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The Prohibitive Costs of Long-Term Care

The Prohibitive Costs of Long-Term Care - The Increases Continue in 2024

by Don Drake, Connelly Law Offices, Ltd.


Medicaid Planning Rhode Island
Attorney RJ Connelly III

As people age, they often require assistance with everyday tasks typically provided in residential care facilities like nursing homes or assisted living facilities. Similarly, younger individuals with disabilities may also require similar help. However, the cost of such services can be prohibitive for many families. There are several options available to manage expenses. Private organizations or government agencies offer financial assistance programs that can alleviate some of the financial burden. Seeking the help of a professional fiduciary or elder law attorney to begin Medicaid planning is also a crucial step. RJ Connelly III, a professional fiduciary and certified elder law attorney, stresses the importance of knowing these options for those facing financial constraints.


Seniors Are Not Prepared

"Planning for these costs is a necessary task to undertake as we age, but most of us are woefully unprepared for this reality," said Attorney Connelly. "Here are some facts as cited by the Kaiser Family Foundation."


Have Not Discussed it

According to a recent survey, less than half of adults have had an important talk with their loved ones about who will take care of them if they need assistance with daily activities in the future. Additionally, only 39% of adults have discussed with their loved ones how the cost of such care would be managed. The survey also reports that 43% of adults lack confidence that they will have the financial resources to pay for the care they may require as they age.


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Few discuss long-term care expenses

Have Not Planned

A significant proportion of individuals aged between 50 and 64 on the brink of retirement have not made any financial arrangements to cover their future living assistance expenses. Specifically, only 28% of such individuals have set aside funds for this purpose. The percentage of individuals aged sixty-five and older who have made such financial arrangements is relatively higher (48%). However, it is concerning to note that even among this age group, half of the adults have not made any financial arrangements to cover their future living assistance expenses.


Cannot Afford Care

An overwhelming majority of adults (90%) believe it would be impossible or very difficult to afford the estimated cost of $100,000 for one year of nursing home care. Similarly, 83% of adults think paying the estimated $60,000 for one year of assistance from a paid nurse or aide would be challenging. These findings highlight the financial burden that long-term care can place on individuals and families.


Lack of Knowledge of Financing

Many people in the United States misunderstand how long-term care is financed. It is important to note that Medicaid is the primary source of coverage for these services, and Medicare coverage is limited. Despite this, a significant proportion of adults, including 23% of all adults and 45% of those ages sixty-five and older, mistakenly assume that Medicare would pay the bill for their own or a loved one's time in a nursing home if they had a long-term illness or disability.


Paying for Care

One crucial aspect to consider when exploring options for financing residential care is the availability of private pay, insurance, government assistance, and other financial aid programs. Each option has its eligibility criteria and benefits that individuals can assess based on their needs.


"Private pay refers to an individual or their family funding residential care out of pocket. While this option provides more flexibility in choosing a facility and accessing services without specific requirements, it is not feasible for everyone due to the prohibitive costs associated with residential care," stated Attorney Connelly.


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Long-term care coverage is limited

Another financing option is insurance coverage. Many insurance companies offer policies that cover some or most of the costs associated with residential care. However, these policies are quite expensive and require that the covered person meet extremely strict criteria. Individuals should carefully review their policy details and confirm whether they have coverage for such services.


"Government assistance programs like Medicaid provide coverage for low-income individuals who meet specific eligibility criteria," said Attorney Connelly. "Medicaid coverage varies by state but generally covers a portion or all of the expenses associated with residential care, depending on the income level and medical necessity, and for most, Medicaid planning and crisis Medicaid planning can preserve the assets of families in long-term care situations."


"Veterans benefits are yet another potential source of funding for residential care," continued Attorney Connelly. "The Department of Veterans Affairs provides various programs financially supporting eligible veterans requiring long-term care services. Lastly, charitable organizations can also offer financial aid through grants or scholarships designated for residential care expenses."


More on Nursing Home Costs

Several factors, including the location, duration of stay, and required care services can influence the cost of nursing home care. A private room in a nursing home is estimated to cost a median of $325 per day or $9,872 per month in 2024, according to Genworth. A semi-private room is cheaper, with a median cost of $284 per day or $8,641 monthly. This translates to an annual expenditure of $103,700 for a semi-private room and $118,457 for a private room. It's important to note that nursing home costs vary significantly depending on the location. In 2024, the monthly median costs for a semi-private room can range from $5,600 in Texas to $34,434 in Alaska.


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"In recent years, the cost of nursing home care has been consistently increasing, and this trend is expected to continue in the foreseeable future," said Attorney Connelly. "According to projections, the national monthly cost of a semi-private room in a nursing home is expected to rise by approximately 33% and exceed $10,000 by 2030. In southern New England, that cost has already been met."


Similarly, the anticipated annual expenses for private rooms have surpassed six figures. This trend is primarily due to rising healthcare costs, inflation, and the growing demand for nursing home care as the population ages. Consequently, planning for long-term care expenses and considering options such as Medicaid planning or long-term care insurance is becoming increasingly crucial to ease the financial burden.


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Costs of Assisted Living

"Assisted living continues to be a popular option for seniors who require assistance with daily activities but do not need the level of medical care provided in nursing homes," said Attorney Connelly. "However, the cost of assisted living is also on the rise, and it is important to be aware of the expenses involved. According to recent estimates, the median cost of assisted living facilities is around $162 per day, which can add up to $4,971 per month or $59,007 per year, depending on the state where you live. In southern New England, the costs are significantly higher."


It is important to note that these estimates do not include additional expenses for specialized care, such as memory care or accommodation for individuals with disabilities. Furthermore, the cost of assisted living can vary depending on the type of services and amenities the community provides.


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"Despite the increased costs, assisted living remains a more affordable option than semi-private or private rooms in nursing homes," Attorney Connelly said. "Therefore, it is advisable to carefully consider your budget and options when choosing the right senior living arrangement for yourself or your loved ones."


A Final Word

"Long-term care expenses are continuously increasing, and most families are not equipped to handle the financial burden that comes with it," stated Attorney Connelly. "Failure to prepare for this type of care can profoundly affect a family's emotional and financial stability in the future. Unfortunately, the current discourse surrounding this crisis is not effectively communicated, exacerbating the problem. More education and awareness are crucial to help individuals understand the significance of planning for long-term care and the various options available to them to avoid financial ruin."


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Please note that the information provided in this blog is not intended to and should not be construed as legal, financial, or medical advice. The content, materials, and information presented in this blog are solely for general informational purposes and may not be the most up-to-date information available regarding legal, financial, or medical matters. This blog may also contain links to other third-party websites that are included for the convenience of the reader or user. Please note that Connelly Law Offices, Ltd. does not necessarily recommend or endorse the contents of such third-party sites. If you have any particular legal matters, financial concerns, or medical issues, we strongly advise you to consult your attorney, professional fiduciary advisor, or medical provider.

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