Funding Mom’s and Dad’s Assisted Living Expenses

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Long-term care can be critical to the health and emotional well-being of older adults. The adult children of aging parents are often called upon to provide that care, but they do so at a cost to their own quality of life. Family caregivers who work long hours without compensation may be sacrificing careers, incurring expenses, and enduring stress to care for the parents they love.

Paid caregivers also help older adults age in place. Unfortunately, a shortage of qualified workers has driven up the fees charged by home care agencies. High employee turnover makes it difficult for caregivers and their clients to form a bond. To meet demand, the workforce of professional caregivers will need to increase by 20% in the next decade. It is unclear whether the job market will supply needed workers in an underpaid profession that is difficult and stressful.

When aging parents cannot live independently, a long-term care facility can be a desirable alternative to family caregiving. Assisted-living facilities use trained staff members to help residents with their activities of daily living, including bathing, getting dressed, and eating. Nursing homes deliver healthcare services to seniors who need around-the-clock care.

Unfortunately, Medicare does not generally pay for residential care. Some seniors qualify for state Medicaid programs that cover nursing home care, but Medicaid does not cover room and board in assisted-living facilities. Seniors must exhaust their financial resources before they become eligible for Medicaid coverage, which often makes it difficult to pay for the room and board component of residence in an assisted-living facility.

The Cost of Assisted Living

About 850,000 people reside in approximately 30,000 assisted-living facilities in the United States. Most seniors enter assisted-living facilities in their mid-eighties. 

Facilities typically charge a base fee to cover room and board. Fee structures typically base additional costs on the level of care services that a resident requires or desires. Not all facilities serve residents who suffer from dementia, but those that do generally charge higher rates for dementia care.

While prices vary across the nation, the average cost of residing in an assisted-living facility is $4,500 per month. Since last year, prices for all levels of assisted living have been rising faster than inflation.

The “Dying Broke” series of articles in the New York Times examines “how the immense financial costs of long-term care drain older Americans and their families.” A November, 2023 article in that series notes that, while assisted-living facilities may be an ideal long term care option for many families, “most Americans can’t afford them.”

Depending on a facility’s pricing structure, residents may pay extra for meal delivery to their room or assistance taking a shower. Assisted-living facilities do not provide medical treatment to residents, but they may charge extra for providing services that must typically be performed by a licensed nursing professional, such as administering injections. Some charge residents extra for ordering medications from a pharmacy that hasn’t been approved by the facility.

The Future of Assisted Living

At this point, residents of assisted-living facilities tend to be relatively affluent. They depend on a lifetime of savings, investments, the proceeds of home sales, and help from working family members to pay their assisted-living fees.

Some residents fund their stay with long-term care insurance. However, the Times reports that “the market for long-term care insurance has virtually collapsed, covering just a tiny portion of older people.” When insurance benefits run out, residents often exhaust their savings or seek other housing options.

Veterans who receive a VA pension and who need help with their activities of daily living may qualify for an Aid and Attendance benefit. The benefit typically reimburses the veteran for the cost of care services and may, under some circumstances, pay for food and lodging.

The executive director for the industry’s trade association told the Times that offering affordable assisted-living care would require “an entirely different business model.” That model might depend on federal assistance, perhaps by expanding Medicare or enacting legislation that requires health insurance to cover assisted-living facilities.

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