Underestimating the Cost of Long-Term Care 

Q. My husband has Alzheimer’s, and needs more care than I can provide. It’s getting harder and harder to take care of him at home, but I’m not sure we can afford long-term care. I recently read something saying that nursing homes now average more than $100,000 a year across the U.S. If nursing homes cost THAT MUCH, then almost nobody can afford them without going completely broke.

I estimated years ago, when my husband was first diagnosed, that it would only cost about half that amount. If what I read is true, then in less than 2 years, that would deplete all the money we worked so hard for all these years, and saved for retirement. Please tell me that long-term care isn’t THAT expensive!

A. Unfortunately, what you read is correct. A new report by Lincoln Financial Group shows that for the first time, the cost of nursing home care throughout the country now averages over $100,000 per year, jumping 3.3% from last year. This is for a private room. Semi-private rooms average $90,000 a year! And, like many things, it is even more expensive here in the National Capital Region, where the cost of a nursing home averages between $120,000 to $150,000 a year!

Underestimating the Cost of Long-Term Care

According to a survey conducted by MoneyRates.com, nearly 57% of Americans believe a year in a nursing home would cost less than $75,000. Therefore, most people are in danger of saving less than is necessary to meet the need.

Nursing-home costs vary greatly from region to region, so not only is the average person underestimating the cost of a nursing-home stay, but in some areas they may be off by tens of thousands of dollars. For example, while the national average for a semi-private room is around $90,000 a year, in the New York City area the cost averages $141,620 (similar to costs here in the DMV)

These are some of the findings from the MoneyRates survey:

  • Survey responses about the estimated cost of assisted living were almost identical to those about the cost of a nursing home. This is inaccurate, because the average cost of assisted living in the DMV is $80,000/yr (compared to $120,000 – $144,000 a year for nursing home care) and quite a bit less in other parts of the country!
  • Two-thirds of Americans do not have enough set aside for one year in a nursing home.
  • 40% of survey respondents have set aside nothing for elder care, and a total of 67% have less than $75,000 set aside.
  • Long-term care insurance may or may not be the answer. 12% of respondents are counting on long-term care insurance to take care of their elder care expenses. Insurance can be a good way of meeting the rising costs of this kind of care, but be sure you check the details, such as how much your policy will provide annually, and what types of care are eligible.
  • Men and women are about equally naive about nursing-home costs. 56% percent of women and 58% of men incorrectly believe that a year in a nursing home costs less than $75,000.
  • Men are more likely to have money set aside for elder care. While men are slightly more likely than women to underestimate the cost of elder care, at least they are more likely to have saved for it.
  • 50% of women surveyed have set aside nothing for this eventuality, compared to 31% of men.
  • Most people age 55 and older recognize that a year of nursing care costs more than $75,000. Unfortunately, in each of three younger age groups surveyed, most believe the cost is less than $75,000.

Knowing what costs to expect and how you will pay for them can prevent financial stress from adding to these difficult emotions.

The significant costs of long-term care can impact retirement plans, savings, and assets, and the level of care one receives. That’s why it’s so important that people speak with a financial advisor and an experienced elder law attorney about their long-term care preferences and put a plan in place. We provide both of these services right here at the Farr Law Firm.

Medicaid Planning for Long-Term Care

Medicaid planning can be started while you are still able to make legal and financial decisions, or can be initiated by an adult child acting as agent under a properly-drafted Power of Attorney, even if you are already in a nursing home or receiving other long-term care. In general, the earlier someone plans for long-term care needs, the better.  But it is never too late to begin your planning.

To begin long-term care planning (and incapacity and estate planning) right away, please call us now to make an appointment for a no-cost initial consultation:

Fairfax Elder Law: 703-691-1888
Fredericksburg Elder Law: 540-479-1435
Rockville Elder Law: 301-519-8041
DC Elder Law: 202-587-2797

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