Figures from a Bureau of Labor Statistics (BLS) report published recently showed that the growth in the price of nursing homes and adult care has been especially volatile this year, reports Kiplinger’s recent article entitled, “Nursing Home Costs Soared in July.”
The national average cost of nursing homes rarely declines. The cost declined for just five months in the last quarter century (the months between 1997 and 2022). Therefore, it’s surprising to see three months of decline in 2023 (April, May, and June). Nonetheless, the total 1.2% percent dip in those three months was more than offset by the 2.4% cost increase in July.
It’s hard to determine if the July price jump was an aberration or indicative of future price increases. This unusual volatility likely shows an industry struggling to regroup after the disruptions of the pandemic, which severely impacted nursing.
Nursing home and adult care is very expensive. In the Roanoke Valley, we are seeing nursing home care cost upwards of $11,000.00 for some facilities.
This high cost is likely due to several factors, and the increased demand from a rapidly aging population, inflation and a shortage of qualified nurses top the list.
For most active, middle-aged people, it’s hard to imagine that you might need significant nursing care one day. However, research shows that 70% of adults who survive to age 65 need at least some long-term support before they die, and 48% receive some paid care, according to a study by The Urban Institute.
While Medicare may cover some expenses which includes a rehabilitative stay of up to 100 days, partnering with a professional is wise to get your long-term care planning on the right track. If you have children, you’ll be doing them an enormous favor.
The key is to pay attention to financial and estate planning. A senior’s thoughtfulness will let her family move them to a high-quality nursing home and likely be covered financially for a long time. If you are wealthy, you may self-insure. Other options are traditional long term care insurance, as well as special life insurance products with a long-term care insurance rider. By creating a financial plan for you, David can model outcomes to test what happens if you need assisted living or long term care in the future. He can also provide information about specific insurance products that pay for long term care, provide premium quotes, and help you apply for the insurance coverage.
Another option is Medicaid planning by making gifts and/or creating irrevocable trusts. Robyn has worked with many clients who want to set aside certain assets and protect them from having to be sold to pay for nursing home care. In Virginia, most planning of this nature must occur at least 5 years ahead of needing care.
When no planning has been done ahead of time, Robyn can also evaluate a person’s financial situation to see if an “emergency” Medicaid plan can be put in place to accelerate a person’s ability to qualify for Medicaid to pay for long term care. In particular, emergency Medicaid planning can work well for married persons, persons with disabled children, and persons whose adult children have been living in their home and taking care of them for a period of time.
No one really wants to think about nursing home care, but when you are ready to plan or have an unanticipated need for nursing home care, call us at Vested Partners.
Reference: Kiplinger (Aug. 16, 2023) “Nursing Home Costs Soared in July”