Financial Wellness Month: where does Alzheimer’s care fit in?

January is Financial Wellness Month, an annual reminder to pay attention to our financial well-being. For too many Americans, this reminder goes unheeded as we progress toward retirement.

And for those who must factor in the cost of long-term care for a loved one living with Alzheimer’s disease, this is a wake-up call to encourage us to understand the costs and options that may be open to us should the need arise.

The good news – and the bad news

The good news, according to Northwestern Mutual’s 2021 Planning & Progress Study, which surveyed more than 2,000 American adults, Americans’ average personal savings have grown 10% year over year, from $65,900 in 2020 to $73,100 in 2021. And retirement savings have jumped 13% from $87,500 to $98,800.

The bad news, according to the Alzheimer’s Association, is that for the 6.2 million U.S. families currently dealing with Alzheimer’s disease, the cost of skilled care can be prohibitive.

Median costs for long-term care services

Nationwide, the cost of caring for those with Alzheimer’s and other forms of dementia in the U.S. surpassed a quarter of a trillion dollars ($355 billion) in 2020. For individual families, a cost-of-care survey conducted by Genworth in 2020 showed:

• Home care: A paid non-medical home health aide is $24 per hour and $960 per week or $49,920 per year (assuming 40 hours of care per week)
• Adult day services: $74 per day
• Assisted living facilities: $4,300 per month or $51,600 per year
• Semi-private room in a nursing home: $255 per day or $93,075 per year
• Private room in a nursing home: $290 per day or $105,850 per year

How long can Alzheimer’s care last?

The sixth-leading cause of death that kills more people than breast cancer and prostate cancer combined, Alzheimer’s is not a predictable disease. The symptoms worsen over time, although the rate at which the disease progresses varies. On average, a person with Alzheimer's lives four to eight years after diagnosis, but can live as long as 20 years, depending on other factors. People living with Alzheimer’s fall into three broad categories, with care needs increasing as the disease progresses:

• Early-stage Alzheimer's (mild) – In the early stage of Alzheimer's, a person may function independently. He or she may still drive, work and be part of social activities. Despite this, the person may feel as if he or she is having memory lapses, such as forgetting familiar words or the location of everyday objects.
• Middle-stage Alzheimer's (moderate) – Middle-stage Alzheimer's is typically the longest stage and can last for many years. As the disease progresses, the person with Alzheimer's will require a greater level of care. During the middle stage of Alzheimer’s, the dementia symptoms are more pronounced. The person may confuse words, get frustrated or angry, and act in unexpected ways, such as refusing to bathe. Damage to nerve cells in the brain can also make it difficult for the person to express thoughts and perform routine tasks without assistance.
• Late-stage Alzheimer's (severe) – In the final stage of the disease, dementia symptoms are severe. Individuals lose the ability to respond to their environment, to carry on a conversation and, eventually, to control movement. They may still say words or phrases, but communicating pain becomes difficult. As memory and cognitive skills continue to worsen, significant personality changes may take place and individuals need extensive care.
  

“How individual caregivers are able to cope with their loved one’s dementia can have a significant impact on the cost of care,” said Meg Donahue, director of Community Engagement for the Alzheimer’s Association of Colorado. “Some families are able to keep their loved ones at home longer. When that works, it can be beneficial for the individual with the disease to be in familiar surroundings with family.”

The Baby Boomer factor

A large segment of the American population – the Baby Boom generation – has started reaching age 65 and older, when the risk for Alzheimer’s and other dementias is elevated. By 2030, the segment of the U.S. population 65 and older will have grown substantially, and the projected 74 million older Americans will make up 20% of the total population (up from 17% in 2021).

By 2025, the number of Americans age 65 and older with Alzheimer’s dementia is projected to reach 7.2 million – a 16% increase from the 6.2 million in 2021.

While age is the primary risk factor for Alzheimer’s disease, Donahue noted that age and Alzheimer’s are very different in terms of their impact on the cost of care for older adults. At age 80, approximately 75% of people with Alzheimer’s live in a nursing home compared to only 4% of the general population.

The impact on caregivers

One research study reported that 74% of caregivers were “somewhat concerned” to “very concerned” about maintaining their own health since becoming a caregiver. A 2017 poll found that 27% of dementia caregivers delayed or did not do things they should in order to maintain their own health. And 18% of Alzheimer’s caregivers die before the person for whom they are caring.

However, the reality is that all family members are not able to provide the level of care their loved ones need at home, especially as the disease progresses. The average volunteer (unpaid) caregiver provides over 26 hours of care per week. For those who are employed, 57% report sometimes needing to go into work late or leave early because of the demands of caregiving, while 18% reduced their hours of work.

An Alzheimer’s Association report found that nearly half (48%) of care contributors must cut back on their own expenses – including basic necessities like food, transportation and medical care – to afford dementia-related care, while others must draw from their own savings or retirement funds.

Caregiving planning tips

The Alzheimer’s Association encourages families to look at retirement planning as a time to also anticipate the possible need for long-term medical care. Putting financial and legal plans into place now provides an opportunity to express your wishes for future care and decisions. It also allows time to work through the complex issues involved in long-term care. Following are tips for families that are beginning the planning process:

• Conduct an inventory of your financial resources (savings, insurance, retirement benefits, government assistance, VA benefits, etc.). A financial planner or elder care attorney can help with this.
• Enhance your understanding of the role and limitations of Medicare, Medicaid and other insurance options. A 2016 Alzheimer’s Association report found that nearly two out of three people incorrectly believe that Medicare helps pay for nursing home care or were unsure whether it did.
• Investigate long-term care services (for example, home care, assisted living residences and nursing homes) in your area. Ask what types of insurance they accept and if they accept Medicaid as few individuals with Alzheimer’s and other dementias have sufficient long-term care insurance or can afford to pay out-of-pocket for long-term care services for as long as they are needed.
• Call the local Area Agency on Aging to determine what community services and support programs are available (for example, respite care, homemaker services and Meals on Wheels can help alleviate financial burdens).
• Once you understand what you have for financial resources and what you can afford, make a plan with your family or a close friend for how to access care.
• If you are caring for someone living with Alzheimer’s, learn about income tax breaks for which you may qualify. Caregivers likely pay for some care costs out-of-pocket. Because of this, you may qualify for tax benefits from the Internal Revenue Service (IRS). Tax rules are complex and can change. Be sure to get advice from your tax adviser or accountant before filing your returns.
• Call the Alzheimer’s Association’s free Helpline at 800-272-3900. It is staffed by trained professionals available to help 24 hours a day, 365 days a year.

Contact: Jim Herlihy, Marketing & Communications Director (720) 699-9286 or jherlihy@alz.org

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