One of the greatest concerns of our clients and their families is that of long term care. Two-thirds of seniors will need long term care at some point in their lives, and many have not planned for this likelihood. It can be an emotional and unpleasant topic to broach, but helping our clients plan ahead empowers them. This issue of the ElderCounselor™ newsletter focuses on information necessary to assist clients in making decisions regarding long term care options.
According to the Centers for Disease Control, the average life expectancy at birth in the U.S. is projected to be approximately 79 years by 2015 and to continue to rise thereafter. And someone who has reached the age of 55 today has an even higher life expectancy: around 84 years. Since health declines as we age and we become more likely to need help with everyday activities, we need to consider with our clients what options will be available if and when they need assistance. Thinking about these matters now helps them mitigate the risk of making bad decisions during that stressful time when they are already at the point of needing assistance.
Clients have several different levels of care available to them as they age. The level of care that they choose at any given age will depend on an array of factors, the principal one of which will be the immediate depth of their need for assistance. Each level of care may include a medical component, a personal care component and a social component.
The first, and least invasive, level of care is adult day care. Inexpensive by comparison to other more comprehensive levels of care, it costs on average $18,200 per year. Services provided at this level typically include very basic medical care and interactive social services in a group environment. Clients with mild to moderate cognitive or functional impairments are usually suited to receive the greatest benefit from this level of care, but even those with significant mental impairment can enjoy the social aspects of these communities.
A step up from adult day care is home care, which is also a slight step up in cost as well: typically between $20,800 and $21,840 per year based on a $20-$21 per hour rate. Home care is simply the hiring of an individual or agency to be present in the home and assist the client with whatever needs she might have, from basic homemaking responsibilities to assistance with activities of daily living and medication management. Often the greatest draw for clients considering this option is that it allows them to "age in place." But while it may be ideal for a short term period or as long as the amount of assistance needed remains at a few hours per day, at $20-$21/hour it is often financially impossible for clients to stay at this level of care as their level of need increases.
When the need of clients who otherwise might prefer to remain in their homes increases sufficiently, it becomes financially prudent to evaluate the level of care provided in an assisted living facility. Costing, on a national average, $42,600 per year, an assisted living community does not typically strike clients as financially modest. But here there is great variety in both the level of services clients can choose, and therefore also the cost of the care. An assisted living community often provides services that include care management, assistance with every day activities, housekeeping, medication management, security, transportation, meals, and social activities. Clients can often choose from various levels of care within the assisted living community, and even sometimes choose their services al a carte. When clients have only modest needs, it can be quite economical.
Finally, nursing homes are available for clients who require the most assistance. The national average annual cost of nursing homes is $81,030 for a semi-private room or $90,520 for a private room. Nursing homes provide a secure environment and services to meet the physical, medical and social needs of their residents, which include sophisticated health care, medication management, personal care, and social and recreational activities. Many patients in nursing homes require assistance with multiple everyday activities (bathing, dressing, eating, toileting, transferring in and out of chairs or beds, and continence) or have severe cognitive limitations due to Alzheimer's disease or another form of dementia. While expensive, for clients with advanced needs, it is often the only option.
Aside from the overall cost, which will always and unavoidably be a significant part of a potential placement discussion, clients and their families should also keep in mind the following factors.
Clients and their family members must be clear on the level of care that the clients will need or would ideally like to have available. Often a doctor can provide a realistic picture of these needs for them. Once these requirements are known, clients should review a potential care provider's contract or policy on included services thoroughly with an attorney to discern what basic services will be covered by the provider's agreement and what services will be provided at an additional charge. It is imperative that the client or the client's advisor have a clear understanding of the contours of an agreement for services prior to its execution, specifically who is obligated to pay for the services provided and under what circumstances.
Another important consideration for clients contemplating the accoutrement of a care provider is that provider's policy regarding staff qualifications. For example, some providers have staff trained in serving patients with Alzheimer's disease and other forms of dementia while other providers may not. Some providers have higher rates of turnover than others, some have more staff per resident, and some have more rigorous policies on staff behavior. Clients need to know and understand the significance of a provider's staff training and education requirements.
In cases where clients want to be able to stay in a community for the long term and avoid any future moves or adjustments, an important factor in the analysis will be whether the care provider is a community capable of providing only limited levels of care, or it is community that can provide any level of care. For example, some assisted living communities are independent and unable to continue to care for a resident whose needs increase beyond the point of its assistance, but others are associated with or connected to a nursing home. This is important in the event a patient can no longer live in an assisted living community and must transfer to a facility that provides more services or a more comprehensive level of care.
Finally, a client's personal preferences are paramount in determining the proper placement for anyone requiring long term care. It is not uncommon for clients to know quite clearly what they want and for family members to fail to listen to what the clients are saying. While any decisions regarding care should be made with input from family members, at the end of the process the clients will live with the consequences, and thus their preferences should be given due deference. Details matter when evaluating personal preferences, such as the proximity to family and friends, religious affiliation, familiarity with the surroundings, and the personalities of other residents and staff. Even small, intangible benefits, perceptible only to the client, like the aesthetic value of the facility, have their place in the decision-making process.
Determining the appropriate level and type of care is one of many challenges facing clients and their loved ones. Other challenges include figuring out how to pay for care, knowing what rights the client has, understanding for what Medicare will and will not pay, and making sure that the right legal documents are in place to carry out the clients' wishes. We have helped numerous clients and families meet these challenges through sophisticated planning, and by using legal tools to ensure the plans' success.
If you would like more information or if we can be of assistance to you or a family you are working with, please contact us.
Statistics from: *The 2012 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs, November 2012. www. Metlife.com
To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.