Cost of Aging: Caregiving - Unanticipated Costs

By Mark Olshaker | Care of the National Aging In Place Council

Half of all men age 65 or over and 60 percent of women will need a high level of personal care at some point. Three-fourths of seniors with long-term care needs live at home, and nearly two-thirds of those receive all of their help from unpaid family members and friends. For those who do have compensated care, Medicare or Medicaid pays about 42 percent of the costs and private insurance covers about five percent, the remaining 53 percent is paid out-of-pocket.

When we consider average lifetime long-term care spending, 53 percent comes out-of-pocket, 34 percent is paid by Medicaid, and 13 percent from other sources. For home and residential care, it breaks down to 68 percent out-of-pocket, 19 percent Medicaid and 13 percent other. For nursing home care, it’s 35 percent out-of-pocket, 51 percent Medicaid and 14 percent other. And keep in mind that Medicaid is needs-based and not available to most seniors with moderate assets.

Medicare pays for a limited amount of long-term supportive services, but eligibility requirements are strict and generally cover only four to ten hours a week....​

​Long-term care represents a crisis that is only growing with the aging of the Baby Boomer generation and rising health-related costs. Bruce Chernof, MD is President and CEO of The SCAN Foundation, which is dedicated to creating a society in which older adults can access health and supportive services they need. As he frames the problem: “Currently Americans have few viable tools to plan for these costs, putting enormous pressure on their retirement savings, as well as requiring hands-on and financial support from families and public programs. Yet our policy frame is stuck in the past, built for a place that no longer exists.”

“Families are smaller than they were in the past and multiple generations don’t live together nearly as often, so the crisis is the fact that there are fewer and fewer caregivers,” says Gail Gibson Hunt, President and CEO of the National Alliance for Caregiving. So it’s going to fall on us as Baby Boomers.” Twenty years from now, this age group will double.

Hunt’s organization conducted a study that found family caregivers spend an average of greater than $5,000 out-of-pocket costs per year, more if long distances are involved.

And the stresses can be overwhelming. “Data shows that 60 percent of family caregivers continue working,” she notes. “Six percent of those will quit their jobs and another three percent will take early retirement. But 60 percent of the working 60 percent will need some kind of workplace accommodation. And it’s important for people to know that leaving the workforce for a couple of years at the peak of earning years means taking a big hit on wages, pensions and Social Security. By the time they retire the financial
impact is $325,000 on average.”

There are no easy answers, either for paying for home healthcare or taking it on without pay for a relative or friend. A few public policy issues can help, according to Hunt. “Social Security credits for unpaid caregivers would be an acknowledgement that this is real work with real value. And for years, Senator Barbara Mikulski of Maryland has been introducing legislation for Long-Term Care Tax Credits. Three states – California, Rhode Island and New York – have mandated paid family medical leave. Washington State also passed it, but never funded it.”

Whether through family members or paid help, long- term care is costly on many levels. “The biggest issue for us,” says Hunt, “is that there be recognition of family care-givers, along with education and training and respite care when they need it. They are the backbone of our long-term care system and would cost billions of dollars to replace.”