What is private pay?

Private pay means paying for care with your own money rather than through Medicare, Medicaid or insurance. The National Institute on Aging says many older adults pay for part or all long-term care this way, using savings, a pension or retirement fund, investment income or the sale of a home. Because Medicare doesn't pay for most long-term care, private pay is common in dementia care.

Private pay home care is help at home that the family pays for directly, such as companion care, personal care and homemaker services. Medicare.gov says Medicare doesn't cover custodial care like bathing, dressing or using the bathroom when that is the only care needed, so families usually pay for it themselves. The National Institute on Aging notes that family often provides care first, before paid help is needed.

With private pay, the family covers the cost of care from its own money; with Medicaid, the state program pays for eligible people with limited income and assets. The Alzheimer's Association advises private-pay families to ask a care community what happens if the person runs out of money, since some communities accept Medicaid and others do not. An elder law attorney can help plan ahead.

Private pay in a nursing home means the resident or family pays the bill directly. The National Institute on Aging says many people must pay for nursing home care themselves, because Medicare generally doesn't cover long stays, though it may pay for related costs such as doctor services. Medicaid may cover costs for people eligible by income and resources, and long-term care insurance may pay part.

Families pay the provider directly from their own resources. Besides savings and income, the National Institute on Aging lists private financing options: long-term care insurance, reverse mortgages for homeowners 62 and older, certain life insurance policies, annuities and trusts. Which fits depends on age, health and finances. NIA suggests talking to an expert before taking a reverse mortgage, because they can be complicated.