From in-home care to memory care to nursing, care is not cheap in this country.
This is part of an ongoing series about our family’s experience with dementia. There is no order to it, just observations, reflections and, I hope, some guidance for others on this journey or who may someday begin it. It is not intended as any sort of financial, medical or psychiatric advice. Just one family’s experience…
LET’S TALK MONEY.
I had planned on talking about our decision to move Connie into a memory care unit, and all the steps you go through, experiences you have, from decision-point to move-in. But, I am going to take a detour and it’s not going to be a pleasant one. It’s also going to be a long one so pour a cup of coffee or grab an adult beverage. Or two.
The United States is no country for old men and old women, to paraphrase Cormack McCarthy. Compared to other industrialized, modern nations we really do not seem to care much about the elderly and if we do, we certainly don’t back it up with policies that give them a fighting chance to age gracefully.
Here is a cold, hard fact. Unless you have amassed a decent amount of wealth, maybe augmented that with long-term care insurance, the day you enter a care facility you basically agree that your assets now will go to that care center and not to your loved ones.
Exaggeration? I wish that it were, but….
According to the National Council on Aging, 80 percent of older Americans would be unable to sustain the costs of long-term care. Worse, 20 percent of those have zero assets to draw on and would be thrown into the world of Medicaid where quality of care becomes less assured.
“It is unacceptable that nearly all older Americans are one crisis away from plunging into poverty after working their entire lives and often saving a nest egg that is then wiped out by the cost of care,” says Susan Silberman, a senior researcher with NCOA.
The New York Times, in a major 2023 series, “Dying Broke,” on aging in America, reported:
- 10,000 Baby Boomers per day will turn 65 until 2030.
- The price tag for elder care will explode to half-a-trillion dollars a year.
- Dementia, now at 8 million victims per year, will continue to grow adding to its already top reason for care of long or indeterminate length in the nation.
- The U.S. already devotes a smaller share of its GDP to long-term care than any other wealthy, industrialized nation.
- Any sort of medical help for the elderly, in spite of medical improvements leading to longer lives has not changed to any degree since Medicare and Medicaid were enacted in 1965. (When, by the way, I was 19 years old).
- One major political party is already on record as saying it will cut Medicaid, the only option available to older people without assets if it controls the White House and Congress. (Note: Medicaid also involves state contributions and in many states those have been cut).
- A memory or nursing care stay can easily cost a family in excess of $100,000; nine of 10 people surveyed for the Times report said it would be “impossible or very difficult” for them to pay that much.
- Efforts to create some kind of Federal safety net beyond Medicaid have not made it out of committee. That includes an effort by President Joe Biden to include $150 billion in the Build Back Better Act for in-home and community care (not nursing homes!) It was cut from the bill.
- Burden of care still falls disproportionately on women with one study showing the median lost wages for women providing intensive care for a loved one was $24,500 over two years.
- While Medicaid, mentioned above, becomes the last resort for patients, and sometimes care givers, with depleted assets, requirements are complex, vary from state to state, often require a lawyer to navigate and even if someone qualifies, there can be waiting lists for care.
I would like to provide a link to the series but it’s behind a pay wall. If you have an NYT subscription it ran in November-December 2023.
So, here we are. The odds are that if you have what you once thought was a healthy estate it won’t end up going to your kids, it will end up going to a care facility.
IF YOU WATCH much TV, or look at magazine and newspaper ads, you might come away thinking some kind of country club care exists for the elderly. You’ve seen those ads with happy seniors toasting each other with wine, playing bridge, taking walks through bowers of green.
For most of us, forget it. Here is the reality. I looked into one such place. First, we would have had to put up $250,000 as an entry fee. There are two reasons for that fee. One is that the institution invests it and earns interest on it, instead of you earning the interest. The second, and more benevolent reason, is that should you run out of money it becomes a draw down that will cover your costs. If you don’t use it all, what’s left goes into your estate.
But wait, that’s just the beginning. Our rent would have been in excess of $6,000 a month, or $72,000 a year. That may or may not have included a meal plan since this was for independent living so the units would have full kitchens. Now, keep in mind we are talking independent living. What if someone needs assisted living, or in our case memory care? The unaffected spouse would continue to pay $72,000 a year for their unit with memory or nursing care added on. Such care could add another $100,000. So, now you are up to $172,000 a year, conservatively speaking. Could you afford that for, say, 10 years? The Heiland’s answer was “no.”
So, what about memory care, alone? That is what we opted for in a nice facility in our community. Memory care is just north of $10,000 a month, or $120,000, with some fees on top of that. Meanwhile, I continue to reside in our old apartment complex where, with a downsizing to a one-bedroom unit, I pay $26,000 a year, plus some utilities. Who knows how long a dementia patient might live. Let’s say 10 years. If I remained healthy and in my apartment, my cost of shelter would be $260,000 and Connie’s care would be $1.2 million. Now, we do have Social Security and dividends from some investments, but would that cover $1.5 million? Yes, but…
See, there is always a but….this presumes that I would not need to go into any sort of nursing care for any extended period of time. And, it assume Connie would not need pure nursing care. This is where it gets tricky.
Nursing care can run, on average, $15-18,000 a month. And, if we were uncertain how long she might need it and wanted to retain her spot in memory care, for that period we would be spending $28,000 a month, not $10,000.
Starting to see why the NCOA says 80 percent of Americans cannot afford care, unless they are willing to write their kids out of the will and replace them with YeOldeLocalNursing Home?
NOW, A CONFESSION. We have a fighting chance to survive financially, but only because somewhere back around 2008 Connie talked me into a long-term health care policy. At the time we took a deep breath because the premium was around $2,000 a year. That seems paltry now because our most recent annual premium was $6,800. Each year, we debated whether to continue it. After all, statistics were showing that most people only spent a year or two in a nursing home, then died. That was before we understood the staggering impact dementia would have on the elderly population. We kept the policy, realizing at one point that if we cancelled, we would have made a sizeable donation to an insurance company.
That has been a lifesaver. But only a small percentage of Americans have long-term care, in part because they can’t afford it and in part because they don’t think they will need it. Add to the problem the fact that increased demands place on insurance companies by dementia have led to some companies exit the market and you end up with higher costs from less competition.
Our policy will cover up to $725,000 in total care costs with actual room and board reimbursements capped at 75 percent of total costs. It does not kick in for 90 days meaning we paid $30,000 before it kicked in. Going forward, we will pay $2,500 a month, manageable for us. At $90,000 per year of reimbursements, the policy would last between 7.5 and eight years. Then we would be on our own.
I cringe a bit sharing this much personal financial information, but I started this blog to help people and I can’t do that without transparency. At this point, I hope you are reading this with one eye on your own situation. I know for many of you this feels like a hard smack in the face, a cold-water bath. Well, that’s because it is. This is the reality.
If you are in your 50s, or younger, my advice would be to start saving like hell if you have not already done so. If you have done so, consider what you’ve done might not be enough. Look into a long-term care policy if you can afford it. On all things work with a certified financial planner/advisor. Consider your consumption. Do a gut check on “needs vs. wants.” Put away as much as you can.
This is not a column I wanted to write. I know it sounds harsh and even pessimistic. Well, that’s because it is. The sooner you take the blinders off and accept the reality of what is going on in this country with how we view the elderly and their ends of life, the better off you will be.
Start planning. Now. If you are so inclined a dose of prayer also would not hurt. Remember: The U.S., compared to much of the world, is not a country kind to its elderly. The proof is in the story the numbers tell.
Rich Heiland, has been a reporter, editor, publisher/general manager at daily papers in Texas, Pennsylvania, Illinois, Ohio and New Hampshire. He was part of a Pulitzer Prize-winning team at the Xenia Daily (OH) Daily Gazette, a National Newspaper Association Columnist of the Year. Since 1995 he has operated an international consulting, public speaking and training business specializing in customer service, general management, leadership and staff development with major corporations, organizations, and government. Semi-retired, he and his wife live in West Chester, PA. He can be reached at [email protected].