Demand for home and community-based services (HCBS) is expected to continue to increase over time as the 65+ population grows larger and older and has a greater need for long-term services and supports. More than 80 percent of adults have expressed a desire to remain in their homes and communities as they age and prefer a home setting over a nursing home or other institutional setting.
HCBS includes a wide range of services and supports provided at home (e.g. personal/home care, home health services, home modifications) and in the community (e.g. transportation, meal services, and adult day services).
The $12.7 billion investment in state Medicaid HCBS programs from the American Rescue Plan Act has the capacity to transform state HCBS systems in the coming years. This fact sheet serves as a primer on the current state of home and community-based long-term services and supports for older adults and highlights successful models for expanding these services.
HCBS Recipients and Providers
Most people who receive HCBS are older adults and people of all ages with disabilities. In 2018, for example, about 12.6 million American adults living in the community needed LTSS, and more than half (6.7 million) were over age 65.
Much of the work of HCBS is performed by more than one million direct care workers, including personal care aides and home health aides, more than half of whom are Black or Hispanic/Latino and 87 percent of whom are women. HCBS settings also serve more diverse populations than nursing homes and other institutional settings.
Family support underpins the entire LTSS system, and unpaid family caregivers furnish the majority of activities of daily living (ADL) supports to older adults and people with disabilities. As of 2020, more than 40 million adults served as family caregivers (which includes friends and neighbors) and many incur out-of-pocket costs.
People receive HCBS by paying for services and supports a) privately, b) through enrollment in public coverage, or c) through private long-term care insurance. And despite the common misperception, Medicare does not cover most LTSS costs, with only a subset of HCBS services (e.g., home health services) covered for a limited duration of time.
Medicaid is the primary source of public HCBS funding, with more than $50 billion going to HCBS for older adults and people with physical disabilities in recent years. Under federal Medicaid law, most HCBS are included as an optional benefit, while nursing home services are categorized as mandatory. The optional nature of these services gives states discretion and results in significant variation across states, as reviewed in detail in the fact sheet.
Other sources of HCBS funding are:
- Older Americans Act (OAA) programs, which provide critical services such as home-delivered and congregate meals, in-home assistance, and support for family caregivers.
- The U.S. Department of Veterans Affairs (VA), which spent $3 billion in 2020 on HCBS for more than 370,000 veterans.
- States’ general funds sometimes cover services for people whose incomes or assets are too high to qualify for Medicaid HCBS, but too low to be able to afford private services.
Some of the service delivery models and policy solutions that have helped expand HCBS access and improve services in recent years could be further expanded to accommodate older adults’ and people with disabilities’ overwhelming preference to age in their own homes and communities.
- Assisted Living: This type of housing generally offers personal care and supportive services 24 hours a day, some health care, and meals in congregate residential settings.
- Self-Directed Services: This allows recipients of Medicaid and state-funded HCBS the option of hiring and training their own workers, sometimes including family members, and deciding when and how they receive services.
- Programs of All-Inclusive Care for the Elderly (PACE): PACE enrollees, most of whom are dually eligible for Medicare and Medicaid, receive comprehensive health care and LTSS from a provider who receives a capped fee from the state and/or federal agency.
- Medicare Advantage (MA) Supplemental Benefits: Some enrollees may be able to access coverage for some HCBS through their MA plan.
- Telehealth Expansion: Telehealth has shown promise in helping monitor some HCBS participants and kept them connected to support and socialization opportunities during the pandemic. Remote services have clear limitations, though, and raise concerns about creating and/or deepening long-existing disparities given inequities in internet and technology access.
- Subsidized Rental Housing for Older People: The federal government funds service coordinators in federally subsidized housing projects to help residents age in place, primarily through the U.S. Department of Housing and Urban Development’s (HUD)’s Section 202 housing program.
Hado, Edem, and Brendan Flinn. LTSS Choices: Home and Community-Based Services for Older Adults. Washington, DC: AARP Public Policy Institute, November 2021. https://doi.org/10.26419/ppi.00153.001
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