What Does Long-Term Care Cost Today Where I Live?

Sondra Ziegler (0:01)

Welcome to Second Half Conversations. I'm your host, Sondra Ziegler. This is a space to discuss all kinds of topics about the second half of life, from complicated legal topics like wealth protection and business succession planning that we break down in a practical way, to long term care planning and care navigation when you have a loved one on a care journey, to leaning into fully experiencing new seasons of life, of work and relationships. Our team and guests are here to equip you to take full advantage of where you're at. Because if done right, the second half is the better half. Let's get to it. Hello, everyone, and welcome back to Second Half Conversations. I'm Sondra Ziegler. I'm going to do a little solo podcasting today to talk about something that affects every family, and that is the cost of long term care. But I am not here to to talk in generalities. I want to give you actionable information about the levels of care and the cost of care, and how quickly those costs are rising, how those costs or the increase in those costs compares to general inflation these days and different ways to pay for care. My goal today is to give you information that could actually help you if you are at a moment where you realize a loved one needs long term care, or you just want to plan for the future. You want to get with your financial advisor, your CPA, and look at, okay, if I have a long term care need, how will me or my spouse, how will we pay for it? And how can we protect our assets from the cost of long term care? What options are out there? And this will be great information if that's not you right now, but you have a friend or loved one who's facing this, please pass on this information because many people don't realize just how expensive long term care has become. What we're actually talking about right now in our area. What are the costs of the different types of care? Could I stay at home? Is that even feasible? And how a long term care event can impact not only your savings, but your spouse, your children and the legacy that you're hoping to leave behind. So before we get started, I just want to remind you that this is educational in nature only. This is not legal advice because to give you legal advice, we would need to know your entire situation. Our attorneys would sit down with you and find out who's in your family, who do you want to leave a legacy for, what assets you have and how they're titled, how they're owned, because that will affect your potential eligibility for programs that could help pay for care. And what are your goals? We would need to get all of that information to give you legal advice. So this is not meant to be legal advice. This is educational in nature only. So with that, before I jump into the types of care and how much those cost these days, at least in our area. You could be listening to me from another area. So what's great is I'm about to point you to our new tool on our website. Our cost of care calculator is now live on zieglerestatelaw.com. If you go to our website there, click on Resources at the top, and then Calculators. Or you may see the cost of care calculator promoted at the top of our website. Have two different calculators that just went live not long ago. One is our cost of care calculator, which we're talking about today. The other is our estate tax calculator, which is also really cool. But if you go to our cost of care calculator, it's going to allow you to put in your zip code, the care type you're interested in, the period you want to see results for, so whether that's daily, monthly, or annual costs that you want to see, how many years from now you want to project this cost, whether you want to know what it costs today, or would you like to know what it costs in two years, five years, ten years, and what rate of inflation do you want to assume? That is a big one. That is a big factor in what it's going to cost, of course. And then it'll give you that number. It'll give you those numbers so you can play around with that. You can look at the difference in the types of care in terms of their costs. You could, you know, extrapolate based on different annual inflation rates that you're going to assume. So go to our calculator if this is interesting to you, but it's a tremendous tool. Okay, let's dive into the levels of care and their costs. So the first type of care that I want to look at is nursing home care. In Texas, the nursing home average cost is $7,500. Now I'm per month for a shared room in a nursing home or about $90,000 per year. That is a statewide average. If you live in one of the bigger cities in Texas, it's going to be more. If you use our cost calculator to check out costs in other parts of the country, you're going to see very quickly that Texas is one of the most affordable states when it comes to nursing home care. The Northeast and the West Coast, so much more expensive. But in Texas, it's running around $7,500 per month for a shared room in a nursing home. Here's the thing to understand though. Nursing home costs are increasing at a rate of inflation that's about 7% annually, which is way faster than the average rate of inflation for the economy as a whole. So, you know, in the news right now, you hear a lot about inflation. You hear about core inflation, and that is the government's estimate as to what the rate of inflation is if you pull out groceries and gasoline, gasoline, which which I would love to have an economist explain this to me because it seems like core inflation should include fuel and groceries. But I digress. Core inflation is running at about what 3.1, 3.2%. Right now, I know the Fed's target rate is 2%, but we haven't been there in, I don't know, six, seven years at least. The inflation rate for nursing home care has been 7% over the last few years. That is shocking. Let's move to assisted living. So the cost of assisted living median cost that is in Texas is about 5,051 thousand per month, or 61,000 per year. Okay? So less expensive than a nursing home, but it's a different type of care than what is provided in a nursing home. So in a nursing home, you will have people who need the care of a skilled nurse, of a licensed nurse. They need medication management. They may need oxygen. They may need to be administered insulin. They may need wound care. So people who stay in an assisted living who where that's the appropriate level of care for them are needing more what we're calling custodial care. Now people who are in nursing homes may need the care of a licensed nurse and some custodial care as well. But many people who have dementia, Parkinson's, chronic debilitating illnesses that are taking away their ability to function in everyday life may not need the care of a skilled nurse. The care that they need may be able to be provided by a lesser level of care than a skilled nursing facility provides. So that would be more because what we call custodial care provided providing help with things like activities of daily living. So that's bathing, dressing, eating, toileting, continence, transferring from a chair to a bed, or to the bathroom, or you know, from the bed to the kitchen. Those that type of care can be provided in an assisted living facility. It's assisted living facilities that have a memory care unit are going to be more expensive. So if you're in memory care in an assisted living facility, it's going to be more than this median cost of 61 or excuse me, $5,100 per month or $61,000 per year. Okay. Now let's look at home care. So home care provided by a, you know, formal home care provided by a home health agency, the median monthly cost of that in Texas is $4,800 per month. Now you are probably thinking for how many hours exactly. Right? That number is going to vary drastically depending on how many hours you need. This number is just based on the average number of hours that people who are hiring formal home care are paying for. It's $4,800 a month. I don't know what that number is for how many hours they're hiring in, but that's the average. If you needed round the clock care, that round the clock care in the home would be the very most expensive place you could receive it. Way more expensive than a nursing home or an assisted living facility. Now I will say while we're on the subject of home care, home care can be provided by informally. And informal home care is what we would call care provided by a loved one, a family friend, someone that's not a home health agency or a licensed care provider, Just someone that's coming to help you with activities of daily living in your home. They could be helping you prepare meals, transfer, get dressed for the day. That's informal care, and that cost would be different. I want to mention senior living communities while we're talking about types of care. So senior living communities are living arrangements. They're sometimes they're they can be apartments, sometimes they're condominiums, but they're communities. They're living communities where they don't come with medical care, but they come with some services that are helpful as people get older. And those include things like meals, all your meals provided. So there's not any cooking needed activities, transportation to doctor's appointments, to shopping, to events. Those are not technically long term care facilities. And so I want to be careful in talking about that because you cannot use public benefits in a facility like that because they're not actually providing any medical care. Now having said that, can you live in a senior living community and need some in home care? Absolutely. At that point, the senior living community just becomes a different address than your home that you used to live in. It's just the new apartment that you live in, and oh, by the way, maybe I'm hiring in home care from a home care agency, or I'm hiring in informal care. I'm hiring my niece to come by a few times a week or once or twice a day to help me do certain things. So that's definitely an option if you have a loved one who needs care and they're not needing a lot of care, they're not needing around the clock care, their quality of life may be much better at a senior living facility with some care a senior living community with some care hired in from a home health agency. An assisted living facility is probably a more appropriate place for someone who does not have a need for a high high level of skill in their care provider in terms of a a licensed nurse. They're not needing skilled nursing care. If they're just needing some custodial care, then assisted living is probably going to be a lot better place for them. So it's important to look at the levels of care, not assume that your loved one needs a nursing home just because they need long term care. And if you would like help assessing that, I just want to let you know we have a care navigator at our firm who can be in your initial consultation when you're there talking about your loved one's need for care and the legal planning that they may need, that our care navigator is a licensed social worker who's worked in all levels of long term care for more than twenty years in the Lubbock area. And she could really help do that initial assessment with your loved one to find out, okay, is my loved one safe at home? If they're not safe at home, could they be if we hired in some care? If so, what kind of care and how much do we need? Is that plausible? And if it's not plausible, what is the next step? Do they need to go to a nursing home or could they be cared for well in an assisted living facility where they would have more social options and, you know, where they could get help with custodial types of care with activities of daily living without having to be in a full on skilled nursing facility. Our care navigator, Michelle Potta, is just fantastic at helping families with these decisions, and it just relieves so much of the burden for you that we would love for you to come and talk with her. Alright. Little plug for our care navigation. So when we look at those numbers, it's obviously shocking, and it's a it's a real piece of the puzzle in making sure that you're financially secure in retirement. And so, you know, the next thing I think that jumps in most people's heads is, well, doesn't Medicare pay for long term care? I mean, you know, Aunt Betsy fell and broke her hip. She went to the hospital, had surgery, and then was in a nursing and rehabilitation center to get back on her feet. Isn't that she all of that was paid for by Medicare for her. So doesn't Medicare pay for long term care? The answer is no. Medicare does not pay for long term care. The reason that's confusing is that Medicare does pay for that rehab after the fall and breaking your hip and, you know, a certain number of days of rehabilitation services to get back on your feet up to one hundred days as long as that skilled care remains medically necessary, but it is not a guarantee. It is not a guarantee that you're gonna get a hundred days, but for sure, you're not gonna get more than a hundred days. So hear me say this, Medicare does not pay for long term care. It's interesting from a public policy standpoint, you know, Medicare obviously pays for some very expensive things. If you have a heart attack and you need triple bypass surgery, Medicare will pay for that. If you get dementia and have a Care Journey in a long term care facility for five years, it does not pay for that. And there's really no explaining that except for the policymakers when Medicare was passed did not have as part of day to day reality that most older people were going to need long term care. It just was not it was not a part of most people's journey. But today, we're living longer and with longer life has come a greater need for long term care due to a longer journey with certain chronic illnesses and due to things like dementia. So just remember Medicare does not pay for long term care. So how do people pay for care? Obviously, cash out of pocket if you have it is one way to pay for care. The use of traditional long term care insurance benefits is another way to pay for care. There are newer hybrid insurance products that combine a life insurance component with long term care benefits, and they sort of trade out. It's like if you end up needing long term care, it's gonna draw down the life insurance benefit. It's gonna draw down from the death benefit basically and reduce it to a point that there wouldn't be a death benefit necessarily anymore if you were on long term care long enough. But if you if you need long term care, you've got long term care benefits. If you don't need long term care benefits, these hybrid products will keep all of the value in the life insurance so that then that all passes to your family instead of losing the value of what you pay in like you do on a traditional long term care insurance policy. So two ways there to pay for long term care with insurance. One is traditional long term care insurance and the other is these hybrid products that combine life insurance with long term care benefits. Public benefits is the is the other way to pay for long term care. But before I move on to that, I do want to say if you have a traditional long term care insurance policy, don't stop paying for it before you get some advice on that. Go to your insurance agent, your financial adviser, have them look at the long term care insurance policy and see if you should give it up or if it's worth keeping. There are some policies that we call golden ticket policies because they don't write them like that anymore, but there are some still in force that people have been paying on forever. And if you look at them, you're gonna wanna look for a couple things. One is, what is the benefit amount per day? What is the benefit amount total? Is there a limit to either of those? Okay? And actually, there's a there's a third thing you wanna look for, and that is where can you receive care? Can you receive care anywhere? And this policy will pay for it, home care, assisted living, or nursing home care, or is it limited only to nursing home care? That is a typical limitation on the older policy. Some of them will only allow you to receive benefits in the nursing home. Most, if not all, policies written today have a per day cap. They have a total maximum cap. You never see them written unlimited, but there are some out there, some older policies that do not have a limit. So you wanna look for those those three pieces of information in your long term care insurance policy or that of your loved one. Don't give that policy up or let it lapse without looking at that and getting some advice because if it is an unlimited policy, it can be gold, I mean, as you've seen with the cost of care rising like it is. So we talked about home care, we talked about assisted living, and we talked about nursing home care. Nursing home care is rising at 7%. The cost of nursing home care is rising at 7% a year, way outpacing normal inflation, which is currently running at about three or 3.1 or 2% if you only count core inflation and not fuel and groceries, which of course is crazy. I will tell you that the rate of inflation recently for assisted living is growing faster than any other segment of long term care. It's growing at 10% a year on average. Home care is growing more similarly to the cost of nursing care. Either way, 7% increase, 10% increase, that's a huge increase year over year. And when you use our calculator, you'll see the impact of that rate of growth in calculating future potential costs. All right, so now let's talk about public benefits. So we talked about the fact that Medicare does not pay for long term care, so what does? Two benefits we're going to talk about. One is a Veterans Benefit. So there is a veteran's benefit called aid and attendance that is for our wartime veterans or their surviving spouses that will help pay for some long term care. Then we also have Medicaid. When we're talking about the VA benefit, we're talking about VA non service connected pension with aid and attendance, and the important thing to understand about this is it's not going to pay the whole cost of care, but it can pay us a significant chunk. Okay, and the amount that that benefit will pay every year changes every year, it goes up a little bit every year. And so I'm not I don't want to give the numbers because that's going to change, but you can look online and find out the figure for a married veteran, a single veteran with no dependents, and then a surviving spouse of a wartime veteran. It's a different maximum monthly amount for each of those, But it is a significant benefit. If you can qualify, it's become pretty difficult to qualify for that benefit. So I'm going to move on and talk about Medicaid. Medicaid is a joint state federal program, where the overarching rules are set by the federal government, but there are some state differences. And Medicaid, unlike VA non service connected pension with aid and attendance that we just talked about, aid and attendance for short, unlike that one, Medicaid will pay for the entire cost of care if you qualify. And that is the big question, right? How do you qualify for Medicaid? Don't you have to be completely broke to qualify for Medicaid? The answer to that is no. You don't. Now I will tell you, if you look at what we call the cliff notes, the cliff notes of Medicaid rules, you would think you do have to be completely broke to qualify. But the important thing to understand is that that's the cliff notes. The Medicaid rules are more than 800 pages long for the state of Texas, and the reason you don't have to be completely broke to qualify is in the exceptions in the rules, not the cliff notes in the exceptions to the rules. That is what an elder law firm can help you navigate. We know where those exceptions are, and we can look at your situation, the assets you own, and help come up with a strategy that will help you qualify if you need Medicaid to help pay these high costs of care. So don't think that you can't qualify. Don't think your loved one can't qualify. The sooner we plan, the better options we're going to have, the more of those exceptions in the rules we're going to be able to use in your favor. But even if your loved one is already in the nursing home, and they have not qualified for Medicaid yet, we can usually help get them qualified and protect the majority of their savings that they have left before it's too late. If you hear someone say, you have to spend everything down. In rare cases, that's true. It is usually not true. So that's a good moment to stop and get the advice you need to protect your loved ones assets and get them the care that they need. So in other words, don't assume it's too early to plan. But also don't assume it's too late. As a wrap up today, I want to leave you with three takeaways. First, long term care is incredibly common. Most of us are going to need it before we pass. Second, the costs are much higher than most people realize, and they continue to rise rapidly. Third, there are often more planning options available than families realize if they seek guidance early. And so that's what I wanna ask you to do. If you like to see the projected cost of care in your own community, visit the the CareScout cost of care calculator on our website, ziegler estate law dot com. Go to resources and then Calculators. You'll find our cost of care calculator there. You may discover that the biggest risk isn't needing care. The biggest risk is waiting until a crisis happens before you start planning for it. Thank you again for joining me on Second Half Conversations. If this episode was helpful, please share it with a friend or family member who may be facing these issues. And if you'd like more information about long term care planning, Medicaid planning, protecting assets for the next generation, or care navigation, please visit us at zieglerestatelaw.com. Until next time, take care of yourself and the people you love. Knowledge is power, but only if you act on it. See you next time. A quick reminder that today's conversation is for educational purposes only. It is not meant to be legal advice because to give you legal advice, we need to meet with you and know your specific situation. Thanks again for joining us today for this conversation and remember to make the second half the best half.