Thursday, February 29

What you need to know about caregiving for an aging parent

People living longer and in poor health has become a costly trend. An estimated 7 out of 10 people will require long-term care in their lifetime.

The median cost for a private room in a nursing home is more than $100,000 a year — and it’s $60,000 or more a year for a home health aide, according to a Genworth survey. The median cost for an assisted living facility is $54,000.

“In some cases, residents and their families don’t know their total costs until they receive their monthly bill,” Sen. Bob Casey, D-Pa., who chairs the Senate Special Committee on Aging, said in a hearing Thursday on costs and transparency in assisted living facilities.

“These substantial costs and hidden fees make it nearly impossible for older adults and their families to accurately budget for long-term care,” he added.

The alternative — caring for aging family members on your own — can also come with hefty expenses.

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About 38 million family caregivers in the U.S. provide unpaid care valued at about $600 billion a year, according to a 2021 AARP report. That figure doesn’t include out-of-pocket costs related to looking after a loved one. 

“The average family caregiver spends about 26% of their income [on caregiving activities], which nationally averages out to about $7,000,” said AARP’s family and caregiving expert Amy Goyer, referring to the 2021 AARP analysis. “Some spend much more and some spend much less,” depending on their location and the care they provide, she added.

Knowing a few key terms can help you understand the services an aging parent or relative may need — and plan ahead for how to afford them.

Here are five essential terms you should know: 

Activities of daily living

Continuous care retirement communities

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Continuous care retirement communities run the gamut and can be an alternative to aging in one facility or group of facilities. “The idea is to have these all on the same campus so that you can go between the levels of care as you need,” said AARP’s Goyer.

  1. Starting with “independent living,” older adults can live in a house, condo or apartment and receive several services — two or three meals daily, housekeeping and/or laundry services. 
  2. When they need more care, they can move to “assisted living,” where they may get help with some activities of daily living, such as bathing, dressing or eating. The level of assistance can vary and costs rise as more help is needed. 
  3. The highest level of care is “skilled nursing care” for those who are chronically ill or disabled and can no longer care for themselves. This could be a particular unit or nursing home within the community. Some communities also offer “memory care” units or facilities for residents with dementia or Alzheimer’s disease, providing more secure and specialized care. 

Within these communities, costs can vary greatly depending on the type of care and geographic location.

Some continuous care retirement communities offer a monthly rental option. Others require residents to “buy in” by paying a sizeable entrance fee — more than $442,000 on average, according to the National Investment Center for Seniors Housing & Care. Then they refund a percentage of that fee when the resident leaves the community. Monthly fees may also be charged. 

Within these communities, average monthly rent for independent living is about $3,900, assisted living costs about $6,700 a month, and memory care costs about $8,400 a month, according to the National Investment Center.

Medicare and Medicaid

Long-term care insurance

Respite care

Some long-term care insurance plans provide coverage for respite care, but there may be other places to get free or low-cost assistance. Check your loved one’s Medicare plan. Military veterans may be able to get resources from the Department of Veteran Affairs to cover the cost of respite care. 

The U.S. Administration on Aging’s Eldercare Locator can connect you with a local Area Agency on Aging that can offer in-home respite care support, including sitter service and preparing meals. The ARCH National Respite Network can also help you find local respite providers.  

Coverage for respite care can vary depending on your Medicare, Medicaid or health insurance plan. Ask your provider. And ask your employer. Some companies may offer paid time off for workers to provide respite care or senior caregiving. 

If your employer offers a dependent care flexible spending account, you can typically put in up to $5,000 in this account through payroll deductions, to use for respite care and other elder care costs, as long as you claim the qualifying family member as a dependent on your tax return. 

Employers may also offer senior caregiving support by helping employees navigate Medicare and Medicaid, explore in-home and out-of-home care options, and connect them to caregiving resources.  

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— CNBC’s Stephanie Dhue contributed to this report.

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