An article in the Wall Street Journal details how an AARP caregiving expert ends up broke and $120,000 in debt trying to care for her parents in need of long-term care. (“Caring for Older Relatives is So Expensive That Even AARP’s Expert Filed For Bankruptcy”, Wall Street Journal, 2-22-22). The article reads, “On average, caregivers spend 26% of their personal income on caregiving expenses, according to a 2021 AARP study.”
Caregiving is becoming more expensive because people are living longer with more complicated medical needs, and hiring help costs more.
According to a leading long term care insurance company, the median annual cost of in-home care rose to $54,912 in 2020–an 18.5% increase from 2016.
The majority of Americans cannot afford to cover the costs of long-term care out of income and savings without purchasing insurance for these costs. Relying on family can bankrupt family members, leaving them with no way to cover their own retirement.
Many people wrongly assume Medicare will cover long-term care costs and are shocked when they learn they are personally liable for these bills. Medicaid, a welfare program, will take over but only once you have spent down your own assets to impoverishment. Any gifts given in the 5 years prior to Medicaid will make you ineligible for even that.
Once care is needed, it is too late to qualify for long-term care insurance– it must be in place while one is still healthy enough. Costs rise each year you wait, so investigating and purchasing at younger ages makes it more affordable.
Getting advice from an expert who understands long-term care and can appropriately size coverage can make this insurance affordable.