Halloween is awesome. The candy, the costumes, the opportunity to use genial mockery to take the sting out of things that actually do scare the pants off us. But before the real Grim Reaper shows up to turn you into a ghost, the odds are pretty high that you're going to pass through a major health crisis or two, or develop a chronic condition, and in the aftermath, you're likely to need long-term care. And haunted houses have nothing on the scare factor of opening the bills for that expense -- especially if you haven't prepared for it.
You can prepare though, so for this episode of Motley Fool Answers, hosts Alison Southwick and Robert Brokamp have brought in a special guest to help them guide their listeners through what they need to know about it: Dr. Jean Accius, vice president of independent living and long-term services and supports at AARP.
In this segment, they discuss how you can start putting a plan in place, what Medicare and Medicaid do and don't cover, and more.
A full transcript follows the video.
This video was recorded on Oct. 23, 2018.
Robert Brokamp: Part of what's scary about it is that people see the stats on long-term care and the expenses and think "there's no way I can do anything about it, so I'm not going to do anything." Just so we can scare everyone, let's do some of those stats.
Alison Southwick: Woo-oo-oo-ooh! Scary stats!
Brokamp: Here we go! Woo-oo-oo-ooh! So most [of the stats come] from AARP, but other places as well. The stats are, generally speaking, that about 70% of people 65 and older will need some type of long-term care. Average cost is $138,000 of any kind of care. A stay in a nursing home across the country is an average of $100,000 a year. Living in assisted living is about $45,000 a year. Adult day care of some kind is $70,000 a day, so that's almost $20,000 a year. That's an awful lot of money and when people see that they think, "There's no way I can plan for that." That's not necessarily true, right?
Jean Accius: That is exactly correct. I think part of the issue is the fact that it is overwhelming. When you hear those numbers, depending on where you live, you can be paying significantly out of pocket.
Brokamp: For example, a nursing home in Alaska is almost $300,000.
Southwick: Wait, what?
Brokamp: The highest state in the country.
Accius: Absolutely. When you hear those numbers, you don't know even where to start, in part because of the fact that we don't necessarily have a long-term care system that is actually person and family centered. And what I mean by that is the fact that the person and the family are in the center of these conversations. The cost for 30 hours of having someone come into your home is roughly about $30,000 to $34,000 give or take. And that exceeds the vast majority of what older adults can actually afford on an annual basis.
In fact, we did a study culled across the States where we wanted to put out all these numbers: the amount that it costs for nursing home care, the amount that it costs for assisted living, or the amount that it costs for home care; and one of the key findings is the fact that it's unaffordable across the country. So you do need to have a plan, and the question becomes what that plan exactly looks like.
There are four factors that typically impact long-term care cost. One is exactly where you live. Where you live matters significantly. The other is what type of care you need; whether that's nursing home care, assisted living, or home care. Whether it's moving into an age-restricted active adult community or a continuing-care retirement community. Whether it's assisted living or whether it's adult day care to provide you with some support during the day. The third aspect of this is how much care you actually need and then, of course, for how long. So all of those four factors impact some of the cost that you're hearing in terms of some of these staggering numbers.
But there are things that people can do. We know that of the vast majority of people -- and you can think about yourself -- as you age, where would you like to receive care? And oftentimes it's in your home and in your community. So one of the things we're encouraging people to do is that when you go home, or if you're home right now, assess whether or not where you live can accommodate your needs as you age.
And what I mean by that is [whether there are] universal design principles. And universal design features are things like whether there is a bedroom and a full bathroom on the first floor. Why is that important? In part because of the fact that as you age your ability to go up and down steps might become a challenge.
Or how safe is the actual home that you live in? Are there grab bars? Are there zero entry steps? Can you get into your home without having to take the steps in there? Are there handrails? What are some of the modifications that you can do in your bathroom? What are the things you can do to live independently for as long as possible with a sense of dignity?
And the earlier you can start that process, the better off you'll be just in terms of assessing, and then coming up with some sort of a plan. We think about what our current needs are today. But can [the homes and communities] where we live, eat, play, work accommodate our needs as we age? That's the question.
And one of the things that is extremely important for us to think about is to imagine what you want for yourself. The earlier you can start planning the more likely you are going to be able to have more choices. More options. It helps to reduce the sense of stress and the sense of being overwhelmed by some of these stats, because you have a plan in place.
And it also, to the extent that it's possible, helps you help your family, because one of the things that we're trying to do is foster these conversations so that way your family knows exactly what you want and more importantly, you're in the driver's seat in terms of executing what you actually want. That's one thing. Assess what the home environment is like.
The other thing I would encourage you to do is [assess] your community. Do you have the right community features in terms of whether there's a grocery store nearby? Are there doctors' offices nearby? Can you get to and from? Think about it. Your neighborhood is your gateway to all things in terms of social engagement. So what are the transportation options that are available? What are the alternatives if you can no longer drive? Are you able to get to and from?
I'll give you a good example of what I mean by this. When I worked for the federal government, I had an opportunity to actually do a site visit to Richmond, and I got an opportunity to talk to someone who was part of a program who transitioned out of a nursing home back into the community. Check this out. He was roughly in his early 40s. A former police officer. A tragic situation. Gun shots. Paraplegic. Was in a nursing home for quite some time.
He was able to transition out of a nursing home and was back living with his brother and his brother's wife in a beautiful home in Richmond with a beautiful lake. There were some home modifications that were done to accommodate the gentleman's needs. And [we asked him to walk us through his day].
What he said was every day there was a personal care attendant that comes in and is with him during the day, at least around 01:00 or 02:00 in the afternoon. Neither his brother nor his brother's wife come home until about 05:00 or 06:00. So from 01:00 to about 05:00 or 01:00 to 06:00 he's pretty much isolated in this home.
And he said, "Look, I may not have the physical abilities, but I still want to work. I'm mentally sharp. There's a lot I can do, but I'm having a hard time getting to and from." So we asked, "How engaged or integrated are you in the community?" He said, "Well, we live in a cul-de-sac and the public transit only comes to the entry of the neighborhood. They're not going to come to the front of the entrance." That was an issue that we had to try to resolve. Here you have someone who wants to be socially engaged and who wants to contribute and provide value, but because of the infrastructure and some of the barriers in the community, he was not able to do so.
I think it's also important to think about, as you age, what the options are in your community to support you in your aging process. What are the abilities in terms of transportation? In terms of social engagement? In terms of the different types of opportunities? We have a tool called AARP Livability Index. You can go in, you put in your zip code, and it will tell you exactly how livable your community is. That's for all ages and people with disabilities.
The other aspect of that is to understand exactly what the different types of programs that are available to support you as you age. Again, we hear the stats. It's $100,000 per nursing home care; $34,000 to get someone to come in and provide you 30 hours of care, and that can be overwhelming and, frankly, stressful.
But there's a lot of programs and opportunities at the local level that may offer services on a sliding scale. Whether that's home-delivered meals. Whether that's transportation options. Whether that's caregiver support. I would encourage you to look through your local Area Agency on Aging and find out exactly what services and supports are available for you in your community. Or if you are a daughter or a son, or a friend caring for someone who's long-distance, what are the different types of services that are available in that person's community? That's something else you can think about in terms of planning for your long-term care needs.
Brokamp: When people think of being older and healthcare needs, they think of things like Medicare, but how much can people expect from Medicare and maybe Medicaid in terms of helping with a lot of these costs?
Accius: That is a very good question. One of the biggest myths and misunderstandings is the fact that Medicare will pay for long-term care, or your private insurance will pay for long-term care. In fact, neither Medicare nor your private insurance pay for long-term care. They just don't. That's just one of the areas they don't cover -- those different types of benefits.
And when we talk about long-term care, we're referring to things like assisting you with your bathing and your dressing, your eating, your medication management. Or helping with managing finances or taking care of transportation. Some home modifications. These are personal and social support activities that you need assistance with. And Medicare doesn't cover those.
Medicaid, on the other hand, does; but in order to qualify for Medicaid you have to have limited resources. It varies by state in terms of the eligibility requirements, so it will be very important to assess what the eligibility requirements are in your particular state; but on average, you can only have about $2,000 worth of countable assets. That excludes the home, but depending on your state, it depends on the equity in your home, so there's limitations there.
I want to go back to something else that I mentioned is this whole issue about choice and why it's important for us to plan ahead and plan as much as we can with respect to long-term care, because it increases your options and it increases your choices when you actually have a plan in place.
What do I mean by that? Well, in the context of Medicaid, if you do become eligible, meaning the fact that you've met their requirements for eligibility, nursing home care is a required service, meaning that every state has to offer you nursing home care. So if you're eligible, automatically you would be eligible for nursing home care. Home and community may service this -- that means getting service in your home -- but it's an optional benefit, so they are not required to offer that and with the states that do offer it there are limitations in terms of the caps, the allotments. So in some cases there might be long waiting lists to actually get these services.
Brokamp: You talked about being in the driver's seat with this. Once you get to the point where you need Medicaid, you're no longer in the driver's seat.
Accius: Again, it really depends on where you live. It depends on where you live in the sense that some states provide you with the option to get home community-based services, so you can actually get those services in your home, but you have to go through the process of being eligible. Some states provide what we refer to as "consumer-directed care," so it allows you to be in the driver's seat.
But what I mean by increasing options is the fact that once you've gotten onto Medicaid, because there's so many different factors that come into play, you could potentially be in the driver's seat, but it depends on whether or not the services are available; not just in your state, but also in your geographic area.
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