Helping a family member who needs eldercare services raises a whole set of unique issues and questions that none of us as caregivers (or potential caregivers) are eager to discuss. The topic of financial issues is a delicate subject for most aging adults, especially when it comes to telling their children how well, or not so well, they planned for a moment like this. As caregivers, it’s important that we are armed with as much information about long-term care costs as possible. The only way we can help our parents or loved ones make the right choices is to know what they can afford and how to access the most cost-effective resources available.
Currently in the U.S. the cost of care looks like this:
- The national average daily rate for a private room in a nursing home is $206, or $75,190 annually.
- The national average daily rate for a semi-private room in a nursing home is $183, or $66,795 annually.
- The national average hourly rate for home health aides is $19. For only 5 hours of care 7 days per week, the monthly average cost is $2660 per month or $31,920 annually.
- The national average hourly rate for homemakers/companions is $17. For only 5 hours of care 7 days per week, the monthly average cost is $2380 per month or $28,560 annually.
Basically, paying for care boils down to five options:
Privately paying for long-term care means that seniors would have to find an additional $28,560 to $75,190 per year in their budget for just ONE person to receive care. Most of us, seniors or not, could not afford to privately pay for our own care year after year.
Long-term care insurance will pay for in-home care, assisted living, and nursing home care. This is the most appropriate and needed form of insurance protection available to us today. Long-term care insurance should be termed “lifestyle” insurance (it’s NOT nursing home insurance). If your vision of your later years includes sitting at home in your own recliner, with your own remote control, watching your own TV, then you should be planning for that future with long-term care insurance.
Reverse mortgages (Home Equity Conversion Mortgages) have become one of the most popular and accepted ways of paying for many different expenses, including the cost of long-term care. Reverse mortgages are designed to keep seniors at home longer. A reverse mortgage can pay for in-home care, home repair, home modification, and any other need a senior may have.
The VA Home Aid and Attendance Pension Benefit is available for veterans or their surviving spouses for non-service-connected disabilities. The Veterans Administration (VA) has established a pension program whereby your purchase of personal care and attendant home services may be paid for through a veteran’s acquired pension. If your parent is a veteran or the surviving spouse of a veteran who has served at least 90 days or more on active duty with one day beginning or ending during a period of war, and they are in need of assistance at HOME due to their disabilities, they may be eligible for VA´s non-service connected disability pension.
Government assistance should be a last resort when considering how to pay for long-term care. This type of assistance refers to relying on the Medicaid system. Medicaid will pay for long-term care for seniors who cannot afford to pay for care themselves. Keep in mind that Medicaid is an under-funded and over-burdened system, therefore Medicaid resources are limited. This means that in many areas Medicaid beds in nursing homes are difficult to find. Families may end up driving long distances to visit their loved ones. Traditionally, Medicaid resources for in-home care are extremely limited, which means most seniors who apply for Medicaid end up in a nursing home type setting. The Deficit Reduction Act 2005 makes qualifying for Medicaid even more difficult for most families. Planning ahead is really the only viable option for families today.
It is important for all of us to understand and use the tools available to us to maintain autonomy, dignity, and independence in our later years. It’s just a matter of understanding the challenges we face upfront. Don’t let the financial impact of long-term care take you and your aging loved ones by surprise. Plan ahead if possible, but more importantly, access all of the financial resources available to you and the ones you love.