Can Your Parents Afford Long-Term Care? Here’s What They Need to Know.

The Squeeze

• Long-term care ranges from at-home support provided by health aides or skilled nurses to nursing homes and assisted-living facilities, and costs vary widely.
• Ninety percent of Americans don’t have long-term care insurance — even though half of all people 65 and over will need such care at some point.
• Medicare pays only for a short stay in a long-term care facility, and most people who need long-term care need care for 2 years or more.

As your parents age and health problems arise, daily tasks and routine activities can become more challenging for them to do independently. It is likely that they will need some kind of support, whether that daily help comes from you and other family members or outside caregivers. If your parent experiences a health crisis and suddenly requires full-time care in a residential setting, it can be overwhelming to know what steps to take next. 

So the best time to come to understand the costs of long-term care is while your parents are as healthy as possible — and it's also an important time for you to think about your own future needs and make plans, as well. Here’s a closer look at some of the different approaches to this kind of care, key questions to ask and some answers to consider.

What is long-term care?

Long-term care means something different to every family. As the National Institute on Aging explains, long-term care encompasses a spectrum of services designed to support both an elderly individual’s health needs and his or her personal needs. The U.S. Department of Health & Human Services estimates that 70 percent of people who reach age 65 will need long-term care of some kind, even if it is just assistance with activities of daily living (ADLs) such as getting dressed, driving to appointments, or making meals at some point in our lives.

The location where this type of care is provided also varies. In some cases, your parent may continue to live independently, in their home or the home of a family member, with a care provider visiting to assist. This approach allows your parent to "age in place," as it's called, backed up by help with chores, personal care, transportation, shopping and more. Full-time in-home residential care is also available.

More comprehensive long-term care options include residence in a nursing home or or assisted-living facility. These two types of solutions differ primarily in that nursing homes are a medical-care environment, with skilled nurses and doctors on staff, where assisted-living residences provide non-medical support for as many ADLs as a resident requires, whether it's buying groceries or cooking the meals, monitoring (but not administering) daily medicine, and differing levels of personal care, from getting dressed to assistance in bathing and more. 

The critical point to remember is that there is an array of options available, and finding the right one for your parent’s needs and budget will take time, thoughtful consideration and research.

How much does long-term care cost?

There's no way around the fact that long-term care — no matter what kind — is expensive. And as medical costs have skyrocketed in the last 20 years, long-term care costs have exploded exponentially,  and unplanned medical costs are leaving 1 in 4 seniors approaching bankruptcy, according to the Journal of General Internal Medicine. This is not surprising when you consider that the cost of long-term care in a nursing home can range anywhere from $60,000 to $140,000 annually, according to the most recent national cost of care survey, conducted 2018. (Alaska is an outlier, with their estimated annual costs of nursing-home care topping an eye-popping $408,000.) 

Unsurprisingly, such steep costs can be too much for many families to bear. At the outset, many individuals pay such costs on their own, tapping into retirement funds or liquidating stocks, bonds, pension assets or even savings. Some even sell their homes to fund these costs. This is why long-term care insurance is so vitally necessary to plan for (see below).

As for the cost of long-term care provided at home, it can also be pricey, but naturally, it tends to be far cheaper than residential facilities. The national average for in-home care is $4,000 a month, according to the same cost of care survey cited above — but there is much broader range of services and hours at play in at-home care, so that number is not particularly useful in helping plan. 

Home care is booked in three time allotments: hourly, daily and overnight. Typically in-home care starts with a few hours a week, to assist with activities of daily living, which means you do not need to hire a skilled nurse, whose services cost significantly more than a caregiver. Most insurances do not cover non-medical in-home care, so be sure to check with your insurance company to see what costs are covered.

The good news is that Medicare and Medigap health insurance plans do cover some long-term care expenses, but again, you'll need to check on the specifics. The wide variety in what is and is not covered by regular health insurance, partnered with double-digit annual increases in healthcare costs, is the reason why long-term care insurance is now more important than ever. 

What is long-term care insurance?

Planning that your parents (and you!) will need long-term care — remember, 70 percent of the U.S. population will need long-term care of some kind — leads to making plans for long-term care insurance. And don't think you should wait until your parents are in their 70s to acquire it. In fact, Mutual of Omaha recommends that people in their late 40s and early 50s begin the process of securing long-term insurance — because you're more likely to qualify for coverage and can lock in your "insurability" before you are struggling with a chronic condition. 

There is a lot of variety in long-term care: how much you pay into it dictates how much is covered, naturally. A good policy will fund both home health care and residential benefits, but it is more expensive. Another figure to take into consideration is what span of time for long-term care the policy covers: the average American is in long-term care of some kind for 2 to 3 years, so possibly you insure for only that length of time. But if you don't have significant retirement savings that you can fall back on to pay for any long-term care beyond that period, your best bet is to pay for insurance that covers up to 5 years.

Also be sure you understand whether your policy covers custodial and intermediate care as well as skilled care.

A final piece of advice on this front: As with all types of insurance, the younger an individual is when purchasing a policy, the less it will cost. So when you talk to your parents about long-term care insurance, and start exploring with them, remember that you should be thinking about you as well.

What government support programs are available?

There are some government programs that provide financial support for health care for seniors. Here are some of the options to investigate and consider.

• Medicare & Medicaid When considering long-term care for your parent, one of your first calls should be to the Centers for Medicare & Medicaid Services (CMS), which runs several programs. Check with CMS to obtain information about the types of support available for your parent.
  Medicaid, in particular, covers some types of long-term care. Generally, this support is available to those with limited income and who meet other eligibility standards. Eligibility requirements vary by state. To find out more about Medicaid offerings and programs, visit their website.
• Program of All-Inclusive Care for the Elderly (PACE) Depending on where your parent lives, they may have access to PACE or the Program for All-Inclusive Elderly Care. According to the National Institute on Aging, this Medicare program offers care and services to people who “would otherwise need care in a nursing home,” according to the National Institute on Aging. This program covers medical, social service and long-term care costs for those who are frail. Also, worth noting: PACE may cover costs associated with long-term care needs for those with Alzheimer’s. Visit the PACE website to find out more about offerings, costs, and how to qualify.
• Department of Veterans Affairs (VA) If your parent is a veteran, he or she may qualify for support from the VA, which could include long-term or at-home care benefits. To find out if your parent qualifies, contact the VA directly. Also, bear in mind that there is likely a waiting list for VA nursing homes.

Additional support resources

In addition to the government options already noted, non-governmental organizations and resources are available to help you identify programs that may help defray the cost of care for a parent. 

In particular, the National Council on Aging (NCOA), a private group, offers Benefits Check Up, a cost-free service that can help you find programs on the federal and state level to help your parent. The site lists programs that will help your parents pay for everything from heating bills and housing to meal programs.

Determining whether your parents can afford long-term care is a complex question, one that can be highly personal and involves many variables, including identifying the appropriate level of care for your loved one’s needs and budget. 

No matter how complicated the situation, however, the best approach is to get moving on it — together.