Every day 10,000 baby boomers turn 65, and many are expected to live well into their 80s. The aging of the U.S. population means increased demand for long-term care, and that puts pressure on costs. According to Genworth, a financial services company, the average annual cost for an assisted living facility is currently $43,200; nursing homes charge more than double that. Insurance policies can help defray expenses, but as with the cost of care itself, long-term care insurance rates are rising at a rapid clip.
Knowing the facts about long-term care can make the transition to an assisted living facility more affordable.
What Is Long-Term Care?
Long-term care encompasses a number of different services that help seniors manage daily life. They range from assistance with personal care, such as bathing, dressing, and eating, to help with everyday chores, such as shopping, cleaning
, managing money, and tending to pets. Long-term care may be provided at home by an aide or at an assisted living facility or nursing home.
Assisted living facilities, often the most affordable option, range in size from less than 10 beds to large facilities with private and shared apartments. The larger facilities may offer more optional services, such as game rooms, cafes, and libraries. They are licensed to distribute medication but not to provide medical care. Some may offer services for residents with dementia or specific medical conditions, but generally the family is responsible for arranging medical care. This poses a potential problem for families when a relative's condition worsens and requires a move elsewhere for proper treatment.
A 2014 study of the cost of end-of-life care by Genworth found that the median monthly rate for assisted living facilities was $3,500, or about $117 a day. Nursing home care, by contrast, ranged from $212 to $240 a day (a private room costs more). The data also revealed that location significantly affects prices. The annual cost for a single occupancy room at an assisted living facility hit a low of $30,000 in Georgia and Montana and a high of $82,674 in Washington, D.C. Moving to a different state in search of lower-cost care is a drastic response, but it can pay off.
Prepare an Action Plan.
It's important for siblings, in-laws, children, and other family members and friends to discuss long-term care needs with elderly relatives early on. Chris Orestis, CEO of Life Care Funding, suggests having a plan in place that divides responsibilities in a mutually agreeable manner. Who will look after the senior's finances? Will someone find the assisted living facility or is someone willing to bring the relative into their home? Who will speak to doctors? And so on.
Don't Ignore Warning Signs.
Loved ones should be on the lookout for signs that an elderly relative needs assistance. Difficulty with daily tasks such as eating and bathing should never be ignored. If a person starts having trouble driving or walking, that's likely a sign to start looking into long-term care options, if not an indication that it's time to act.
Find the Right Place in Advance.
Waiting until the last minute leads to rushed decisions. Moreover, the best facilities for the senior and the family may have a wait list. Identifying an assisted living facility or nursing home early on (before a crisis, that is) increases the likelihood of openings when the need arises. Decide whether an all-inclusive facility or one that provides the basics and charges extra for additional services is most appropriate. If family members can visit and care for their loved one on a regular basis, it may be cheaper to opt for the latter.
While researching long-term care facilities, you'll be quoted monthly rates. Don't accept them at face value; there's no harm in trying to negotiate
. Ask how the potential resident might qualify for a lower rate, receive a few extra services at no cost, or be eligible for move-in incentives. There's no guarantee you'll succeed, but the only way to "yes" is by asking.
Find a Roommate.
It's as true in old age as it was during college: Roommates can be a hassle, but they make things cheaper. The companionship is even a welcome bonus for some, and family members may be put at ease knowing there's always someone nearby in case of an emergency. Many facilities have home-sharing programs that help match roommates based on temperament, cleanliness, and shared interests.
How to Pay for Assisted Living.
When it comes to paying the tab, there are several paths. For seniors and/or their families who have the means, paying out of pocket or with insurance policy payouts ensures the most flexibility in terms of facility choice. Seniors who satisfy the criteria for financial and medical need can receive assistance through Medicaid but must stay in Medicaid-approved facilities. Veterans who are totally disabled and those who served in active combat and are 65 or older are eligible for subsidies for in-home caregivers, assisted living facilities, or a nursing home of their choosing.
Heed the Medicaid Rules.
To qualify for financial assistance through Medicaid, the senior must present with medical necessity and few financial resources. People who don't qualify because they hold too many assets may be tempted to spend them down to a level that would allow them to enroll. Proceed with caution. Executing this improperly can disqualify the senior completely from Medicaid; the government can open a five-year window onto past financial activity.
A Home Can Be an Asset.
After a homeowner moves into an assisted living facility, the home may be superfluous. Some families choose to sell the property and use the funds to pay for long-term care. Another alternative is to rent it out. There's more work involved, but if the rent can cover the cost of care, the asset can remain in the family for years to come.
Mind the Gap.
Susan Sterling, regional manager at Country Place Senior Living, which operates facilities in Texas and Alabama, notes that families often lack immediate access to their money and may need a bridge loan to cover the first few months of care. Even after a contract is signed, closing on the sale of a house can take up to 60 days; Veterans Administration benefits may take months to begin flowing. Long-term care insurance policies have elimination periods (when policyholders must wait before receiving benefits) that range from zero to 180 days. And note that benefits often are triggered by the policyholder's condition, such as inability to dress, bath, or eat without assistance.
Buy Insurance Early in Life.
Long-term care insurance
can help cover costs, but waiting until the last minute to buy a policy can mean exorbitantly high premiums or inability to qualify for coverage. The American Association for Long-Term Care Insurance recommends applying for long-term care insurance at age 50 to lock in discounts for being in good health and to qualify for lower rates (although they continue to rise with age). Pay attention to the policy's elimination period (the waiting time before benefits kick in). Although premiums decrease as the duration increases, opting for a shorter period may be wise if there aren't sufficient funds to cover several months of care.
Buy Couples' Insurance Policies.
Insurance companies may offer separate long-term care policies for men and women, and because women generally live longer, the premiums are higher. Gender-differentiating policies, as opposed to unisex policies, are being rolled out on a state-by-state basis. Check to see if unisex policies are still available in your state. If so, grab one -- gender-neutral policies often have lower premiums for women and couples.