The “Silver Tsunami” and the Cost-of-Care Crisis

We all want to make sure that our loved-ones are well cared for in their old age.  If asked where they want to spend their final days, many seniors would say they want to remain in their own home until their death. This is commonly known as “aging in place.”

While spending your final years in the comfort of your own home might be appealing, it is not always feasible.  Conditions like Alzheimer’s and dementia can make it increasingly difficult to remain living at home.  Some homes are not well-equipped for older persons because they include features like lots of stairs or long driveways than need to be plowed.

 Like it or not, it is a common occurrence for older folks to need a higher level of care than what can be provided in their own homes.  More than just a few hours a week quickly becomes prohibitively expensive.  Few people can afford full-time in-home care.  Even with family help, it is a common experience for older folks to move into an assisted living facility.  These sorts of facilities offer assistance with activities of daily living, such as bathing, dressing, walking, toileting, and eating.  They also provide cleaning and laundry services.

If you have ever researched assisted living facilities for yourself or a loved-one, you might have been shocked by the expense. 

The average cost of long-term care in Idaho is approximately $6,500 to $6,800 per month, depending on if you select a private or semi-private room.  The expense only increases from there.  Cost of care is much higher (up to $12,000 to $13,000 per month) for residents with much higher care needs, for example, those who cannot transfer themselves from a bed to a wheelchair, and residents with severe memory loss who need full-time supervision.

Seniors primarily rely on their Medicare coverage to pay for their medical expenses.  However, while Medicare will pay for short-term stays in nursing homes (100 days or less), it will not pay for long-term stays.  As most seniors receive only Social Security as income, for most families, there is no possible way to pay for this sort of care.  As the baby boomer generation reach the age of 65, described metaphorically as the “silver tsunami,” an increasing number of families are finding themselves in crisis.

One solution that is not widely available is long-term care insurance.  This can be a valuable benefit when paying for care.  However, there are several drawbacks.  Premiums are expensive, and if the benefit is not used, that investment is gone.  Another issue is that you can typically only qualify for this type of insurance at a relatively young age.  By the time you are past 65, it is already too late in most cases.  Also, there are monthly and lifetime limits on most long-term care policies, so there is no guarantee that insurance would cover all expenses.

One option gaining popularity is taking out a life insurance policy with a long-term care rider.  These sorts of policies are easier to qualify for later in life.  Further, if you do not end up using the long-term care portion of the policy during your lifetime, it will be paid out to your beneficiaries.

In most cases, those facing the expense of long-term care are forced to ultimately apply for Medicaid, a joint state and federal program to help pay for medical expenses.  In Idaho, Medicaid limits how much income you can earn and how many assets you own.  In many cases, Medicaid applicants have to “spend down,” or reduce, the amount of assets they own before they can qualify.  Also, through the Estate Recovery program, the Medicaid agency places a lien on the assets of the Medicaid recipient after they die.  However, there are some planning mechanisms to prevent Estate Recovery.

With so many baby boomers turning 65, it will be interesting to see how the system holds up as this generation begins relying on Medicaid to pay for long-term care.  Coyle & Eyman Elder Law is one of the only firms in the Coeur d’Alene area that advises about long-term care planning and assists clients at all stages of the Medicaid application process.  Call us today to learn more!