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Monday, August 3, 2015

The Hidden Costs of Long-Term Care

The costs of long term care are becoming prohibitive. But the hidden costs are the ones to look out for when planning for care.

As senior-serving professionals, many of our clients will face the issue of where to live to
receive long-term care. There are choices, each with its own pros and cons. Whether the choice is living at home or in a community setting, long-term care is or will be needed.

Caregiving affects all of us. As former First Lady Rosalyn Carter, said, “There are only four kinds of people . . . those who have been caregivers, those who are currently caregivers, those who will be caregivers, and those who will need care.” Care comes with a cost. And the cost of care, especially long-term care, is staggering regardless of wherever, whenever, and by whomever it is given.

As professionals, we must shout in full voice to all who will listen: “Plan for long-term care.” And most especially, we must give clients the fullest picture of the cost of long-term care, beyond the cost of “room and board.” It’s the hidden costs that can add significantly to the basic cost of room and board.

Donald’s story. Donald sought care management services when telephone calls from his mother, her caregivers, and the homecare agency became too much. Donald’s mother lived independently, but she was a twelve-hour drive from Donald, her only child, with a family of his own and a professional life. With care management services, his mother was relocated and settled into a senior community, minutes from Donald’s house.

When the relocation was being planned, it was suggested to Donald that he do the math for his mother’s monthly long-term care (LTC), using a figure of $10,000. He was shocked.

Donald, a financial professional, could not understand why the projected cost of his mother’s care, as determined in the relocation care plan, far exceeded the cost of care cited in Genworth Financial’s cost of care survey. For example, The Genworth survey covers the national median cost of a homemaker, home health aide, adult day care, assisted living facility, and skilled nursing facility. However, it does not take into account
the add-ons or “hidden costs” of long-term care. 

Linda’s story. Linda’s father, a widower, recently died at 102. He had the usual trajectory of care arrangements—home with no help, home with a homemaker, home with an aide, care in rehab, and finally a board and care home where he died. Linda’s father had a long-term care insurance (LTCI) policy, which was in effect. However, his policy, purchased years before, only covered care in a nursing home. Therefore, he had to private pay in the small assisted living home. Newer long-term care policies are not as restrictive as older policies such as Linda’s father’s policy. Nowadays, most long-term care policies follow the individual, rather than being restricted to care in a nursing home.

Linda’s misunderstanding of long-term care and Donald’s sticker shock are both common. Linda assumed that long-term care referred to care in a “facility.” And Donald did not realize that the Genworth survey did not include the “real” cost of care.

Understanding the Meaning of Long-Term Care

Here is a useful, pithy definition for professionals to share with a client: “Long-term care is care that a person requires from someone else to help them with physical and emotional needs over an extended period of time.” 
Long-term care is not place-specific, and may be needed and delivered at home or in an institutional setting.

One commonly held misconception is that Medicare pays for long-term care. Medicare does not pay for long-term or custodial care. Rehab or sub-acute care is not considered a long-term care need and is not covered, long term, by Medicare. Medicaid is the government-funded program that funds long-term care and varies state by state in where and to what extent care is provided.

Also, it’s important to understand the difference between long-term care (LTC) and long-term care insurance (LTCI). Long-term care (LTC) means care that will be required over time. It is also referred to as custodial care, when a person needs help with activities of daily living. Long-term care insurance (LTCI) is a privately-funded vehicle that can help defray the cost of long-term care when certain criteria are met. However, it rarely covers 100 percent of the costs of long-term care.

Another issue that confuses consumers who are entering the LTC landscape is the absence of a standard nomenclature. What constitutes assisted living, independent living, or skilled nursing care, varies significantly from facility to facility, even within the same
city. There are “board and care homes,” “small assisted living homes,” “personal care homes,” for example, depending on the state. So, a “housing arrangement” can have many names, and provide varying levels of care, programs, and services.

For example, Facility #1 calls itself “an assisted living community,” but does not provide long-term care for the memory-impaired. Facility #2 calls itself an “active senior community,” but also offers several levels of care, depending on the resident’s needs. Facility #3 calls itself a small, assisted living home, but provides only room and board, and no care. 

For long-term care delivered at home, the landscape can be equally murky when privately paid homecare is needed. The problem is that the homecare industry does little to educate consumers about the difference between an agency and a registry. This is an important distinction and can have far reaching implications. Simply put:

• An agency employs its caregivers.
• A registry staffs or refers caregivers for in-home care.

And, regulations for each vary by state.

Oops, I Thought That Was Covered 

Professionals who work with older adults and their families should explain what long-term care is, and the host of expenses that accompany it. For example, many facilities advertise that transportation is provided or available. What they do not often explain is that transportation is limited, often to certain days, and restricted by distance. There is often a charge when transportation is provided beyond the mileage limit or when provided on a facility’s “off day” when transportation is not scheduled. It is especially challenging to schedule an appointment on the days and times when transportation is available. So, then comes the cost of going back and forth to appointments and activities when transportation is not available from the facility.

Too often, older adults and their families learn about the add-on costs after the fact. It is common that when visiting a long-term care facility, emphasis is on the model room, while services and programs are often not fully explained, and the potential resident or
potential resident’s family is told to read the admission material. Most often, they are in crisis and critical information is overlooked.

For a client considering a move to an assisted living community, it is important, that advisors emphasize that an assisted living facility is real estate, a space, usually for sleeping with meals and programs included in the basic cost. Stress that care is provided at an additional cost. While there are a few situations where there is a bundled cost that includes room and board, programs, and other services, they are limited.

A Los Angeles Times article ( 2002), “Assisted Living’s Hidden Fees,” cited a 1999 report by the General Accounting Office: “Marketing material, contracts, and other written material provided by the facilities [long-term care facilities] are often incomplete and
vague or misleading [and] only 25 percent of facilities routinely provide their document to prospective residents before they decide to apply for admission.” While that article was published fifteen years ago, much remains the same.

The Consumer Consortium on Assisted Living 
developed a guidebook with Metropolitan Life Insurance that suggests some questions families should ask when they are considering a long-term care facility:

• Does housekeeping include only light dusting, and is there any extra charge for cleaning bathrooms, floors, and windows? Is there a separate fee for doing personal laundry?

• Do units have separate telephones and how is billing handled?

• Are monthly residence and fees still charged if a person is away in the hospital, or on an extended 
visit with relatives?

What to Tell Clients about Long-term Care Costs

It is expensive, and the cost of care wherever it is given rises about 4 percent annually. Here are some of the hidden costs that can come with long-term care.

Transportation. Advise your clients that it will not always be safe or convenient to transport their older or disabled loved ones in car. Private, wheelchair-accessible and accessible transportation comes with a cost. And the transportation provided by a retirement community, assisted living, or nursing home may not be available when it is needed. So, this can be an added expense, particularly when special transportation
is needed. In one case, the cost to transport a client’s mother to and from a funeral in a wheelchair van cost $200. But it was worth easing the emotional toll on everyone.

Supplies. There is a cost for personal care needs, whether the person is at home or in a facility. For example, in many facilities, there is a charge for disposable supplies, as well as for the number of times they are changed. Supplies often used in long-term care
include disposable gloves, wipes, blood pressure kits, thermometers, first aid supplies, toilet tissue, disinfectant spray—the list goes on. 

Downsizing, Moving, Relocation. Hiring a downsizing or moving specialist might be the answer to the emotional toll a move from home can be, or de-cluttering a house to make it safer and appropriate for long-term care. While there is a cost to hiring a specialist, it is often wiser to hire a professional, especially when the house is packed with household
items accumulated over many years or there is a hoarding situation.

Clothing. Buying adaptive clothing that suits the needs of the person needing care is a solid investment. In the course of caring for an individual, clothes will be ruined or lost and will need to be replaced. For example, for a person with a special need—such as a
wheelchair user—purchasing clothes appropriate and designed for a wheelchair user can be another overlooked expense. Clothing companies that specialize in adaptive clothing are on the rise. Just fifteen years ago, finding clothing for a wheelchair user was virtually impossible. A person’s dignity is often related to how they appear to themselves and others.

Dietary Supplements/Special Nutritional Supplements. Medicare only covers special dietary supplements like Ensure or Jevity when prescribed by a doctor. Vitamins or over-the-counter medications add to the cost of long-term care.

Furnishings. It is important to factor in the cost of new or replacement furniture. For example, a reclining chair might be in order. Or a larger TV, better lighting, or a bedside commode might be needed—all to enhance the person’s quality of life and be a help
to the caregiver. Too often, caregivers struggle to give bedside care without a conveniently situated bedside table. Or, they strain their backs to give care in a bed that is too low. An electric hospital bed is especially essential for those needing bed care. An electric bed is covered by Medicare under certain circumstances. Or it can require a monthly rental amount. Often overlooked is the need to replace armless chairs with chairs with arms. Otherwise, for the person with mobility issues, trying to sit in a chair without arms is a safety risk.

Equipment. It’s important for care professionals to know some of the ins and outs about various equipment that older adults may use. Wheelchairs need to be sized specifically to the individual user, including the seating system, arm rests, back support, and foot
rests. And walkers and canes need to be correctly adjusted to fit the height of the user. On average, a manual wheelchair for daily use will cost between $1,000 and $2,000, excluding any special add-ons. 
The cost of an electric wheelchair varies widely from $7,000 upwards, sometimes exceeding $25,000. A properly fitting wheelchair is critical for the person using it. Medicare only covers the cost of a wheelchair under specific guidelines. When considering buying a wheelchair, factor in the cost of a wheelchair carrier for the car, especially if it’s is electric. Consider other potential equipment costs such as a shower chair, hand-held shower head, grab bars (beyond the bathroom), and a Hoyer Lift. This is used for transfers when a person requires 90-100 percent assistance to
get into and out of bed.

The home. A significant cost to consider is retrofitting the house if the plan is for the person to age in place. The costs of retrofitting can extend beyond the cost of grab bars! It may be that a ramp is needed or a doorway widened, sinks lowered, or a roll-in shower
installed. At the ultimate end would be remodeling the entire house using Universal Design. Universal design refers to buildings, products, and environments designed
to be accessible to older people, with and without disabilities.

One-on-one care. There may come a time when the person who needs long-term care will require one-on-one, round-the-clock care, also referred to as private duty care. This can happen following discharge from a hospital of an older loved one. Most people never think about the cost of one-on-one care, especially if they are considering a move to assisted living. Assisted living means caregiving to a degree. Often due to a care recipient’s increased agitation, frequent need to be repositioned, or wandering, one-on-one care in an assisted living facility may be required. 

As the preference for long-term care beyond an institutional setting continues, the demand for paid caregivers will increase. According to the April 2012 “Occupational Outlook Handbook,” a publication of the Bureau of Labor Statistics, U.S. Department of Labor: “Employment of home health aides is expected to grow by 70 percent from 2010 to 2020, much faster than the average for all occupations.” This, of course, signals that the hourly wage of a homecare worker will increase, as it should.

Genworth Financial publishes an annual survey of the cost of care across the United States. The example below is an excerpt from the Genworth survey and shows the increase in yearly cost for years 2014, 2029, and 2039 for a home health aide in Washington, D.C., Colorado, and California:

An overlooked way to reduce the cost of one-on-one care, especially when it is provided at home, is to pay a family member or friend. This is possible legally when a long-term care service agreement has been formalized. Such an agreement goes by a variety of names—support services agreement, eldercare contract, family care or caregiver contract, or personal care agreement. While it may be best to direct the family to an elder law attorney to create the agreement, it can be done without an attorney. But it would be wise to have an attorney review the agreement. A resource for creating such an agreement is the Family Caregiver Alliance.

Care Levels. It’s important to understand exactly what is provided for a specific care level. In a long-term care facility, whether a large facility or smaller group home, the various care levels can be amorphous. For example, one assisted living facility might have five care levels, each at a different daily rate. It all depends on the amount of care the person requires. At one urban facility, for this year, the base cost for level one is 
$30 per day and the highest level, $115 per day. Regardless, there are add-on costs for a level of care in an assisted living facility. 

Medication management can be an unexpected expense. In a long-term care facility, the cost depends on how many times medications are given in a twenty-four-hour period. Basically, the more pills, the more the add-on costs to the daily basic room and board.

Taxes. In no uncertain terms, paying a caregiver “under the table” is illegal. If a client decides to hire a caregiver privately, let them know that the IRS has specific
guidelines for household workers. Unfortunately, many families think it is o.k. to pay a caregiver under the table in order to pay a lower hourly or live-in wage. This is illegal. Professional advisors are ethically bound to advise clients that this is illegal and why.

Some of the care expenses can be a tax deduction.

An accountant or tax attorney who is familiar with eldercare can help. Clients should ask for, if it is not provided, a yearly “resident care verification” document that gives a breakdown of expenditures in an assisted living facility.

Assistive devices. Hearing aids, special devices to assist with daily activities, non-covered aids like special eye glasses, or retro-fitting a car with hand controls may be called for. There is a wide range of helpful, assistive devices for both the caregiver and care receiver. For example, a personal sound amplifying product known as a “pocket talker” may be useful to someone who misplaces or loses hearing aids. A New York Time article, (2013), “When Hearing Aids Won’t Do,” commends the pocket talker as a useful
alternative to hearing aids.

Professionals can prepare their clients for potential long-term care by educating them about the array of professionals whose expertise can save time, money, and emotional toll. While these professionals—care managers, elder law attorneys, financial planners, senior move specialists, daily money managers, geriatricians, to cite only a few—come with a price, remind your clients that good advice comes with a price and the benefit may well outweigh the cost. 

The Bottom Line 

Long-term care, wherever it is delivered, will take a chunk of money. Try as a person might to cut corners, the person may end up spending more emotional and financial currency than might otherwise be necessary. And compromise a quality of life. When long-term care is needed, preparation and planning is the key to quality living. Steve Weisman, in his book, A Guide to Elder Planning: Everything You Need to Know to Protect Yourself Legally & Financially (2004), writes: “Studies predict the cost of nursing homes will approach $200,000 per year by year 2030 when the last of the baby boomers will reach age sixty-five.” 

As professionals, we are in the position to broaden the thinking of boomers, in particular, to imagine and create alternative long-term care arrangements beyond the nursing home or assisted living facility. For families facing long-term care for a loved one, we have an
opportunity to unpack the cost of long-term care and to explain to clients some of the ways that it can be funded when it is needed.

Statistics show that someone turning sixty-five has an almost 70 percent chance of needing some type of long-term care. As professionals, we must reinforce the importance of prepari
ng for its costs. It is no longer the thing to do—it is the smart thing to do. •CSA

Irene V. Jackson-Brown holds a Ph.D. and is certified as a geriatric care manager (CMC) and Certified Senior Advisor (CSA). She is founder of a care management company, The Art of Eldercare, a divison of Jackson-Brown Associates, LLC. She is a member of the
National Association of Professional Geriatric Care Managers, and the CSA Journal Editorial Board. Contact her at 202-722-4205,, or visit

The Hidden Costs of Long-Term Care was published in the Spring 2015 edition of the CSA Journal. 

Blog posting provided by Society of Certified Senior Advisors