When families hear a diagnosis of Alzheimer’s disease, they know long-term care is inevitable. And while many families would prefer to provide that care themselves as family caregivers, they understand the needs of an Alzheimer’s disease patient are too great to be met at home. That means eventually, their loved one will have to move into a nursing home to receive the care they need. When that happens, how will the family pay for it?
The Costs of Alzheimer’s Care
Alzheimer’s care is costly. Assisted living costs averaged $3,600 per month in 2016, with Alzheimer’s patients paying approximately $1,150 more each month for specialized memory care. That adds up to $4,750 every month or $57,000 annually.
Most seniors with Alzheimer’s disease will graduate into nursing home care as their health care needs increase in later stages of the disease. As of 2016, nursing home care averaged $6,600 per month. However, those costs have already risen and continue to increase. McKnight’s reports that by 2050, a semi-private nursing home room is expected to skyrocket to more than $200,000 a year.
Paying for Alzheimer’s Care
Medicare pays for certain costs associated with Alzheimer’s disease. It covers the diagnostic process, medically-necessary counseling and therapies. A Medicare Advantage plan will cover prescription medication costs among other supplemental benefits. There are also Medicare Advantage plans known as Special Needs Plans that are designed to simplify care for people with chronic conditions like dementia.
While these Medicare benefits are valuable, they don’t pay for costs associated with custodial care provided in a nursing home or assisted living facility. That means families must find other ways to pay for this necessary care.
There are three primary options for covering the costs of institutional care:
Private pay: Private pay, or paying out of pocket, may rely on funds from a variety of sources: income from Social Security and pensions, personal savings, withdrawals from retirement and investment accounts, and Health Savings Accounts are common sources. Other options include selling
Long-term care insurance: Long-term care insurance reimburses policyholders for costs associated with custodial care. Different plans offer different coverage types and amounts. However, insurers can deny applicants with pre-existing conditions, which means patients with Alzheimer’s disease are unlikely to qualify.
Medicaid: Medicaid provides healthcare coverage, including long-term care coverage, to low-income individuals. Medicaid has strict income and asset limits, although specific eligibility requirements vary by state. Many Alzheimer’s disease patients rely on Medicaid to pay for nursing home care.
Long-term care isn’t the only financial need to plan for after an Alzheimer’s disease diagnosis. Families must also consider how they’ll pay for end-of-life expenses such as funeral costs. If all of a senior’s assets are spent paying for long-term care, the family will be left with the burden of paying $10,000 or more for final expenses in the midst of their grief. Even a senior with modest assets can plan ahead for end-of-life costs with final expense insurance, which provides a death benefit in exchange for monthly premiums.
Families want a loved one with Alzheimer’s disease to receive the best care possible. However, there’s only one way to make that happen: by planning ahead for the costs associated with Alzheimer’s care. If you’re not sure of the best way to pay for your loved one’s Alzheimer’s care, talk to a financial advisor to determine which option is right for your family.
Ms. Bridges is the creator of AgingWellness.org, a website that aims to provide health and wellness resources for aging seniors. She’s a breast cancer survivor. She challenges herself to live life to the fullest and inspire others to do so as well.
This is a great overview of the costs. I would highlight that not all assisted living or nursing homes will accept Medicaid. To be less disruptive in a move better to find that out sooner than later. Also in some states you can set up a fund that can be used for your loved one for clothes, beauty salon services, special one to one help like reading or chatting. Once the loved one passes this money goes to the state if they are on Medicaid.Also you can prepay a funeral with the patient’s money.
I really liked how you pointed out that the best way to care for those you love with Alzheimer’s is to plan for the expenses. This is really helpful to me as my mom has begun to develop Alzheimer’s and it has been pretty hard. I want the best for my mom and I want to make sure that she receives care at the hands of a professional.
IT’s a very confusing road for sure. That was my biggest struggle and I know that I missed some great opportunities for help by not knowing about them. Thanks for your comments.