Time to have 'the talk': How seniors can avoid financial ruin by planning long-term health care now
Have you had “the talk” with the older adults in your life?
No, not the one about the birds and the bees. The one about long-term health care plans.
If you haven’t gone there, you really need to or you'll risk financial ruin and a poor end-of-life experience for a loved one, experts warn.
In a decade, older adults are projected to outnumber children for the first time in U.S. history, according to the Census Bureau. There will be 77 million people ages 65 and older in 2034, compared with 76.5 million under 18, it said. By 2060, nearly 1 in 4 Americans will be 65 and older, the number of 85 and over will triple, and the country will add a half million centenarians.
With this expected surge, America will probably see greater demand for health care, in-home caregiving and assisted living facilities. But the cost of that care is staggering. The median price tag for assisted living is $54,000 a year, a private nursing home room costs $108,405, and basic home care aid for five days a week, eight hours a day runs $56,160, according to a Genworth Cost of Care Survey from 2021.
According to National Health Expenditure projections, home health care spending will increase 83% from 2018 to 2027, while spending for nursing homes and other continuing care retirement communities increase 58%.
“This could be the next public health crisis,” said Michelle Griffith, senior wealth advisor at Citi Personal Wealth Management.
What if I have health insurance?
Health insurance doesn’t usually cover long-term care.
Medicare and supplemental insurance, or Medigap, pay only for short-term acute care, typically for injuries, illnesses, urgent and emergency needs, and for recovery or rehabilitation after surgery.
They don't cover long-term care because it isn’t considered medical care. Instead, it’s categorized as “a range of services and support for your personal care needs” to assist with everyday living, according to Medicare.gov.
Only Medicaid will pay for nonmedical, long-term nursing home care, indefinitely as long as there’s a need. But Medicaid is only for people with limited finances, which leaves a huge swath of Americans to fend for themselves.
If you’re rich, paying out of pocket might be OK, but most Americans aren’t so lucky. Half the population is middle-income, according to Pew Research Center using 2021 data.
“The forgotten middle,” said Narda Ipakchi, vice president of policy at The SCAN Foundation, an independent public charity focused on care for older adults. “They’re particularly at risk. They don’t qualify for Medicaid and are paying out of pocket, which is prohibitively expensive.”
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What’s being done to help?
Right now, friends and family are picking up the slack. More than 50 million U.S. adults are unpaid caregivers to family, friends, and neighbors, The SCAN Foundation said. They’re the “invisible backbone” of U.S. health care, each spending roughly $7,000 a year on out-of-pocket costs related to caregiving, such as household and medical expenses, it said. AARP also estimated their unpaid work was worth $600 billion a year.
“If we don’t keep these millions of people who do free care for loved ones at home, there’s no way our health care system can cover their absence,” said Randy Wolfe, one of those unpaid caregivers who took care of his aging parents and who himself is a senior, soon to be 70 years old.
By day, he’s also president of Lambert’s Health Care, a Knoxville, Tennessee-based home medical equipment company that helps transform homes to allow older adults to stay in them as long as possible.
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Nearly 9 in 10 Americans ages 50 to 80 would like to “age in place,” or age in the comfort of their homes, according to an AARP-sponsored poll last year. Yet nearly half acknowledge they haven't taken any steps toward that goal.
If you want to age in place, it’s not outrageously expensive to modify your home to do so, experts say. It’s just that people don’t consider doing so until it’s too late.
“Many don’t have the opportunity to age in place because it comes upon them, and they’ve done no proper planning,” said Tom Ryan, president of industry group American Association for Homecare. “Then it’s crisis mode.”
While you’re still healthy and able to get around your house, consider adding modifications in stages to spread out the costs over several years, Wolfe suggests. Items to consider installing or shoring up include:
Safety bath benches and grab bars in showers and baths, which cost about $100 and help older people avoid breaking hips or ribs in a fall.
Old decks and railings that need repair to prevent wiggling. That way, older adults with bad knees won’t fall.
Stairlifts, which cost $2,900 to $3,500, can be installed for straight stairs, don’t require construction and can be added in a day.
Elevated toilets generally cost less than $500 to install in a couple of hours.
Lift chairs, which help a person sit and stand without assistance, cost about $700 for the most basic and $3,000 for the fanciest. They also allow people to take naps without walking to a bedroom or elevate their feet to reduce swelling.
What can I do to prepare financially?
When speaking to a qualified financial adviser, make sure long-term care is part of your plan. And don't forget to speak to a tax adviser because parts of your plan, including home modifications, may be deductible, experts say.
Financially, people have at least two options, according to Denis Poljak, managing director at Poljak Group Wealth Management at Steward Partners Global Advisory:
Because payouts are capped in dollars, ask for an inflation rider to protect that against rising prices over time, he said. Also, ask if the policy has a guaranteed renewal so it can’t get canceled if you have a health problem; a waiting period for when your payouts begin that you might have to cover out of pocket; and a nonforfeiture benefit so you can still get a portion of the benefit even if the contract is terminated or lapsed, he said.
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Can the government help?
President Joe Biden signed an executive order in April to boost compensation for care workers, support family caregivers, and expand affordable care options through 50 directives to federal agencies. But it may be a while until we can see results.
Meantime, some states are acting. On July 1, Washington state workers will pay up to $0.58 per $100 of earnings for a long-term-care fund, WA Cares Fund, for eligible residents to begin tapping in July 2026. Each person will be able to access care costing up to $36,500 (adjusted annually for inflation) over their lifetime, the state said.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
This article originally appeared on USA TODAY: Senior health care planning is key to avoid financial ruin
