The January Talk Every Family Should Have: The Possible $77,563 Annual Nursing Home bill

There is an article in Forbes which aptly raises the “The January Talk Every Family Should Have.” The articles leads off:

It doesn’t matter where you are in life, you need to look ahead. Getting old is no ice cream cone and you need to talk about it.

When it comes to long-term care, the subject will impact every family. That’s a guarantee. You will have to manage or care for older relatives — and yourself. With Americans living longer, it’s a given. . .

The reason why you need a January family pow-wow on this subject is that there is no long-term care safety net in the U.S. Social Security and Medicare don’t cover it and most of it is paid for out of pocket by families.

Long-term care is possibly the most critical threat to a family’s long-term financial well-being. Many plan for retirement and even heavily invest in life insurance; however, the possibility of the need for a nursing home or even assisted living is completely overlooked. Why is this converasation so hard?

Kathryn Lawler, who manages aging and health resources for the Atlanta Regional Commission in Georgia, says, “Even in my own family, as an aging professional talking with my own father, I find it remarkable how much anxiety I have about returning to this conversation that, yes, we had a couple years ago, but you have to keep having it: ‘Has anything changed in your plans, Dad? Do these documents need to get updated?’ I mean, who wants to keep doing this? It’s so hard.”

Let’s look at the numbers:

Long-term care expenses are running more than double the rate of inflation. A decent nursing home costs more than $100,000 a year.

Assisted living and home care are less expensive, but are not covered by Medicaid, which only kicks in if you’ve spent down most of your nest egg.

Long-term care is highly fragmented in this country, but there’s almost no public funding for it. Veterans can obtain some help and it really helps if you have a guaranteed pension.

Many expect Medicare to pay for long-term care, but it does not except in a very narrow set of circumstances and then only for up to 100 days.

The Genworth Cost of Care Survey for 2017 found the following median costs for long-term care in Alabama:

  • Homemaker Services: $106 per day
  • Adult Day Health Care: $26 per day
  • Assisted Living Facilty with Private Bedroom: $36,684 per year
  • Nursing Home, Semi-private room: $73,000 per year
  • Nursing Home, Private room: $77,563 per year

Can your family cover these costs for 2, 3, 5 years? The average stay in a nursing home is 835 days, according to the National Care Planning Council. A separate statistic provided by the National Investment Center (NIC) in their 2010 Investment Guide cited the average length of stay in assisted living as 29 months. A few years of long-term care can easily exhaust the entire value of a family’s life savings.

In another article entitled “Talking to your Parents about Ling Term Care

Of all the reasons people find it hard to plan for their later years, the hardest to overcome might be a degree of disbelief that life will change.

The parents of accountant Carolyn Kramer’s “were never going to go to a nursing home,” she says, because “nothing was ever going to happen to them.”

They worked hard, saved diligently and expected to live out their days in their home in South Wales, N.Y. They made it clear that if their children ever placed them in a nursing home, they’d take it as a betrayal.

But they never talked about alternatives, or a Plan B if living self-sufficiently at home was no longer possible.

“[Most people] have no clue that there are all of these different levels of care, and what’s provided at each level,” says Menzies, who helped Kramer’s family make a Plan B when the need became urgent. “They hear ‘nursing home’,” Menzies adds, as soon as there’s any need for help.

What is your family’s game plan? What contingency planning needs to be performed? What happens in the case of dementia, debilitating conditions or Alzheimer’s? What happens when the elder spouse can no longer physically maneuver their husband around the house safely?

There are options: personal service contracts, life estate deeds, etc.