The Cost Of Long-Term Care

Welcome, it is Mr. Stillman's Opus. I'm John Stillman alongside a couple of special guests. Special guests who have been here before, Matt Ayotte and Alan Milliken are the founders of Aegis Home Care. You can find them online at aegishomecare.com.

That's a-e-g-i-s homecare.com. Guys, we don't have a lot of repeat guests on this here show, so congratulations on getting the call back. That's big-time stuff, I hope you're aware.

Oh, thank you. Glad to join you, absolutely. So we talked before in a previous episode about the four misconceptions of aging and healthcare. We're talking today about what it really costs to have some kind of long-term care need, and we'll start at the most expensive and get to the more affordable, to the extent that any of these options are affordable. We'll kind of work our way down to the different, less expensive options there. But first, Matt, I know you've got a couple of resources that you wanted to recommend to folks to sort of check out what costs look like for different things in this space.

Yeah, and thanks, John. The two things when we were chatting before the show that I did want to make sure that folks were aware of, because I use them all the time and have for 20-plus years. The North Carolina SHIP program, it's S-H-I-I-P, it's the Seniors Health Insurance Information Program. It's run through the North Carolina Department of Insurance, and it literally is W-W-W-N-C SHIP, like a ship, but with two i's, dot com. It's just an incredible resource for understanding Medicare, Medicare options, the new, not just what your benefits are for Part A and Part B, and how those change each year with the varying deductibles and so forth going up. But it's a great resource to be able to look at your county specifically and determine what licensed Med Supp, Medicare Supplemental Policies, or Medigap, as it's sometimes called, policies are available to you out there, and also to look at Medicare Advantage plans, which can be a little tricky, and tricky to understand, tricky to understand the distinctions between them, but the M-A-P-D, the Medicare Advantage Part D programs are all outlined out there.

It's just, they've got an 800 number, they have a really well trained group of folks that are glad to take phone calls and glad to answer questions. The other thing that I had mentioned I use all the time is the Genworth Financial, I'm not associated with Genworth in any way, but genworth.com, there's a forward slash cost of care, and their cost of care models are really, really good, and actually really accurate. The only tricky part is our part of the state can be sometimes more expensive than the western part of the state or down east, so sometimes you may see something being quoted as $110 a day, and in our area, Alan and I are seeing $125 or $130 a day, so sometimes you have to kind of mentally build that in, but they do give you the ability to slide the scale specifically up a number of years so that you can find out what it's costing today, and what the annual growth expectation is for that particular service in 2027 or 2032, or whenever you think you might need it. It sometimes can help with budgeting for long term care.

And when you talk about the future costs, there are basically two things in our economy that are growing in price more rapidly than inflation. One of them is college tuition, the other is the price of long term care, so certainly something you want to be factoring into your plan. So on that note, let's talk about the different ways of caring for yourself as you get older, and sort of the cost expectations for each of those tiers.

So we'll start at what is essentially the most expensive, the CCRCs, the continuing care retirement communities. You probably pay in a deposit early on, you may or may not own your unit that you stay in, or you might just pay a really high rent, but the idea is you're taken care of for life, no matter what your needs are medically. So give us an idea of what it might cost to move into a place like that. An initial deposit, what does it cost for a unit?

What do the monthly costs look like? So I just got a call yesterday, John, from a family looking at options like this, and they said, hey, can I go to XCCRC next door to us? You know, I can move in there, right?

And I said, well, I guess you can, and there's two ways that you can get in there. One is you have to be independent to move into those places initially. So you really can't have any physical needs or cognitive needs to move into one of these places initially.

You have to be independent. So if that's the case, then certainly you can go in there, but you also have to have some money. And typically the cost of getting into a CCRC can range anywhere from a one bedroom apartment, which is in the 130 to 150 range, 130,000 to 150,000 range up to in the 500s if you want a three bedroom villa that's fully sort of decked out in the latest marble and granite and hardwood.

So they're super nice. And as we've talked about before on a previous podcast, there are some equity models where you don't lose that money. It's an investment of sorts and you are guaranteed help for life on that campus, but it can be quite expensive. Not only do you have that initial fee of the 150 to 500, but there's also a monthly fee and that's all usually tied to your sweater square footage.

How big is your unit? So if you have a 1500 square foot unit, it'll be one price that could be 2,500 to $3,000 a month, all the way to 35 to $4,000 a month. If you have a bigger unit, you will also pay more if you have, if you're a couple moving into one of these places on a monthly basis. And in some of those cases you own your unit. When you pass away, your kids inherit it. It can be sold. They get the equity.

Correct. In some cases I know it's sort of like shared equity with the community, right? Like however much the unit grows from the time you buy it, the community gets part of that growth. You get part of it. Some of them, as we said, you don't own the unit at all.

And this is Matt. The one quick thing I would add to what Alan said, you know, what you're doing, John, in terms of helping people do advance financial planning for long-term care, it can't be overstated enough how people unfortunately really do need to address this sooner than later. A lot of the phone calls that we get, and it's always, it's tricky for us because our hearts go out to these folks and sometimes they even have the money and they're ready to move in. There is a waiting list at one of the large CCRCs in our area that's over 500 people. There are waiting lists where they're going to be building a new stage, but it's not going to be ready until 2022, that type of thing. So it's not sometimes just a matter of saying, oh, 150,000, well, I could do, I could deal with that. The fact is you have to get on the waiting list and it might be three, four, five years before you get the phone call. And as Alan said, now the tricky part of that is things can change very drastically in three or four or five years. So you might have well qualified for it from a clinical perspective, not to be overly clinical, but you might not have had any cognitive impairments or anything, but five years from now, you might not be a good candidate to live on that campus. So checking this out much sooner than later and thinking about these things, it's all part of having an advanced plan.

So that's kind of the highest in the CCRC. Next tier, probably not as glamorous, but also very expensive would be the nursing home. So give us an idea on costs on that front. The nursing home costs, like Matt said earlier, the early part of those stays can be covered by Medicare. If it's a qualified stay in a hospital and you have a diagnosis that says, sure, Medicare is going to pay for part of that. If that's not there or if it runs out because at some point Medicare won't pay anymore, then the average cost is somewhere in the neighborhood of $225 for a semi-private room and $250 for a private room. That can be higher in our area.

It's just the way it is in the triangle. Unfortunately, that can be higher up to 300, 325 a day, depending on which nursing home you look at. And what you get there is 24 hour care with around the clock nurses and certified nursing assistants and aides and dietary help and food. And you don't have to pay for any utilities. I mean, if you live there, then you're getting everything, including transportation to and from doctor's appointments, those kinds of things. But it's like you mentioned, it can be a small room and you might have a roommate.

Yup. So pretty high cost there. Then we have assisted living where the care is not as strenuous, but you are still there 24 hours a day. It's just that the level of care needed to be provided to you isn't quite as, I don't even know the right word, but isn't quite as intense, I guess.

But Matt, what does some of those costs look like? You know, comparing nursing home to assisted living. You're right. And it's not, it's not as robust. The service offering isn't as robust and the costs aren't as high either. The easiest way I generally think of it, it's about half. So in this area, instead of being in the 250, even 275 plus dollar a day range for a nursing home, you could be looking in the 125, $140 a day range. Annualized it, which is how I always think of things, a nursing home right now in our area is something in the neighborhood of $90,000 a year, which catches people a bit off guard to say the least.

I had mentioned earlier that cost of care website on the Genworth site. Um, I was looking at this yesterday and scaled it up 10 years just to see what they were predicting for 2027. So let's say you're 72 today or 67 and you're thinking about, yeah, what, what, what could that be 10 years from now? Well, that, that price is going to be up to almost $125,000 a year. Red living is roughly half of that. So right now it's in the low forties, which is still a considerable chunk of change, 40 plus thousand dollars a year.

Uh, but it's going to be up in the mid fifties, maybe even $60,000 in 10 years. Another option that a lot of people look at where maybe it's just care needed during the day is adult daycare. And I know this can kind of work hand in hand with some of the home care too, but looking only at adult daycare by itself, what kind of cost would we be looking at there?

And also what happens there? What goes on in adult daycare? So it's, it's, it's a term that you might hear more often now than you used to. Um, everybody's heard of daycare for their children, but, uh, adult daycare is similar but different. It, it typically is, um, someone who, uh, may be in a spousal situation where the wife is perfectly fine and working full time and something happens with her husband. He might've had a stroke, he might've had early onset dementia, and, um, she still needs to work and she can't really afford 24 hour care.

So what are my options? So one of the options is, um, as we mentioned, adult daycare, so you can take your spouse, she could take her husband to one of these facilities and he can be there during the day. They do, um, meals, they help with, um, cognitive issues, they do activities, there's music, there's, um, a whole plethora of things that actually the state requires that they have in an adult daycare situation and they can stay there from eight to five Monday through Friday.

They typically aren't open on weekends or holidays, but it does help bridge a gap between, you know, when someone is just not old enough or not ready or not financially able to retire and take care of their spouse, this is an option. Uh, as you said, someone like us as an agency can help on either end of that day. We can help in the morning, get somebody up, get them ready, take them to the daycare, pick them up in the evening, you know, take them home, help them with a meal, get them ready for bed. So if the day ends up needing to be longer for these folks, then we can help on either end of that. The cost of a daycare situation typically runs about 90 to $100 a day.

Okay. And then looking at home care, which obviously can be very flexible. You could have somebody in the home 24 hours a day helping you with tasks around the house. It could be that you just need help a few hours a day, but, uh, just to give us a general idea of hourly rates on something like that. And again, I know we're talking about having a CNA certified nursing assistant is what you guys are providing for home care. So there's the capability to help with some medical stuff. Although I know primarily what you're doing is helping with meals and transferring from one room to another and things like that.

But what kind of costs are we looking at on that? Um, and, and one other quick note, uh, you are correct. Yes. So it's, it's meal preparation assistance with ambulation assistance with general hygiene. A lot of times the CNAs, um, we actually train them and encourage them to look around and keep the home environment safe.

First and foremost, that's what they need to do. So even light duty housekeeping, um, you're, you're there in the home, do the load of laundry, keep the kitchen clean, uh, go through and look in the refrigerator for, you know, expired, uh, foods and that type of thing. So it's a little bit, uh, sometimes a little bit more than, than just, um, companion care and that kind of thing. The cost ranges from generally speaking 20 to sometimes almost $30 an hour, but it's, it's kind of, it's counterintuitive. So the longer the shift that you might need at any given time, the less it is per hour. So if you were to need eight or 10 or 12 hours or around the clock of care, it's going to be back down towards the $20 range. Um, and the absolute, uh, the Frank, uh, honest truth on that is it's just much, much easier administratively for us to staff that we have many, many, many, uh, CNAs. We have almost 175 CNAs currently that, uh, they love the long shifts and they would rather drive somewhere, be there 10 hours and drive home.

Um, if you need only two or three hours, um, the price goes up per hour because it's, it's still the same preparation and the same drive and it's sometimes much, much, much more difficult to actually find somebody willing to do that. But, uh, the flexibility in working with an agency and not just ours, but any home, any licensed home care agency through the department of health and human services, um, is that there is backup. That's really important, uh, concept that people unfortunately forget and don't think about. We, we work with a lot of families that started by finding, you know, Mary or Nancy on Craigslist and they stayed with mom for a year and it was great. And then Mary got the flu and was out for a month and you didn't want her around your mom anyway with the flu. But there is no backup.

There was nothing, um, nothing there to as a safety net. Um, and agencies are always going to be able to have another person at the ready with a nurse to be able to, uh, to help them understand the needs of your mom. And you can see how combining something like adult daycare for part of the day with home care for the other part of the day could be a much less expensive way of caring for somebody than just having to go to the nursing home and they get to stay in their own home, which is a big thing for a lot of people. We're often referred to as a bridge and we'll get a call from someone who says, mom's just not ready to move into assisted living or dad or husband. And we say, sure, you know, we, we want them to stay home too.

That's where they want to be. So, you know, we can do anywhere from three or four hours a day to whatever you need. And, and not only, um, three or four hours, but when do you want those three or four hours?

Do you want them 6am to 10am or do you want them one to four? That's the beauty of home care. You can provide that and give people exactly what they want when they want it and nothing more, nothing less. And it is a bridge to the next level. We, we know that people will change and we'll need, um, things more than maybe what we can provide down the road. But it is a bridge to the next level. And so then the question becomes, how do we pay for all of this?

And that's a completely different discussion for another day. But, uh, we've actually done a couple of podcasts in the past about all the different insurance options, longterm care insurance, life insurance with what's called an accelerated death benefit or living benefit where essentially you can use your death benefit to pay for your care while you're still alive. There are asset based longterm care options where you can essentially convert your IRA into an insurance policy and yes, you're paying taxes on that as you convert it over, but you can stretch that out over maybe a 10 year period so you're not taking a huge tax hit in any one year. There are ways that you can self-insure if you have the assets. Maybe you have a lake house that's worth a million dollars that you say, all right, well once I end up in the nursing home or need some kind of care, I'm not going to need the lake house. I'll set the lake house at that point and that'll go a long way in covering my care.

There are ways you can do it, but it's just something we have to plan for and we have to figure out what's going to be right for your situation. Again, Matt Ayotte and Alan Milliken are the founders of Aegis Home Care. You can find them online at AegisHomeCare.com. A-E-G-I-S Home Care.com and guys, the phone number once again is what? 919-442-5252.

That's if you'd like some help or maybe more realistically somebody in your family needs some help and you'd like to explore their resources there. Thanks guys for coming in. Enjoyed talking with you and we'll talk with you again soon right here. Pleasure to be here. Thanks for having us. Mr. Stillman's Opus.