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Every year since 2004, private long term care insurer, Genworth has conducted a national survey to determine the average costs of care at home, and in facilities. The data is broken down by state, with the median price listed. The bottom line: the cost of care is rising significantly in all the four general areas Genworth studied. It is also rising in the areas it did not study. Inflation is affecting how much it costs elders and families to keep them at home or in any living situation. The Genworth study includes home care, adult day health, assisted living and nursing homes. There is a lot more to consider than what the Genworth study shows. Long-term care is not limited to the things this insurer pays for when you buy a product from them.
The median monthly costs in the U.S. for two of the services studies are outlined in the 2021 report from Genworth:
Homemaker services (help with cooking, cleaning, transportation, shopping, etc.) $4957
Home Health Aide (personal care: eating, bathing, dressing, walking, bathroom, etc.) $5148
In a book we wrote for financial planners, Hidden Truths About Retirement & Long Term Care (AgingInvestor.com, 2017), we detail how about 70% of us are going to need some kind of long term care in our lives. And we discuss how most of us live in The Great American Fantasy that it won’t happen to us, that we will be fine and die quietly in our sleep at age 100 in full control of our faculties. In the book, we urge financial advisors to help clients get out of fantasy and into the reality that dollars need to be set aside to pay for what Medicare does not cover; so called “custodial care” that is not medical in nature. That includes things like home care workers, home modification to accommodate disabilities, assisted living and other things many people eventually need. We discuss the advantages and disadvantages of all the choices.
Here are actual costs we learned about from clients in two real cases.
Four Years of Home Care
One of them, described in our book from 2017, was about a man who lived to be 95 and never wanted to be in a facility. His wife hired caregivers to keep him at home. Long term care insurance defrayed some of the cost but most came out of pocket. The bill for the 24/7 care he received over four years of increasing dependency: $2M. There was nothing unusual about his needs. He just got more frail and had more care issues over time. That’s typical of how some of us are going to age. At the end, he had four caregivers in shifts, a specially fitted van with special wheelchair, a home stair chair, a lift to get him into the bath, numerous other kinds of devices to help and huge increases in the cost of maintaining the home with all the help. That cost would be significantly higher in today’s dollars.
The Outrageous Cost Of A Difficult Elder’s Care
In another, current case we work with at AgingParents.com, there is an elder with unusual needs. The family has a very difficult mother with dementia. She is calm until certain personal care must be given. Her mental state is confusion. She hallucinates and thinks she is being attacked when the family member or paid caregiver attempts to clean or bathe her. She gets very combative, with kicking, biting and punching those next to her. She calms down after the personal care but it takes two people to keep her from hurting anyone. She is astonishingly strong for a woman in her 80s. Her physical assaults happen multiple times a day when she needs cleanup. The family will not put her into a care home. No home would accept her this way. Rather, they would medicate her into a stupor so she would be more manageable. The family won’t have that. Her lighter medication at home allows her to be engaged with those around her in a good way. All except at those time of the close personal care.
This family is paying $50,000 a month for home care workers from two different agencies to help them. They can’t do it alone. They can’t manage with just one caregiver at a time. It takes two at a time to do the job. The cost is draining their assets and there is no end in sight. As this keeps up, the family will be spending $600,000 in 2022 to care for their mother.
Assuredly, not every elder is as difficult as the combative and confused mother in this case. But some elders do become very hard to care for. If one has strong feelings about not over-medicating a loved one, the choices can get very expensive.
It can take a good strategy to manage the care of an elder at home. It is not as simple as just buying long-term care insurance when the elder still can qualify for it. It may take working with a competent financial planner who understands that the limited things this insurance pays for do not fully protect anyone from out-of-pocket costs. Many additional things may be needed to maintain an aging loved one at home, where most people want to be. Financial planners tend to promote having income to pay for “the lifestyle to which you are accustomed”. No one is accustomed to a lifestyle of needing 24/7 care at home. However that is a reality anyone needs to discuss with a competent financial advisor, as it can happen to any of us.
Overall, this is a wake-up call for anyone who has not thought through how to pay for long term care. If it is your own aging loved one, you can’t ever be sure that they won’t need assistance from a paid source in the future. If it is yourself, at or near retirement age, be wise about how you look at the need 70% of us may have as we get older. Long-term care can be simple for some. It can be a huge, heavy burden for others. The wise retiree will consider the risks of getting old, living long and the likely need for paid help at some time in their future.