Who Pays for Group Home Residents? An Overview of Funding Sources

According to the National Council on Aging, nearly 1 in 5 assisted living residents depends on Medicaid to help pay for daily care services, and this trend is similar for many group home residents. So, who pays for group home residents? The funding for group home residency and services comes from a complex mix of sources, including federal and state government programs like Medicaid and Social Security, private funds, and Veterans' benefits.

Quick Summary

Group home funding combines public and private sources, including Medicaid waivers, Social Security benefits like SSI/SSDI, and personal finances. Eligibility and specific program details vary significantly by state and resident needs.

Key Points

• Public programs are a primary source: Federal and state programs like Medicaid, Medicaid waivers, SSI, and SSDI provide critical funding for many group home residents, especially those with low income or disabilities.

• Private funding is also common: Private pay, utilizing personal savings, long-term care insurance, and family contributions, is a significant funding source, especially for private facilities or supplementary costs.

• Funding varies by population: The specific funding mechanism often depends on the resident's age, disability, and income level, with different programs for adults with disabilities, older adults, and children.

• Medicaid waivers cover services, not room and board: While Medicaid waivers are crucial for funding daily living services in group homes, they typically do not cover the cost of room and board, which must be covered by other means.

• Benefits are managed by the resident or a payee: For residents receiving SSI or SSDI, the group home may act as a representative payee, managing the funds for room, board, and services, while ensuring the resident retains a Personal Needs Allowance.

• Veterans' benefits can provide assistance: Qualified veterans with disabilities may be eligible for specific benefits that can be applied toward residential care costs.

A Mix of Funding Sources for Group Home Residents

Unlike traditional assisted living or nursing homes, funding for group homes is highly dependent on the resident's specific needs, age, and disability. Group homes serve a variety of populations, including people with developmental disabilities, older adults, and children in transitional housing. As a result, no single entity pays for all group home residents; instead, funding is a layered system of public and private contributions. A group home may serve as a representative payee for a resident's benefits, such as Supplemental Security Income (SSI), and use a portion of those funds for room and board.

Government-funded programs

Several government programs are critical funding sources for group homes, particularly for low-income individuals and those with disabilities.

• Medicaid and Medicaid Waivers: Medicaid is often a primary payer for services provided in group homes for people with disabilities. While standard Medicaid does not cover room and board, states can use Home and Community-Based Services (HCBS) waivers to help pay for supportive services. These waivers allow eligible individuals to receive services in a community setting, preventing or delaying institutionalization. Each state has its own specific waiver programs, eligibility requirements, and covered services.

• Supplemental Security Income (SSI): This federal program provides a monthly benefit to adults and children with limited income and resources who are disabled, blind, or aged 65 or older. A resident's SSI benefit can be used to pay for a portion of their room and board in a group home. In some cases, a state may provide an optional state supplement (OSS) to increase the federal benefit. The Social Security Administration provides information on how SSI can be used for living arrangements.

• Social Security Disability Insurance (SSDI): Funded by payroll taxes, SSDI pays benefits to workers with disabilities and certain family members. Like SSI, SSDI can be a source of income that is used to help cover the costs of a group home. Unlike SSI, SSDI eligibility is not based on financial need.

• State and Local Programs: States often provide additional funding beyond federal programs. For instance, some states have their own group home financing programs, special assistance programs for adults, or subsidized housing initiatives. These can help cover costs that federal benefits do not.

• Veterans' Benefits: Military veterans with qualifying disabilities may be eligible for Aid and Assistance benefits through the Department of Veterans Affairs, which can be used to help pay for residential care.

Private funding and financial arrangements

For those not reliant on public programs, private funds are a common way to cover group home costs. This is often necessary for higher-end facilities or specialized care not fully covered by government aid.

• Private Pay: This involves using personal savings, pensions, annuities, or investments to pay for the group home directly. Private pay rates vary significantly based on location, amenities, and level of care required.

• Long-Term Care Insurance: Some individuals have long-term care insurance policies that can cover a portion of the costs of non-medical assistance in a group home, though policies can be costly and have specific requirements.

• Family Contributions: It is common for family members to contribute financially to their loved one's group home expenses, either covering the full cost or supplementing public benefits.

• Personal Property and Trusts: Some families may access a person's assets through avenues like reverse mortgages or establish special needs trusts to fund care and housing.

Comparison of Major Funding Sources

Feature	Medicaid / Medicaid Waivers	SSI / SSDI	Private Pay	Veterans' Benefits	Family Contributions
Payer	Federal and state governments	Social Security Administration	Individual, family, or insurance	Department of Veterans Affairs	Family members or trusts
Eligibility	Low-income and/or disabled individuals	Low-income (SSI) or those with work history (SSDI)	No income or asset restrictions	Qualified veterans or survivors	N/A
Covers	Supportive services (waivers), but not room and board	Portion of room and board and personal needs allowance	Full cost of room, board, and services	Qualified residential care	Varies widely based on arrangement
Availability	Dependent on state waiver programs and waiting lists	Federal entitlement program	Widely available but dependent on personal finances	Requires veteran status and program qualifications	N/A
Flexibility	Varies by state; may not cover all care types	Limited, may be reduced for institutionalization	High flexibility in choice of home and services	Varies by program	High flexibility

Conclusion

There is no single answer to who pays for group home residents, as the financial model relies on a blend of public and private funding. Government programs like Medicaid and Social Security provide a critical safety net for many, especially those with limited financial resources. However, these programs often require supplementation from other sources, as they typically do not cover all costs. For those with more assets, private funds, long-term care insurance, or family assistance can cover the expenses of group home living. Understanding the resident's specific needs and financial situation is the first step in identifying the right combination of resources to fund their care.

For more information on payment methods for long-term care, individuals can explore resources from organizations like the National Council on Aging.

Frequently Asked Questions

Do group homes receive all of a resident's Social Security benefits?

No, group homes do not take all of a resident's benefits. While the group home may receive a resident's monthly SSI/SSDI income as a representative payee to cover room and board, the resident is entitled to keep a state-determined Personal Needs Allowance for personal expenses.

Does Medicaid cover all expenses for group home residents?

No, Medicaid typically does not cover the full cost of a group home. In most cases, Medicaid primarily covers supportive services for eligible individuals through waiver programs, but the resident or their family is responsible for the room and board portion of the cost.

What is a Medicaid waiver, and how does it relate to group home funding?

A Medicaid waiver is a program that allows states to use federal Medicaid funds for services in a community setting, such as a group home, rather than in an institution. These waivers fund supportive services for daily living, allowing individuals to live more independently.

Can veterans use their benefits to pay for a group home?

Yes, military veterans with disabilities who meet certain qualifications can use Aid and Attendance benefits through the Department of Veterans Affairs to help cover the costs of care in some group homes.

Is private pay an option for group homes?

Yes, private pay is a common option for group homes, especially for those not eligible for public assistance or those seeking more specialized or upscale facilities. This involves using personal funds, savings, investments, or other assets.

Do family members have to contribute to group home costs?

Family contributions are not mandatory for all group home residents, but they are a significant source of funding for many, either to cover costs entirely or to supplement other benefits. Family members might use personal savings, investments, or trusts to help with expenses.

Are there nonprofit organizations that help with group home costs?

Yes, some nonprofit organizations and charitable foundations may offer financial assistance or grants to help cover group home expenses, especially for specific populations like children or individuals with particular disabilities.

What are some financial resources for those paying for a group home privately?

Financial resources for private pay include personal savings, annuities, long-term care insurance, and potentially accessing home equity through a reverse mortgage. It's often recommended to work with a financial planner specializing in special needs planning.

Frequently Asked Questions

Do I have to use a Medicaid waiver to live in a group home?

No, a Medicaid waiver is not the only way to fund group home residency. It is a common source for covering supportive services for eligible individuals, but private pay, family contributions, or other government benefits like SSI can also be used to cover costs.

Does Medicare pay for a group home?

No, Medicare does not cover the long-term costs of a group home or assisted living. It is primarily a health insurance program that may cover specific, short-term medical needs, but not custodial care or room and board.

What is a Personal Needs Allowance in a group home?

A Personal Needs Allowance (PNA) is a portion of a resident's monthly income, such as SSI/SSDI, that is legally protected for their personal spending. The group home cannot take these funds for room and board.

How can I find out about my state's specific Medicaid waiver programs?

You can contact your state's Medicaid office or Area Agency on Aging to get information on eligibility and application procedures for Home and Community-Based Services (HCBS) waivers. Since programs vary by state, local guidance is essential.

Can I use long-term care insurance for a group home?

Yes, if you have an active long-term care insurance policy, it may cover some of the costs for services in a group home, though policies can be expensive and eligibility criteria can be strict.

What happens to funding if a resident's income changes?

Changes in a resident's income, such as starting a job while receiving SSI, can affect their monthly benefits. It is important to notify the Social Security Administration and the group home to ensure payments are adjusted correctly and that the resident can keep a portion of their earnings.

Who determines the cost for a private pay group home resident?

For private pay residents, the cost is determined by the group home operator based on the specific care and services provided, as well as the room accommodations. These rates are negotiable and not regulated by government programs.