Page Reviewed / Updated - May 2016
When a loved one is diagnosed with Alzheimer’s disease, the immediate reaction is not how we will pay for Alzheimer’s care. However, not long after a diagnosis, as bills come in, families begin to recognize the high expense of caring for someone with a progressive condition. When immersing in this topic, it is important for the reader to distinguish between paying for medical care and paying for custodial care (non-Medical care).
Medical care for Alzheimer’s will largely be covered by insurance, presumably Medicare and Medicare Supplemental Insurance as the vast majority of Americans over sixty-five have these policies. In the past, we have written extensively on Medicare’s benefits for Alzheimer’s care, so that will not be the focus of this article. The same is true with prescription drugs, Medicare / Supplemental Insurance pays for the majority of medications necessary for persons with the disease. However, custodial / non-medical care is not covered by Medicare. In fact, neither Medicare, nor Medicare Supplemental Insurance will offer any assistance for the personal care costs and supervision necessary for persons with Alzheimer’s.
The focus of this article is on developing a financial plan to cover the non-medical costs associated with Alzheimer’s such as companion care, adult day care and residential memory care (a version of assisted living). If the gray cloud of Alzheimer’s has a silver lining, it is that the long progression of the condition gives families ample time to develop a financial strategy.
The first step in developing a financial plan for Alzheimer’s is to get a handle on what the costs of non-medical care are. In trying to generalize, one must recognize the variables associated with non-medical care. The largest variable is, of course, how much care can family and friends provide. The stage of the condition also dramatically affects the amount and type of care required. As one progresses into Alzheimer’s later stages their care costs skyrocket. Finally, the life expectancy of individual is a major factor in the overall costs. As we discuss costs on a monthly, annual and cumulative basis, the reader must take into consideration these factors and adjust their cost projections accordingly. The cost projections we make here are for a single individual with very limited familial support over the three stages of the condition.
This stage lasts between 2-4 years. Symptoms are characterized by minor memory loss and some physical coordination challenges. Reminders may be necessary for some of the activities of daily living and medication management. However, the need for outside care assistance has not yet presented itself. Most, if not all, of the assistance the individual requires can be managed by telephone, weekend visits and by employing technologies such as Medical Alert services and medication reminder devices / services.
The monthly cost for the medical alert and medication management services and for one, 4- hour, weekly “companion care” visit is projected at $400 - $500 / month. Annually, this works out to $4,800 - $6,000.
In Stage 2, symptomatically, individuals experience persistent memory loss, speech and reasoning are compromised and behavioral changes are noticeable. From a care perspective, individuals cannot be left alone for extended periods of time, and self-driving is not an option. Assistance with the activities of daily living is required.
At this point, either residential memory care or adult day care with nighttime and weekend supervision at home is required. Depending on the area of the country in which the individual resides, residential memory care, or assisted living, costs between $3,000 - $6,000 / month. Calculated annually, between $36,000 - $72,000. The adult day care / in-home supervision approach is less expensive on the adult day care side, but costlier for the in-home caregiver portion. One should expect adult day care for the month to cost $1,500 - $2,000 and in-home care between $2,500 - $4,000 per month. Calculated annually, this approach is projected to cost between $48,000 - $72,000. Of course, if a family is able to provide some of this care themselves, the adult day care / in-home care approach can greatly moderate the cost in Stage 2.
The third and final stage of Alzheimer’s lasts from 1-3 years. Near complete memory and verbal skills loss are the norm. The individual is likely to be immobile, perhaps bedridden and delirium is common. From a care perspective, nursing home care or extremely costly, around-the-clock, in home care are the only two options. Nearly all Memory Care / Assisted Living residences cannot handle the needs of persons in this stage of Alzheimer’s. Nursing home care is billed on daily basis and costs approximately $150 - $300 per day. Annually, depending largely on state, nursing home care costs $60,000 - $120,000.
Persons diagnosed with Alzheimer’s Disease have a projected life expectancy of 8-10 years following their diagnosis. However, this is an average; lifespans of 5 years to 15 years are common. To illustrate the impact of lifespan on the total cost of caring for someone with Alzheimer’s we have calculated these projected costs with 3 different lifespans.
Average Lifetime Cost of Caring for an Individual with Alzheimer’s
1 yr. at $5,000 = $5,000
2 yrs. at $5,000 = $10,000
3 yrs. at $5,000 = $15,000
3 yrs. at $48,000 = $144,000
6 yrs. at $48,000 = $288,000
9 yrs. at $48,000 = $432,000
1 yr. at $90,000 = $90,000
2 yrs. at $90,000 = $180,000
3 yrs. at $90,000 = $270,000
*Geographic variations within the US can impact these projections by as much as 25% in either direction.
Many families have spent considerable effort planning for retirement and some of those plans include options for long term care. However, planning for Alzheimer’s care is very different for a variety of reasons. With Alzheimer’s, families are planning for a known condition with a relatively foreseeable progression. Long term care plans are designed around a “what if scenario”; a completely different objective and one that requires balancing priorities. Alzheimer’s financial planning has the advantage of knowing approximately how much the care will cost. A core component of long term care planning is long term care (LTC) insurance. With a diagnosis of Alzheimer’s, the possibility of purchasing long term care insurance is off the table. Insurance companies will not sell LTC insurance for an individual with Alzheimer’s. In nearly all cases, the later stages of Alzheimer’s care require admission to a nursing home. This is not the case for many persons receiving long term care. Finally, and fortunately, there are many forms of governmental and non-profit assistance programs for individuals with Alzheimer’s. Some of these are “means tested” in other words, eligibility is dependent on the financial resources of the individual with Alzheimer’s. Since the costs and progression are well known, a good financial plan for Alzheimer’s takes these programs under consideration.
By “self-planning” we mean engaging in financial planning for a loved one with Alzheimer’s as opposed to seeking outside professional expertise. Make no mistake that self-planning is a challenging, time-consuming and often frustrating process. It requires expertise in financial matters, the ability to discover and resolve the often-conflicting eligibility requirements for multiple assistance programs and of course, good spreadsheet skills. Further complicating matters, self-planners are usually the primary caregiver for the individual with Alzheimer’s as well. This dual responsibility can significantly impact their time and focus. Our organization produces two tools that can be of assistance to self-planners. For those wishing to care for the individual themselves and receive compensation, we have developed a Paid Caregiver Program Locator. We have also created an Elder Care Financial Assistance Locator, which provides access to a much broader range of assistance options. Also, we feel the Alzheimer’s Association has done an excellent job of providing articles and suggestions for self-planners. Rather than reproduce their efforts, you can find them here.
Area Agencies on Aging, known also as Triple As, are a nationwide network of organizations funded to provide assistance services to adults 60+ years of age. All the agencies offer Information & Referral and many scale this up to essentially providing Case Management services. The big benefit of working with your local Area Agency on Aging is the services provided are free of charge. These organizations are very knowledgeable about local programs that provide assistance. However, their counselors may lack larger financial planning expertise. Further, as public employees providing services free of charge, they may be overwhelmed with requests for assistance and may not have the knowledge or time available to go as in-depth as your family might require. Furthermore, they might not be able to assist with the more strategic approaches to gaining eligibility to assistance programs. Having said that, AAAs are an excellent first place to start. Find your local AAA here.
Financial Planners, of a more traditional nature, are expert in helping clients think long term and structuring their resources to last the duration of their lifetimes. Both of these expertise are critical for Alzheimer’s Financial Planning, but also important is an understanding of the unique challenges presented by the condition and the unique resources available to these individuals. If a family has been working with a financial planner, asking them about modifying the plan for their loved one with Alzheimer’s is a good place to start. However, should a family not already be engaged with a financial planner, they may be better suited by pursuing the Medicaid Planner or Alzheimer’s Planner options discussed below.
As implied by the name, Medicaid Planners (Medi-Cal, MassHealth, TennCare etc. depending on your state’s name), are experts in helping their clients qualify for Medicaid. If you are certain Medicaid is the best approach for your loved one with Alzheimer’s, then working with a Medicaid Planner is a smart approach. They are knowledgeable about Medicaid nuances and can help families preserve some of their resources that they might have been otherwise required to spend on their loved one’s care. Medicaid Planners are often elderlaw attorneys but there is no requirement that they be licensed as such. One drawback of Medicaid Planners is Medicaid services are most relevant to caring for individuals with Alzheimer’s in the late stages of the condition. Often times, Medicaid programs offer no financial or care assistance for those in the less severe stages. Medicaid Planners’ pricing is usually dependent the income and assets of their clients seeking Medicaid. Those with greater incomes and assets will pay higher fees. This is not because they are being taken advantage of, but because having more income and assets results in more work for the Medicaid Planner. One should expect an engagement to cost between $2,500 - $7,500. Learn more here.
Last, but most certainly not least, are Alzheimer’s Planning Specialists or simply Alzheimer’s Financial Planners. These professionals are knowledgeable about Medicaid eligibility but equally as important they are knowledgeable about the many programs available to persons with Alzheimer’s beside Medicaid such as state specific programs or veterans’ programs. This insight is of particular importance because it is these programs that often provide financial assistance during the earlier, less severe stages of the condition before nursing home care or other forms of residential care are required. Alzheimer’s Financial Planners are most appropriate for families who are low to middle income (but not impoverished). Engagement pricing may vary based on the state of residence or the stage of the condition. One should expect fees between $1,500 - $3,000. Families can be connected with an Alzheimer’s Planner that provides services in their state, by completing the short form here.