It is primarily personal care for people whose health has declined to the point where they need someone to help them with one or more normal activities of daily living (dressing, bathing, preparing meals, eating, taking medication, toileting, transferring that's getting into or out of a bed or chair, etc.). Their need for assistance arises because of frailty (loss of strength and flexibility), or cognitive impairment resulting from Alzheimers disease or senility. Their nursing care plans may also include various types of therapy that can help older people adjust to or overcome many of the limitations that often come with aging.
Older Americans are living longer and healthier than ever before. But, as we grow older, our health will decline. Even as events begin to unfold, and the reality of the situation becomes apparent to others, most of us will still look the other way, hoping things will take care of themselves. Ignoring the inevitable will only leave you unprepared for a crisis whether it arises suddenly with no warning because of a heart attack or stroke or creeps up on you until you can no longer fully care for yourself.
Planning for these scenarios won't make them come true, and refusing to think about them won't make them go away. But, planning ahead now will make it easier for your loved ones when the crisis finally arrives. And, it will for most of us. In spite of our wish to die quietly in our sleep before we become frail more than half of us will eventually need help with our normal activities of daily living.
It can be provided in many different settings: at home, in adult day care facilities, and in residential care facilities such as nursing homes and assisted living housing facilities that are often part of continuing care retirement communities. However, where it will actually be provided depends on a number of factors, including your financial situation. Aside the matter of finances that we'll discuss later, most frail elderly people have the following options:
People with moderate to advanced Alzheimers disease or dementia have fewer choices special Alzheimers/dementia units in assisted living facilities, other facilities that specialize in care for Alzheimers/dementia patients, or nursing homes.
The cost of long-term care varies widely depending on your nursing care plans, how extensive that care must be, and the setting where it is provided (at home or in a residential facility). Costs also vary widely depending on where you live (your state and whether you live in a rural community or a large city). On average, however, assisted living is less expensive than a comparable amount of care at home or in nursing homes.
In 2007, the average cost of assisted living ranged from $1,760 to $4,720 a month for a one-bedroom unit; the average cost of nursing home care ranged from $3,300 to $9,130 a month for a semi-private room.
For in-home care, the average cost across the country in 2007 for a Home Health Aide was $25/hour, and a homemaker/companion was $17/hour; most agencies require a 4-hour minimum stay per visit. Care in an Adult Day Health Care Center averaged $61/day nationally in 2007.
Unfortunately, Medicare pays nothing for long-term care, regardless of where it is provided. Instead, virtually all long-term care expenses must be paid out-of-pocket by residents and/or their families, unless they rely on Medicaid.
Medicaid reduces your options to just one living in poverty in a Medicaid nursing home with at least one roommate (no privacy); Medicaid rarely pays for care in your home, in a community setting, or in an assisted living facility. If local nursing homes are full, you have to go wherever a bed is available, even if it is hours away from your family and friends. While no one really knows how this affects people with advanced Alzheimers or senility, it can be devastating for an elderly person who is very frail but still mentally alert. So, if you're thinking about spending down your assets to qualify for Medicaid, our advice is very simple don't do it.
The good news is so many new options are available the most popular being assisted living that traditional nursing homes are becoming a thing of the past if you plan ahead before it's too late.
Look over your finances with the goal of stretching your available funds to last as long as possible. That may mean you won't be able to afford to live in the most luxurious facility. But, assisted living is not as expensive as it seems at first. Instead, to an extent that varies from one person to another, it simply involves a shift of expenses from one living arrangement into another.
If your capabilities have declined to the point where you need to move into an assisted living facility, the move is almost always permanent. When your former home is sold, or its lease terminated, most of the expenses you had been paying for it can then be used to help pay your assisted living expenses. And, the money resulting from the sale of your home can be used, for example, to purchase a CD or annuity that pays monthly interest.
Also, since assisted living usually includes all meals, you will no longer have to buy groceries, thereby freeing up even more money. To help you evaluate your financial situation, we've included a retirement planning calculator worksheet, Finding the Funds for Assisted Living.
The worksheet assumes that no assets are being spent down; in other words, they will remain intact with only the interest/dividend income they produce being used to supplement your income. But, if you find that you'll be short of the funds you need for assisted living, some or all of your assets may have to be spent down. That is, the principal value of an asset will have to be converted into a stream of monthly income payments.
When converting assets into a stream of monthly income, several factors need to be kept in mind for your retirement planning calculator. Among them ...
Yes, in many cases... IF you use the benefits to help pay for your care in a nursing home. But, the assisted living benefit in most long term care insurance policies is a sham most people will never receive any insurance benefits when they are in an assisted living facility.
How is this possible? Most long term care insurance policies sold today are "tax-qualified" plans. To receive benefits under those policies, you must:
According to the Government Accounting Office (the federal government's financial watchdog), most assisted living facilities will not admit you if you have severe cognitive impairment. Thus, the assisted living benefit in your long term care insurance policy could be worthless.
Also, most assisted living residents can perform at least 5 and perhaps all 6 of the defined ADLs (eating, toileting, transferring once again, that's getting into or out of a bed or chair, etc. bathing, dressing, and continence). So, even though they need to live in an assisted living facility because, for example, they can no longer safely prepare their own meals or manage their prescription medications both of which are critical to their continued well-being they would not qualify for benefits under their tax-qualified long term care insurance policy.
Finally, it doesn't make any difference if the long term care insurance benefits are provided by the policy we described above, or by benefits paid out under a life insurance or annuity policy. If they provide tax-qualified benefits, they all have to conform with the same very restrictive federal law. And, if an insurance agent tells you otherwise, walk away he or she is either uninformed or not being honest with you.
Glossary Elder care has its own unique language. Here's a glossary of terms related to retirement, estate planning and elder care all in words you can understand.
If you want to have the option of assisted living in the future, you must prepare to pay for it out of your own pocket. That takes some advance planning like you're doing today and setting aside sufficient funds for savings and/or investment.