Fifty-two and divorced, Mary struggled to care for her aging parents as their health deteriorated. Her mother, age 77, had fractured her hip and was in a wheelchair. Her father, age 82, had congestive heart failure and was showing signs of dementia. When it became clear they could not take care of themselves, they moved in with Mary and she did her best to balance her job and her new role as a caregiver. Eventually her parents needed more help than Mary could provide, but the cost of home care services was a rude awakening and rapidly depleted her parents’ savings.
Aging is expensive. Fidelity’s Retirement Health Care Cost Estimate states that the average couple can expect to spend about $280,000 on medical expenses during their retirement, and this does not count nursing home or long-term care expenses. Unfortunately there is no sign that healthcare expenses will slow anytime soon to match the pace of inflation.
And unfortunately, people often underestimate the costs of home care and long term care. A common misperception is that Medicare will pay for long-term nursing home care or live-in care. However, nursing home care is covered under Medicare only under certain conditions for a limited period of time. Most people who need nursing home care after their Medicare coverage expires use their assets to pay for care until their savings are exhausted and they qualify for Medicaid assistance.
Genworth estimates that in Florida, the median cost for home care services ranges from $3,600 to $3,800 a month, and adult day care is $1,408/month. Even though these costs can rapidly deplete one’s savings, nursing home care is even more expensive, at approximately $8,000 per month, or $96,000/year. While federal rules protect a certain amount of a spouse’s assets when one spouse is not institutionalized, there is a maximum amount of joint assets the other spouse can keep.
Private long-term care insurance is an option for some people, although premiums can be very expensive. There are many types of policies that can help pay for skilled nursing care as well as services such as adult day care, assisted living, and home health services. Long-term care insurance coverage options vary widely, and people shopping for this type of insurance should closely review the types of services and facilities the policy covers, as well as the long-term affordability of the policy if there are premium hikes.
Given these realities, what should families do? First and foremost, adult children and their aging parents need to have the honest (and often difficult) conversations about finances and become as informed as possible about the costs of home care and the rules for state and federal programs such as Medicare and Medicaid before a crisis happens.
If the aging individuals do not have long-term care insurance, what kind of care can they afford and for how long? Will the adult children be able to pitch in financially or allow the parent(s) to live with them if necessary? What roles and responsibilities will siblings take? Navigating the maze of long-term care options can be confusing, but planning far in advance, ideally with the help of professionals such as geriatric care managers and elder law attorneys, can prevent a great deal of hardship later on.
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