Will You Go Broke Paying for Long-Term Care?

The costs of long-term care — whether at home, in assisted living, or in a nursing home — vary widely in the US. However,according to NPR, there isn’t one state where long-term care is affordable for middle-class families. In fact, if paid out of pocket, home care services on average would consume 84% of the income of a typical older middle-income family. For nursing home care, it would consume a whopping 246%.  And these percentages are based on the national averages which are significantly lower than the rates in the DC Metro area.

Whether suffering from the after-effects of a stroke or a debilitating disease such as Alzheimer’s or Parkinson’s, long-term care is catastrophically costly  — and the costs keep increasing. The latest 2014 report by Genworth Financial estimates that the national median daily cost of a private room in a nursing home is $87,600 per year, an increase of 2.62 percent over 2013. In the DC Metro area, the survey shows that the average cost of a nursing home in 2014 is $110,595 per year.

Nearly 730,000 Americans live in assisted-living facilities. The average resident of an Assisted Living Facility (ALF) stays only two years, entering at the age of 87. For these residents, who need less care than nursing home residents, the ALF average national cost is $42,000 a year. In the DC metro area, the average rate is almost double at $82,674 per year. Those able to remain in their homes will pay an average national wage of $20 an hour for a licensed home health aide.

What if you were one of the estimated 11 million U.S. adults who will need some type of long-term care in the future? Many don’t realize that neither routine employer-based medical insurance nor Medicare will pay for long-term care (also called “custodial care”). Some seniors purchase long-term care insurance but, according to NPR, “even that option is looking sketchy as more companies are exiting the business. In the past couple of years, insurance giants such as Prudential and MetLife have pulled back from offering long-term-care policies. Others, such as John Hancock and Genworth Financial, have turned to state regulators, seeking permission to dramatically hike premiums. Depending upon the location, the insurers’ requests for higher rates have been for amounts such as 18% or 40% or, in a few cases, 90%.”

With 70% of people over age 65 needing long term care services and support at some point in their lifetime, preparing for the cost of long-term care is a huge and very real concern for seniors. And, as you can see from the amounts cited in this article, for most Americans, money and hard-earned assets would run out quickly if they tried to pay for long-term care out-of-pocket. The Medicaid program is our country’s largest health and long-term care insurer, covering one in six Americans, including two-thirds of nursing home residents and one in five persons under 65 with chronic disabilities. Many seniors don’t consider Medicaid as an option, believing that they “aren’t poor” or “won’t get the same quality of care.” Please read our blog post entitled “Top Ten Medicaid Myths,” which dispels some of these inaccurate perceptions many have about Medicaid.  The truth is that persons who have done Medicaid Asset Protection generally get the best nursing home care.

Do you have a loved one who is in a nursing home or nearing the need for nursing home care? Are you looking to plan ahead for yourself in the event nursing home care is needed in the future? Life Care Planning and Medicaid Asset Protection is the process of protecting assets from having to be spent down in connection with entry into a nursing home, while also helping ensure that you or your loved one get the best possible care and maintain the highest possible quality of life, whether at home, in an assisted living facility, or in a nursing home.  Our firm is dedicated to helping seniors preserve dignity, quality of life, and financial security. If you have not done Long-Term Care Planning, Estate Planning, or Incapacity Planning (or had your Planning documents reviewed in the past several years), or if you have a loved one who is nearing the need for long-term care or already receiving long-term care, call us at our Virginia Elder Law Fairfax office at 703-691-1888 or at our Virginia Elder Law Fredericksburg office at 540-479-1435 to make an appointment for an introductory consultation.

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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.

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