People living with Alzheimer's and other forms of dementia are among the highest users of long-term care, with more than 75 percent of people with the disease admitted to nursing homes by the age of 80 (as compared to just four percent of the general population), according to a report from the Alzheimer's Association. While in-home care represents an increasingly popular option for independence-minded seniors, these costs can be equally if not more crippling for older adults and their families. We are taking a closer look at this troubling phenomenon, along with ways to reduce the financial burden while ensuring that seniors get the care they need.
A Look at the Figures
Alzheimer's and other dementias are expected to cost the U.S. a staggering $1.2 trillion by the year 2050, according to research published in the New England Journal of Medicine. It is the country's single most expensive disease, and approaching an even deeper state of crisis with the coming of retirement age of the baby boomer population.
Robert Egge, executive vice president of Government Affairs for the Alzheimer's Association, predicts that without a change in trajectory, these escalating costs will place “enormous strain on the health care system, families and the federal budget.”
Why are costs so much steeper for people with dementia? In short, because people in advanced stages of the disease require around-the-clock monitoring and supervision. In fact, monthly residential memory care costs can be as high as an average of $5,800 monthly in some states — significantly higher than the cost of conventional care. Factor in the higher price tag on in-home care, as well as a shortage of qualified care providers, and the problems grows even more alarming.
The critical nature of the situation is seen by the U.S. government's “National Plan to Address Alzheimer's Disease,” a commitment to finding a cure by the year 2025, which would save an estimated $220 billion in just five years of existence.
Managing Long-Term Costs in the Here and Now
While the thought of a country free of Alzheimer's and dementia just 10 years from now is an inspiring thought, it does little to cushion the blow for families currently struggling to meet the needs of their aging loved ones.
If an older adult's asset are less than $2,000, Medicaid may cover nursing home and in-home costs, adult day care, and some assisted living costs. However, those that don't qualify face an uncertain financial future.
Long-term care insurance (LTCI) is one option when it comes to paying for the care costs of people with dementia. In many cases, it covers assisted living and nursing home care, in-home care, and adult day services. Sold privately by insurance companies, LTCI is hardly a cure-all.
Not only are premiums often cost-prohibitive, but you also have to apply well in advance of needing it, which can make it a lesser priority — or financial impossibility — for people with more pressing monetary concerns. Furthermore, you must be in good health to qualify for LTCI, which rules out older adults with chronic conditions.
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Another potential drawback? It's possible to pay for long-term coverage for many years before cashing in on coverage. Others don't end up using their coverage at all, making it something of a waiting game.
Despite these cons, many older adults and their loved ones derive valuable piece of mind and financial support from incorporating long-term care insurance into their retirement plans.
One caveat: If you're thinking about long-term care insurance, the best time to do so is in your 50s and early 60s. Just be sure to read the fine print carefully: large premium hikes are often part of the deal.
Reverse mortgages also offer a way to pay for long-term care by giving homeowners tax-free access to their home's equity. Again, this is not a one-size-fits-all solution. You must be 62 to qualify for a reverse mortgage and funds must be repaid if and when you move out of the home. Additionally, your heirs will lose proceeds from the home's eventual sale.
On the plus side, these funds are available as a line of credit, monthly income, or lump sump, and don't affect income from Social Security.
Additionally, some federal and local programs, as well as national disease-specific organizations, offer support aimed at easing the financial burden of caregivers. Your local area agency on aging should be able to point you in the direction of information and resources for older adults and their caregivers, including everything from respite care to subsidized home modification services.
One last thing to remember? It's never too early to start planning and preparing for later in life. And while trying to keep up with the best ways to provide for aging loved ones — as well as for yourself — can be a daunting task, legal and financial help for seniors can play a critical role in promoting optimal outcomes.