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The High Cost of Elder Care

Written by Nickel - 12 Comments

The High Cost of Elder Care

As I write this, I’m sitting in the living room of my childhood home. My dad has been experiencing some fairly serious age-related health issues, so I took some time off to come home and help out for a few days. Unfortunately, he’s at a point where my mom can’t care for him entirely on her own, so they’ll be needing some help.

The good news is that they’ve been carrying a long-term care insurance policy for quite some time now, so they’ll be able to fall back on that for some financial assistance. But even with that policy in place, I’m learning that elder care ain’t cheap.

The policy that they’re carrying will pay somewhere between $150-$200/day for in-home care — let’s call it $175 for simplicity — and they’ll probably need 8-10 hours per day of help. The rates that we’ve been quoted thus far are around $30/hour, that works out to $240-$300/day. Subtracting off the LTC benefit leaves a difference of $65-$125/day that they’ll have to pay out-of-pocket.

But… The LTC coverage doesn’t kick in for 90 days, which means they’ll have to foot the bill for three months on their own — to the tune of somewhere between $7k-9k/month. Yikes! That’s a huge amount. And even after the LTC policy kicks in, they’ll be facing $2k-$3.8k in monthly expenses related to his care.

Over the course of a year, that works out to $25k-$45k in additional expenses. Ouch. I always new these things were expensive, but I’ve never done the math. And before you ask… Medicare only covers skilled “medically necessary” care, not the so-called “custodial care” that my dad will need.

In retrospect, I shouldn’t be too surprised by all of this. What we’re talking about is essentially a full-time (and then some) position, so it only stands to reason that they’ll have to pay for the privilege.

The good news is that they’ve scrimped and saved for retirement, they have a good pension, and they’ve long since paid off their mortgage, so they should be able to get through this. And if/when he needs to go in for full-time care in a nursing home, the LTC coverage will increase. But this was certainly an eye-opener for me.

Published on December 19th, 2011
Modified on December 20th, 2011 - 12 Comments
Filed under: Insurance, Planning

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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12 Responses to “The High Cost of Elder Care”

  1. 1
    @moneyperk Says:

    Wow, I can only imagine how much of an eye-opener this was for you. That is a lot more money than I could have ever imagined as well. My parents are on the brink of retirement and dad has had health issues his entire life. Reading this article scared me to death! I definitely need to have a sit down with my parents and see what their health coverage can do for them. Thanks for writing this piece as it was definitely thought-provoking.

  2. 2
    justsomeguy Says:

    I have seen many folks in exactly the situation your parents are in.

    Not sure what metro area your parents are in, but the prices you quote seem like Medical care (like CNA or visiting nurse).

    I provide “Companion Care” in the Denver area. Agencies generally charge 20 – 23 /hr. As an individual I usually charge 15 – 18 / hr, and it is easy to find folks who will do it for as little as 10/hr.
    I provide respite, drive folks to appointments, act as a patient advocate during hospital stays, help with paperwork/computer stuff/bill pay, and if asked provide reports to relatives. The only thing I do not do – which all the 10-12/hr people routinely DO – is “personal care” (bathroom stuff).
    You may be able to have the nursing type care less often (such as 2 hrs a day, 3 days a week ?) and have less expensive “companion care” the rest of the time.

    fyi … The 150/day max policy may only cover ONE “event” per day – you choose between submitting the “caregiver” bill or the “physical therapy” bill.

    Anyway Nickel, you now have my e-mail. If you wish to correspond, feel free.

  3. 3
    Maggie@SquarePennies Says:

    Some senior apartments connected to assisted living centers have flexible plans. Your parents might decide to move into an apartment at a similar center with some assistance available as needed. That assistance has to be paid for separately and by the hour. Depending on the rest of your parents circumstances that could be cheaper than what you are describing. Nursing home insurance will not pay for it, not even if your father was in an assisted living facility. Your local administrator can help with the details. Of course you’d have to consider what they’d do if your dad eventually needed assisted living while your mom did not. That could make for double the costs in some situations. Good luck to all concerned. We should all be saving!

  4. 4
    BG Says:

    $30/hr for what is essentially baby-sitting?!? That is nuts. Sounds to me like you are getting screwed. The AARP.org website lists the hourly rate for Home Health Aids at $19/hr in Texas.

    http://www.bls.gov/oco/ocos326.htm#earnings

  5. 5
    R S Says:

    Thanks for writing this! I’ve been concerned about this for a while but never knew where to start.
    My parents never had to deal with this, as their parents both lived abroad and with younger members of the family. One was in India, where the cost of live-in caregivers is significantly less than here. The other was in England, but my uncle really stepped up – he lived with my grandparents and was working from home at the time they started needing help. There was other family in the area that helped out as often as possible, but my uncle kept up with everything amazingly.
    Ideally, I’d like to be able to provide for my parents, as they have for me. But realistically, despite the fact I live so close, my job is not one that can be done remotely, so I could only help after work hours.
    Anyhow, as expensive as it is, it’s nice to hear that there are options to keep aging parents in their own homes, so they at least have that sense of familiarity. I think it would be awful to have your body fail you and have to leave the comfort of your home as a result.. it seems like a double whammy of choices being taken away from you.

  6. 6
    Tommy Z Says:

    Nickel…could your mom hire somebody for only a few hours for the first three months and then increase the hours when insurance kicks in?

  7. 7
    BG Says:

    Here is the link to AARP’s Home Health Aid hourly cost calculator:

    http://assets.aarp.org/externa.....lator.html

    Good luck.

  8. 8
    Nickel Says:

    All: Thanks for your feedback. For what it’s worth, the nighttime needs exceed companion care, which is part of the reason that the costs are a bit higher. They could get a cheaper rate by finding an individual instead of using a service, but they’re not comfortable with that approach — at least not yet — so they’re going this route. Thanks again, and please keep the tips coming! :-)

  9. 9
    dd Says:

    Custodial care is not covered by much (Medicaid and being destitute) and your parents are lucky they had the foresight to buy long term care insurance. You will probably need to read more such as “Medicare Coverage of Skilled Nursing Facility Care,” as your parents’ may be in need of medical and nursing care in the future. If your parents were to experience a health event where they had a qualifying hospital stay (three consecutive days in a row), their rehabilitation and skilled nursing care would be partially covered by Medicare (days 1-20 Medicare pays, days 21-100 copay of $128 day). Skilled care includes injections, changing dressings, physical therapy, occupational therapy, etc.
    https://questions.medicare.gov/app/answers/detail/a_id/1347/~/who-can-get-medicare-covered-home-health-care,-and-what-services-does-medicare

    You can help by just being there, offering emotional support, or helping by freeing up time by taking over chores such as bill paying (online one can be helpful, even if living far away). I wish you the best, as our family has a similar situation.

  10. 10
    John Says:

    Did your parents have compound cost of living on their insurance? also after the 90 days he shouldn’t have to pay on the policy any more.

  11. 11
    Nickel Says:

    dd: Yes, they already took advantage of Medicare coverage for a recovery stay at a local nursing home following a recent surgery.

    John: Not sure what you mean by compound cost of living — yes, their benefit increased over the years from when they first bought the policy until now. And yes, my understanding is that they’ll be able to stop paying the premiums once the coverage kicks in.

  12. 12
    John Says:

    There are 2 types on cost of living increases on LTC insurance simple and compound is where you are increased by a certain % just like simple except on compound say you had 150.00 coverage the first year you would get say 5% more coverage and each year THEREAFTER 5% OF 150.00 WHERE COMPOUND THE FIRST year you get 5% of 150.00 which is 157.50 the next year you get 5% of 158.00 as they round up or down if it is .50 cents more and down if it is less than cents. sorry it took me so long t get back to you. John

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