The financial impact of Alzheimer’s disease in America is well known. Caring for more than 5 million Americans living today with Alzheimer’s costs a whopping $203 billion.
Age is the highest risk factor for Alzheimer’s. Nearly 50 percent of people in their 80s develop Alzheimer’s or some other form of dementia. Americans today develop Alzheimer’s at the rate of one every 68 seconds. In 2050, in what’s being called the Alzheimer’s Tsunami, the rate will be one every 33 seconds, and the cost of care will skyrocket to $1.2 trillion.
Currently, 15.4 million people are already caregiving for a loved one with dementia. One in three seniors dies with Alzheimer’s or another dementia. The cost of care for seniors with dementia is on average three times higher than for seniors without dementia.
These large and almost incomprehensible numbers do have consequences. Unless we find a cure or a way of preventing it, Alzheimer’s will take a heavy toll on our health-care and financial systems. But the impact will be most hardly felt on everyday American homes.
Are You Prepared for the Impact?
When we plan for retirement, we envision time spent with our families, traveling to places we’ve always wanted to visit, maybe spending more time doing our favorite hobby. We do not think of long-term care as part of retirement planning.
However, the numbers indicate that most families will be affected by dementia in one form or another. Should this be the case for your family, do you know what is the lowest and the highest levels of care that might be needed? Have you planned for financial resources that could pay for that range of care? Do you know how long you need to plan for?
Most families today are caught off-guard when it comes to the extra expenses associated with dementia care. Some of the costs to consider include personal care and safety items, home modifications, prescription drugs, adult day services, in-home care, custodial care, or assisted living and nursing home care. Costs for in-home care may add up to $16,000 per month, and according to the MetLife Mature Market Study, assisted living for dementia patients costs nationally an average of $4,762 per month.
Who Pays for the High Costs of Dementia Care?
Costs related to long-term care for dementia patients are mostly out-of-pocket. Public programs only pay for few, selected services.
Medicare, the federally administered insurance program, can pay for hospitalizations, doctor’s visits and prescription drugs. Medicaid (Medi-Cal in California) is a state-administered assistance program that can cover medical costs for qualifying, low-income patients. Neither program covers assisted living costs, which is a necessity for most dementia patients as they progress through the stages of the disease. Dementia patients may need assisted living care for two to six years on average.
Paying for care with personal resources could include income from employment, retirement plans, saving and assets, and reverse mortgages. Long-term care insurance can be a good way to ensure quality care and protect your assets; however, you will not be able to purchase if after a diagnosis of Alzheimer’s or other dementia. The time to purchase it is now — before a diagnosis.
Keeping in mind that not all insurance policies are written equal, when shopping for a long-term care policy make sure to ask if Alzheimer’s disease is covered, when the person with dementia can begin to collect benefits, how long will benefits be paid and what kinds of care will the policy cover.
Talk with your financial adviser about planning for possible long-term care needs now, before your family needs it, even as you hope you will never need it. Receiving an Alzheimer’s diagnosis is devastating news. But coming at the same time to the realization that your loved one with Alzheimer’s will not be able to afford the best quality of care is also demoralizing.
Do not wait for a diagnosis to start planning. As in anything related to Alzheimer’s and dementia, the best way to approach it is to plan ahead. Should your family be ever faced with the challenges of dementia care, foresight will make it a much easier journey for all involved. And the peace of mind brought by knowing your family is financially prepared will make those fun retirement activities even more enjoyable.
L — Lu ciana Cramer is a care specialist for the Alzheimer’s Association-California Central Chapter.