How to financially plan for an Alzheimer’s or Dementia diagnosis
Patients and their families can be left devastated by the emotional and financial toll of an Alzheimer’s or dementia diagnosis, with many care costs not covered by health insurance.
To help those who have been diagnosed and their families plan for future expenses, below is a guide which discusses the legal and healthcare costs that may arise with the progression of the illness.
You or a loved one may have just received an Alzheimer’s or dementia diagnosis, and while you may ride waves of shock and sadness, your thoughts may also turn to how you’ll take care of your loved ones (and yourself) financially.
Americans living with Alzheimer’s currently number 5.8 million. One in three seniors dies with Alzheimer’s or another form of dementia, according to the Alzheimer’s Association.
“That number is expected to increase as the population age 65 and older increases. By 2050, nearly 14 million Americans will be living with the disease unless treatments are advanced,” says Ruth Drew, director of information and support services for the Alzheimer’s Association.
Medicare provides limited assistance with costs for families of Alzheimer’s and dementia patients. Medicare benefits are for medical needs and some of the care for Alzheimer’s or dementia is non-medical in nature.
“The reality is that very few people are prepared for the cost of caring for someone living with Alzheimer’s. Many believe health insurance or Medicare will cover costs, but the costs of caring for someone living with Alzheimer’s often extends well beyond these coverages,” says Drew.
Most costs fall on your own shoulders — or those of your family members. As soon as you’re diagnosed, it’s a good idea to get a plan in place because you (or your diagnosed loved one) might not always be able to make sound decisions.
Costs you may face with the diagnosis
There are several types of costs you’ll face with an Alzheimer’s/dementia diagnosis. Remember, these are progressive diseases and your needs will change over time. Insurance may or may not cover these costs, so it’s important to know your options.
Long-term care or caregiver costs
Long-term care services can involve home-based and/or community-based services, assisted living and nursing home care. The Genworth Cost of Care Survey 2018 totaled the following costs:
Non-medical home health aide: $22 per hour and $132 per day
Adult day services: $72 per day
Assisted living facilities: $4,000 per month or $48,000 per year
Private room in a nursing home: $275 per day or $100,375 per year
Semi-private room in a nursing home: $245 per day or $89,297 per year
It’s a good idea to attack the legal angle as soon as possible, too. Consult with an elder law attorney or estate planning attorney as soon as possible to discuss a power of attorney, power of attorney for health care, a living will and/or guardianship.
Power of attorney
A power of attorney gives an agent — the person you designate — the legal authority to act on your behalf if you do not want to or are unable to take care of certain things for yourself.
“If the person already has advanced dementia when first diagnosed, he probably would not have the capacity to create a valid power of attorney,” says Margaret “Pegi” Price, J.D., professor at National University and the author of the book, “The Special Needs Child and Divorce: A Practical Guide to Evaluating and Handling Cases.”
Price says that you should get a letter from your doctor that states that you are of sound mind, can make good decisions and can handle your finances at that time. “He should get this letter at the same time as he prepares the durable power of attorney in case someone later questions the validity of the power of attorney,” she says.
Cost: $200 to $500, depending on the complexity of the document and where the person lives.
Power of attorney for health care
A power of attorney for health care allows someone to make medical decisions for you. You must sign a medical records release so that the agent is allowed to look at your medical records when making decisions, according to Price.
“The healthcare POA needs to be durable, or it will be useless when the person needs it,” says Price. “It is always a good idea to execute several originals of this type of POA, and have one in your medical chart with your primary care doctor, one with the dementia specialist, one in the long-term care or memory care facility and one with the agent named in the POA.”
Cost: $200 to $500, depending on the complexity of the document and where you live.
Living will/standard will
“A living will does the same thing as a medical power of attorney, except that a living will usually only controls end-of-life decisions, or the last days of a person’s life,” says Price.
You might need someone to handle your health care decisions but a living will cannot do that. The health care POA can include authority to make end-of-life decisions in addition to ongoing medical care before you die.
“If the person with dementia is in an advanced stage of the disease and does not have legal capacity, he cannot create a valid living will or standard will, which distributes a person’s assets after his death,” Price says.
Cost: $200 to several times that amount, depending on the complexity of the document(s) and where you live.
Sometimes, a diagnosis doesn’t happen until well after an individual has advanced progression of Alzheimer’s or dementia. Guardianship, also called conservatorship, gives decision-making authority to someone else. It’s the only option if the person with dementia is not of sound mind.
Cost: $1,500 on the low end to several thousand dollars or more for the lawyer filing the guardianship, several hundred dollars in court costs and a couple thousand dollars or more if the court appoints a lawyer to act on behalf of the allegedly impaired person.
Drugs to treat Alzheimer’s disease average about $177 to more than $400 per month according to Consumer Reports. There are three drugs approved by the Food and Drug Administration to treat mild-to-moderate Alzheimer’s currently on the market. Personal care
Personal care services involve help with personal hygiene or other personal care. Costs vary, depending on the type of care involved.
The average rate for unskilled home-care assistance is $21 an hour. Medicare generally doesn’t help cover the unskilled care most Alzheimer’s patients need, like bathing, dressing and administering medications.
Memory care units are specifically designed for Alzheimer’s patients. For example, a memory care facility is often set up in a circular layout because individuals with dementia sometimes feel anxiety when they encounter a dissimilar area. They offer more safety, security and relaxation than a regular care facility. It can cost $5,400 per month to reside in a memory care unit or approximately $64,800 per year, according to Dementia Care Central.
There are a variety of types of in-home care you can pursue, whether you opt for companion care or skilled nursing care. Besides personal care services, in-home services could include:
Companion services: Companion services are a non-medical option that offers supervision, recreational activities and/or visits for those with Alzheimer’s or dementia. Cost: Varies, depending on the type of care needed.Homemaker services: These services help with cleaning a home, shopping or meal preparation. Cost: $72 per day.Skilled care: This is an option that involves a licensed medical professional. Typically, skilled care nurses injections, physical therapy and other medical needs by a licensed health professional. Cost: $132 per day.
Eventually, it may not be possible to live at home or do in-home care due to safety or family members’ inability to care for you. Specific options include the following:
Retirement home: In the early stages of Alzheimer’s or dementia, a retirement home could be a good fit, particularly because you’ll be able to care for yourself independently. Cost: Between $1,500 and $10,000 per month.
Assisted living: Assisted living is a good option as you become less able to take care of yourself independently. You’ll receive help with meals, basic needs and health care. Cost: $4,000 per month or $48,000 per year.
Nursing home: You’ll get 24/7 medical care. Specific nursing homes could offer care specifically for Alzheimer’s and dementia. Be sure you’re choosing the right type of facility. Cost: $275 per day or $100,375 per year for a private room; $245 per day or $89,297 per year for a semi-private room.
Specialized care unit: Specialized care units put people with Alzheimer’s and dementia together in a unit within a large residential facility. Cost: $233 per day, or $85,045 per year.
Care retirement communities: These types of communities include all of the different levels of needs (retirement, assisted living, nursing home) all together and residents are able to move back and forth. Cost: Upfront fee of $10,000 up to $500,000. You’ll also pay a monthly maintenance fee of roughly $200 to more than $2,000.
Paying for the costs
Use Genworth’s state-by-state guide to calculate the cost of in-home vs. out-of-home care in your state.
Once you know the true costs of paying for the type of care you’d like, here are a few financial resources you can consider:
Personal savings and assets
Now is the time to total up your savings and assets and see how it can fit into the plan of how you’ll pay for your care. Consider any money you might have in the following t