The Cost of Care: Isn’t Assisted Living Expensive?
While the care of your loved ones is your primary concern, the cost of care is reality that cannot be ignored. Assisted living has emerged as an option for senior care only in the last couple of decades. It has emerged to fill a need for seniors who need a little help, but do not require the full care a nursing home would provide. In fact, assisted living care costs approximately 60% what a nursing home would cost. Moreover, assisted living care is often more economical than hiring full time in-home care. However, assisted living is generally not covered by Medicaid and Medicare. Moreover, long-term care insurance from the past often doesn’t cover Assisted Living (a concept foreign at the time).
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So, assisted living care is relatively cost effective, but no one else will be footing the bill. In some ways, this is a good thing as it imposes market discipline on the industry. Assisted living facilities must compete on price because residents are price sensitive. Prices vary greatly from state to state, but the average annual cost of assisted living care in 2008 was approximately 33,900 (Genworth Study). On a monthly basis, that works out to just over 2,800 dollars per month. You should note that this usually includes all food and some base level of care. You can find the average cost of care in your state by looking at this map.
Most facilities have a base fee, and charge more based on the level of care needed. Often different wings of the building are designated for different levels of care. A patient will pay more as the number of ADLs she requires increases. If your facility offers an Alzheimer’s or Dementia wing, you should expect to pay more for that service. It can get confusing but it’s important to examine how the cost of care will change as your loved one ages. Don’t be fooled by facilities that charge a very low base rate but zing you with excessive fees for additional care. Once your loved-one has grown accustomed to a certain facility, it will be very difficult to change. Make sure that you are looking at the long-run costs when you make a decision.
New facilities are appealing. Be aware that new facilities have an strong incentive to fill their rooms quickly. If the rate seems too good to be true, you should expect it to rise when the facility fills up. There is nothing that keeps a facility from raising it’s rates in the future. If the company is a chain, ask how their rates compare to their other facilities that are already established.
Everyone wants to provide their parents with the best care possible. However, assisted living facilities are for profit entities. Treat this decision like any other consumption decision. Do your research, ask questions, and you will find a good value.
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