Perhaps I am more inclined to see this as an immediate crisis because I happen to be living through it right now, but I'm certain I'm not alone. If you have parents in their 70’s or 80’s, it’s likely that you are facing something similar. Or, if you yourself happen to be in your 70’s or 80’s (or plan to be around for those years), you too will likely be dealing with these issues.
Michelle Cottle, writing for the New York Times, puts it as succinctly as possible:
Growing old is an increasingly expensive privilege often requiring supports and services that, whether provided at home or in a facility, can overwhelm all but the wealthiest seniors. With Americans living longer and aging baby boomers flooding the system, the financial strain is becoming unsustainable.
My parents are both in their mid 80’s. They both have their wits about them (for the most part) , but like many elderly people their strength and balance have been debilitated by multiple falls, stenosis, fractures and herniated discs.
Nationwide, the median cost of a semiprivate room in a nursing home is more than $93,000 a year, according to the 2020 Genworth Cost of Care Survey. The median yearly cost of employing a home health aide full time is around $50,000. And tens of millions of Americans are providing unpaid care to family members, costing the caregiver thousands in expenses per year on top of lost work time and wages.
I checked on an “assisted living” community close to my parents’ home. Their minimum-quality care option amounts to $250 dollars per day, per person. That would translate into about $180,000 per year, if they were both to continue living together. Those costs would be completely out-of-pocket, since Medicare will not cover them. The consideration for essentially transferring all your assets to these places is that they will permit you to continue living there, even as your assets disappear, while they pursue reimbursement through Medicaid. Of course, that completely wipes out all of your savings.
The facility is sending me a “beautiful brochure,” no doubt complete with glossy photos of happy, smiling, energetic elderly people having the time of their lives.
(And yeah, I’m well aware that most people are in a hell of lot worse financial shape than they are).
The gloomy reality is that most seniors will require long-term care. Almost 70 percent of Americans turning 65 today are expected to need extended services and supports at some point. About 20 percent will need care for more than five years. Despite this, the majority of those age 40 and over have done no planning for their long-term care, according to a 2021 survey by the AP-NORC Center for Public Affairs Research.
The “gloomy reality” (as Cottle terms it), is that the only people who can afford decent long-term care without bankrupting themselves, realistically, are those who have socked away close to a million dollars, or the very few who have purchased some type of long-term care insurance. Medicaid will cover long-term care, but only if your savings are so depleted that you qualify for it. So in general, unless you’re extremely wealthy (or super healthy into your 80’s and 90’s), you can pretty much forget about leaving any inheritance for your kids or grand-kids.
Other countries have dealt with this problem, and they have some suggestions.
Many developed nations, including Japan and much of Western Europe’s, have established long-term care insurance programs of various shapes and sizes. For the United States, the collaborative recommended a catastrophic plan that would cover back-end costs for people who wound up needing a high level of care. Individuals would be responsible for the first year or more of costs — a sliding time scale would be based on their lifetime income — after which benefits would kick in.
From the link posted by Cottle:
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Some of the countries, such as Norway, have universal coverage as part of a tax-funded social care system.
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Others have dedicated social insurance schemes, as in Germany, Japan, France, the Netherlands, and Luxembourg.
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A few arrange coverage mostly within the health care system, as in Belgium.
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Several countries have universal personal-care benefits in cash (Italy), or in kind (Australia).
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The only country with safety net or means-tested programs, other than the U.S., is the United Kingdom; Scotland, however, which has its own parliament, has free personal long-term care coverage.
Of course, one option is to hop on a plane and establish residency in one of those countries. But for the vast majority of elderly Americans that’s not remotely within the realm of possibility.
So again I’ll be driving up to my folks’ house this weekend, doing what I can to help them out. Because Mom had another fall this week.
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