EDITOR’S NOTE: This content has been provided to Assisting Hands Home Care by Mass Mutual New Jersey-NYC as part of an ongoing series about paying for care and was originally published on their blog and has been updated by Assisting Hands Home Care for 2021. We thought it contained valuable information and obtained permission to share it as a resource.
By Richard Pacesa Jr., financial advisor, Mass Mutual
When the time comes to think about long-term care, one of the first concerns that probably comes to mind is the cost.
The first question any care provider is likely to get from someone calling for care options is “how much are your rates?” and not “tell me about your caregivers.”
After all, home health aides assisted living or residential care facilities and nursing homes can be a major expense.
The national median monthly cost of nursing home care costs about $7,441 for a semi-private room, and $8,365 for a private room, while homemaker services cost roughly $4,004 per month, according to the 2018 Genworth Cost of Care Survey. Download Mass Mutual’s 2020 Annual Median Care Costs chart to see costs in your state.
To help pay for the care they need, many rely on five main sources of support:
- Personal savings
- Government health programs
- Private insurance
- Reverse mortgage where possible
“It’s really about trying to piece it all together in the most cost-effective way possible and to balance that cost with the kind of care you want for yourself or your loved one,” said Amy Goyer, a family and caregiver expert for the AARP.
The Do-It-Yourself Route
In some cases, family members and friends may be able to help with some of the care you need — preparing meals, providing transportation, helping to keep track of medications, doing housework and other tasks – which can help keep costs to a minimum.
More than 53 million people are providing unpaid, non-professional care to another adult in their life. The prevalence of caregiving has risen to 19.2% in May of 2020, a marked increase from 16.6% in 2015.
This is an increase of over 8 million adults providing care to a family member or friend age 18 or older, primarily driven by a significant increase in the prevalence of caring for a family member or friend who is age 50 or older, according to AARP’s Caregiving in the U.S. 2020 Report.
An estimated 41.8 million adults are caregivers of others age 50+ in 2020, which is significantly higher than the 34.2 million in 2015.
Loved ones, however, may not be positioned (or even qualified) to provide full-time, or specialized care as your health begins to decline. Some, too, may simply decide they’ve had enough after a period of time. Burnout is common among sandwich generation caregivers who are juggling their own work and family responsibilities at the same time.
“The stress associated with caregiving is cumulative,” said Goyer, who has been the designated caregiver for her grandparents and both parents. “It becomes more stressful the longer you do it and the more intensive the caregiving becomes.”
Caregivers are stretching themselves thin, both in the volume of people they are caring for and the length of time they are providing care.
Caregivers are caring for two or more people also jumped. Now 24% of caregivers are caring for two or more people, which is a 6% increase from five years ago. These caregivers provide an average of 24 hours of care each week. Almost 30% of people surveyed in AARP’s 2020 study report providing care for more than 5 years, which is an increase of almost 5%, with the average timespan being 4.5 years.
Using Your Savings
When professional long-term care, whether it be home care from a professional caregiver, assisted living or skilled nursing facility, is a necessity, you may be able to pay out of pocket with your own resources — your savings, work income (if you have any) and guaranteed sources of income such as annuities and Social Security payments.
Any of these options can quickly eclipse the average retirees’ income if they require care for longer than expected or the level of care becomes more intense.
In many cases, those requiring specialized long-term care deplete the funds they were hoping to pass along to their children.
Help from Government Programs
Many assume that long-term care is covered by Medicare, the federal health insurance program for seniors and those with a qualifying disability, or Medicaid, the federal-state health plan for low-income Americans.
That’s not necessarily true. Medicare, for example, does not cover long-term care services and support for your personal care needs (also called custodial care) if that’s the only care you need. Generally, nursing home care is considered custodial care.
Medicaid, by contrast, does cover long term care services in specific settings under certain conditions and for limited periods of time, including rehabilitative care provided in a long-term care hospital, skilled nursing care in a skilled nursing facility, eligible home health services (such as physical therapy and speech-language pathology services) and hospice or respite care. Medical equipment such as wheelchairs or oxygen may also be covered in certain situations.
However, Medicaid only pays after you meet eligibility requirements, which include significant restrictions on income and assets. 1 Generally, you must spend down your assets before you become Medicaid eligible, said Goyer.
“Some states have waivers that pay for home health aides on an ongoing basis, but that’s not available in every state,” she said, noting some state Medicaid plans also cover skilled nursing services only in a skilled nursing facility, which can be a source of frustration for family caregivers who are struggling to keep their loved ones at home.
Long-term care is a type of private insurance that can be used to pay for care. It can be a separate policy or included within certain life insurance policies. A financial advisor or licensed insurance broker can provide details on specific plans and coverage.
A reverse mortgage is a type of mortgage loan that can tap into the equity you have built in your home when it is paid off or owe very little on it.
It is available for those aged 62 and above and can be used to supplement your income.
Think of it like an advance on your paycheck. You pay the loan back when you move or pass away. But you are still responsible for the property taxes and insurance.
A financial advisor or licensed mortgage professional can review your situation and provide specific details and options for you.
Insurance products issued by Massachusetts Mutual Life Insurance Company (MassMutual), C.M. Life Insurance Company, and MML Bay State Life. C.M. Life Insurance Co. and MML Bay State Life Insurance Co., Enfield, CT 06082, are non-admitted in New York and are subsidiaries of MassMutual, Springfield, MA 01111-0001.
© 2020 Massachusetts Mutual Life Insurance Company (MassMutual®), Springfield, MA 01111-0001. All rights reserved. www.MassMutual.com.
Goyer interview was conducted in April 2017 and quotes represent the express opinion of the speaker.
1 For more information regarding benefits provided by Medicare or Medicaid (Medi-CAL in California) visit www.cms.hhs.gov.Medicaid guidelines vary by state. Contact your local Medicaid office for details.