters as much as the hourly rate. The right structure depends on your loved one’s needs and how much your family is able to contribute to their care on a daily basis.

Home care structures to consider:

1. 24/7 skilled nursing: This care structure is appropriate for someone who is medically complex and requires continuous clinical monitoring by a licensed nurse. It ensures that professional medical intervention is immediately available when needed. 
2. Split skilled nursing and custodial care: This hybrid structure is ideal for someone who remains somewhat independent but still requires specific medical treatments alongside some assistance with daily tasks. A licensed nurse manages the clinical requirements, while a professional caregiver provides custodial care like bathing, dressing, and meal preparation.
3. Family caregiving with nurse check-ins: This structure supports families who are available to provide the bulk of day-to-day care but want intermittent check-ins from a nurse to assess progress, adjust the care plan, manage medications, and educate when needed.

When comparing providers, ask specifically what’s included in the hourly rate, what the minimum visit length is, and whether the care plan can be adjusted over time as needs change. 

Helping Families Navigate This Process

Figuring out which funding options apply to your situation and how to structure home care around them is usually not a straightforward process. Most families don’t have a clear map of what coverage is available to them or even how to use it. 

Navi Nurses works with families across the Phoenix metropolitan area to co-create care plans that are both clinically sound and realistic for their circumstances and finances. If you’d like to talk through what home care could look like for your family, you can contact us here or call us at (480) 351-5323.