Adult Foster Care for the Elderly & Financial Assistance Options

Definition

Defining adult foster care is challenging largely due to the many different names by which it is referred and the lack of a national standard. For the purposes of this article, adult foster care refers to care provided to persons of adult age in a home-like environment. Breaking that down further; care is typically non-medical in nature, involves assistance with the activities of daily living and ongoing supervision. A home-like environment means a house with shared living and dining areas in which assistance is provided to a very few number of individuals. The actual number varies by US state, but the majority of states limit homes to no more than five seniors.

Adult foster care can be synonymous with adult family care or adult family care can refer to a foster care situation where the caregiver is related to the care recipient. There is no hard and fast rule.

A distinction should be made between adult foster care vs. assisted living. Assisted living homes serve more residents than adult foster care. Commonly, four persons is considered the dividing line between the two, but again this varies by state. Another important distinction is in adult foster care homes, the care providers typically live in the residence, and this is not the case with assisted living. Assisted living is more common in areas with higher population densities, while foster care more so in rural areas. These are simply guidelines meant to orient the reader. There can be official definitions for adult foster care, but these vary in every state.

What's in a Name?  In addition to adult foster care, this type of care is also referred to as Adult Family Care, Adult Residential Care Homes (ARCH), Domiciliary Care, Elderly Foster Care and Small Group Assisted Living.   

 

Types and Levels of Care

The level of care available in adult foster care ranges from as much as a nursing home provides to as little as is provided in an independent living community. That said, in most homes the level of care is on par with that provided in assisted living residences and includes: assistance with the activities of daily living, such as bathing, eating, transferring and mobility, recreation, housekeeping, laundry, and transportation assistance. Either medication administration or medication reminders are offered. However, which one is highly regulated and varies by state.

When comparing care in adult foster care and assisted living, a point of differentiation is access to awake staff. In adult foster care, 24-hour access to assistance is available, but the staff does not necessarily have to be awake, just available. In assisted living, there will be 24-hour awake staff.

Most states require a care assessment and care planning for residents when entering adult foster care. Interestingly, many assisted living residences do not have this same requirement. Due to their larger staffs, assisted living residences could provide a greater range of assistance options than foster care, but in reality, the corporate structure of assisted living usually prevents this option. Most families find a greater flexibility of assistance in an adult foster care environment, especially as needs change for residents with progressive conditions, such as Alzheimer's.

Finally, at least half the states allow residents of adult foster care homes to receive outside assistance from home care agencies or private individuals. To clarify, this means assistance is provided by persons other than those who work at or manage the adult foster home. As discussed further along, this is important to some individuals who are on Medicaid.

 

Costs

As with all types of eldercare, the cost of adult foster care varies dramatically depending on one's geographic location within the United States. Adult foster care is approximately half the cost of nursing home care, and in most cases, it is also a less expensive option than assisted living. One should expect between $1,500 - $3,500 / month. Some of this large variance is related to geographic location and some is based on the resident's care needs. Generally speaking, adult foster care is less expensive in the South and Mid-West and more expensive in the Northeast and on the West Coast. When comparing adult foster care to the cost of assisted living, it is important to recognize that this figure includes both cost of care and the cost of room and board. With assisted living, often these components are priced separately.

Did You Know?  Having an elderly parent move into your home, increases annual household costs by approximately $15,000, according to a recent study. 

 

Financial Assistance & Payment Options for Adult Foster Care

Prior to a discussion of the financial assistance and payment options that are available for adult foster care, there are two points which should be made. First, recognize that very often financial assistance for care costs and room and board costs in adult foster care come from different sources and may have completely different eligibility requirements. Second, the section discusses not only the assistance options, but also programs which are commonly thought to provide assistance, but, in reality, do not.

Medicare 

As an insurance program, common to most elderly Americans, it is worth mentioning Medicare's policy on adult foster care. Unfortunately, Medicare provides no financial assistance for adult foster care, neither the care portion nor the room and board / rent portion. Medicare Supplemental Insurance policies and Medicare PACE programs also do not provide coverage for adult foster care. However, that is not to say that individuals who reside in adult foster care receive no assistance from Medicare. In-patient care, medical appointments and prescriptions continue to be covered as they would if the individual were residing at home, in assisted living or elsewhere.

Medicaid

Medicaid is a state specific program and Medicaid rules related to adult foster care change in each state. Thankfully, most states support adult foster care in some fashion. To be clear, no Medicaid program pays for the "room and board" or "rent" cost of adult foster care. Medicaid can only pay for the care portion of the monthly fee. However, some states offer other forms of non-Medicaid assistance for the rent portion to Medicaid eligible persons. Often there are Social Security supplements for adult foster care.

There are four ways an elderly person might receive financial assistance from their state Medicaid program for adult foster care.

1) Each state offers Medicaid Waivers, which allow participants to receive assistance outside of nursing homes. Many of these waivers expressly declare support for adult foster care (though very often they use alternate phrasing for adult foster care). Our analysis found approximately 22 states specifically state their support for adult foster care with their waivers. Unfortunately, most waivers have enrollment caps and waiting lists are fairly common.

2) Some states offer support for adult foster care through their Medicaid State Plans. State Plans are often referred to, more casually, as "Regular Medicaid". Unlike Waivers, Medicaid State Plans are entitlements meaning there are no enrollment caps or wait lists. Our organization's review found 9 states which offer support for adult foster care in their State Plans.

3) Some states have "Consumer Directed" (CD) Waivers. Under CD Waivers, the consumer (of services) is given the flexibility to direct their own care services. They are essentially provided with a care budget instead of care services. While these waivers might not expressly support adult foster care, depending on the level of flexibility provided, they might enable participants to allocate their care budget to receive care in adult foster homes. Again, this would only cover the cost of care, not room and board.

4) Lastly, some states offer assisted living as a benefit of their Medicaid Waivers. In some states, assisted living residences are defined as having a minimum number of residents, and in other states, there is no requirement. Essentially, in these states no distinction is being made between adult foster care and assisted living, and therefore, one might pay for adult foster care under an assisted living waiver.

 

State Based, Non-Medicaid Assistance Programs

Many states offer financial assistance for adult foster care from sources other than their Medicaid programs. Most commonly is a Social Security supplemental benefit for low income individuals. Sometimes this is offered as a complement to Medicaid funding. For example, Medicaid pays for the care in adult foster care and Social Security pays for the individual's rent or room and board fees. SSI Supplements vary in the amount of assistance they provide; assistance can be as low as $200 / month in some states or as high as $1200 / month in others. Read more.

Other states have programs funded from their general revenues, sometimes called nursing home diversion programs. Some of these programs are intended specifically for adult foster care and others are not, but have no legal language that precludes them from being used to pay for adult foster care.

Note it is recognized that some of the links in the table below to the Social Security government website are out of date. We will update this table when the federal government publishes more recent information. States without links are unconfirmed as offering assistance. 

Veterans' Programs

The Department of Veterans' Affairs does not offer an official adult foster care program. However, there are some benefits available to veterans that can be used to pay for adult foster / adult family care. VA Pensions, like the popular Aid & Attendance Benefit, is ideally suited for assisted living and therefore equally well suited for adult foster care. Veterans Directed Care programs are another option. Formally referred to as Veterans Directed Home and Community Based Services (VD-HCBS), eligible veterans can forego the care they'd receive from a VA Medical Center and instead are granted a care budget, which they can allocate as they determine to best suit their needs. It is within the accepted parameters of the Veterans Directed Care program to use that budget to pay for adult foster care.

It is worth noting that there are also two common insurance programs for veterans and their families which do not cover adult foster care costs. Similar to Medicare Supplemental Insurance programs, TRICARE (for Life) and CHAMPVA (for Life) offer no direct assistance for adult foster care.

 

Reverse Mortgages & Home Equity Options

Reverse mortgages require a homeowner to live in the home on which they are receiving the mortgage. Therefore, if one lives in adult foster care they would not be eligible for a reverse mortgage. In the case of a married couple where one spouse remains at home and the other enters adult foster care, a reverse mortgage could be used. However, this is an unlikely scenario and might not make good economic sense should the individual be considering adult foster care for a period of less than two years.

Another method of using one's home equity is an arrangement called an Equity Key Agreement. These do not require the homeowners to live in the home, but are expected to be in place for 7-10 years. It is very unlikely for any individual to be in adult foster care for that period of time. Therefore, Equity Key would only make economic sense as a funding resource for adult foster care in very limited scenarios. Read more.

 

Loans 

There are loans available which can be used for adult foster care. For the most part, these loans are designed as short term solutions until an alternative source of funding becomes available. For example, should an individual require adult foster care immediately and he or she will pay for it from the proceeds of a home sale, a loan can be taken until the home is sold. Another common scenario is when one has filed a claim for a VA Pension and they are waiting for assistance during the lengthy approval process. Read more.

 

Life Insurance Policies

Persons holding life insurance policies with face values in excess of $50,000 can "sell" their policy and receive cash immediately.  Most policies can be used to pay for adult foster care. Learn more about this option here.

 

Long Term Care Insurance

For those individuals who have long term care insurance, it can be directed to pay for adult foster care. However, should one require the level of care provided in adult foster care and have not already purchased the policy, they will be ineligible to do so, or the policy will be prohibitively expensive probably costing as much as the adult foster care would cost directly.

 

Adult Foster Care in the Homes of Family Members

Many families choose to care for aging parents (or other relatives) in their homes. Until recently, most forms of financial assistance for adult foster care prohibited family members for being compensated to care for relatives who have moved into their homes. However, over the past five years, several states have begun to recognize how families can be better served by allowing familial compensation and that costs can actually be reduced for the state through lowered Medicaid nursing home admissions.

To be clear, receiving compensation to have an aging family member live with you is not a matter of simply moving them in. Furthermore, the rules vary dramatically by state. In nearly every state, spouses are excluded from being paid. Some states require formal training for the caregivers and other states require 24/7 availability of a backup caregiver in the home (should the primary caregiver be unavailable). There can be legal obstacles as well. The host family may be required to formalize as an adult care home business and be subject to regulation, periodic safety inspections, licensing fees and to pay taxes on the compensation they receive. Since compensation is involved, all states will require a formal contract that specifies exactly what care services will be provided.

Compensation sources and levels also vary from state to state. Families should expect compensation from Medicaid or a combination of Medicaid and Social Security. Compensation can be for care services only or care services plus room and board and it can be based on a daily or monthly rate. Typically, there is a base rate and an add-on rate for individuals with higher care needs. Our research has found compensation rates ranging from a low of $750 / month to a high of $2,500 / month for family caregivers / hosts.

States Allowing Relatives as Foster Care Providers

Connecticut
Louisiana
Indiana
Massachusetts 
Ohio
Oregon
Rhode Island
Texas
Washington

Adult Foster Care Contracts / Agreements

When moving into an adult foster / family care home, most families feel better if there is written agreement that outlines the services which will be provided and the outcomes and responsibilities should certain situations arise. According to an AARP study, 39 states actually require these resident agreements. In addition to the agreement, most foster care homes prepare a plan of the resident's care needs or the state or family does that themselves in advance of move-in. This is both to document needs and also to clearly define those needs which are not provided for by the adult foster care home. As an example, who will be responsible for obtaining prescriptions refills?

A typical adult foster care contract addresses all or most of the following areas:

  • Services to be provided
  • Cost for services
  • Cost for additional services (beyond what is agreed)
  • Rate increase policy
  • Reasons for termination of agreement
  • Discharge / voluntary move policy
  • Resident rights and obligations
  • House policies (room access, visitor access)
  • Grievance procedure
  • Belonging storage policy (post-resident move)
  • Refund and deposit policy

 

 

Find Affordable Adult Foster Care

As most adult foster care homes are family homes with just a few residents, the owners have neither the time, expertise or the money to market themselves. Actually finding an adult foster home is much more challenging than one would think. To help families find homes which provide quality, affordable care, we have partnered to provide a free service that matches the elderly with homes in their preferred geographic area. Get started here.

Did You Know?  Many adult foster homes were created after caregivers have cared for their own parents in their homes.