The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants

Cost and Duration of Long-Term Care at Home

By Dr. David Edward Marcinko; FACFAS, M.B.A., CPHQ™, CMP™

By Thomas A. Muldowney; M.S.F.S., CLU, ChFC, CFP® CMP™

By Hope Rachel Hetico; R.N., M.H.A., CPHQ™, CMP

This is the first post in an exclusive four part series for the ME-P titled: “At-Home or Nursing Home Care for Long-Term Care.”

Remaining at Home

It is not surprisingly, eighty-five percent of married elders prefer to remain at home instead of moving to a nursing home or some other senior care facility. Staying at home is easier, more comfortable, and less traumatic. Home care statistics are limited, but three years is the estimated average number of years that elders will require custodial care services. This estimate also may combine home care followed by nursing home care. And, the anecdotal healthcare experience of two authors [DEM and HRH] confirms this period length.

Incremental LT Cost Approach

Quantifying the annual incremental costs of LTC home custodial services is difficult. Today, a high percentage of home care services are provided by unpaid family members, friends, or volunteer organizations. In the future, however, there will be fewer available unpaid caregivers, and more elders will have to pay for home custodial care.

Because of this potential shortage of caregivers, new business opportunities are springing up and, as usual, let the buyer beware. Many of these new businesses, for a fee, contract with a family that needs home LTC for a family member.  Upon contract, the new LTC business owner begins a search for a candidate caregiver who will live in your house and care for your parent or spouse. Often the in-home caregivers have difficulty speaking the language or may not be familiar with local customs.

Furthermore, many of them wish to be paid in cash rather than by check. As you might imagine, background checks, tax compliance and other legal considerations are of utmost importance.  Career education and career experience are also very important. Be sure that if you look for such a caregiver, you must exercise thorough due diligence so that your loved one will be cared for properly.

LTC Costs Vary Widely

LTC home care cost estimates vary widely by location and type of service. At present, the average annual cost for a live-in, full-time aide in the United States (especially if part-time help to relieve a full-time aide is added) is estimated at $40,000, the same as the estimated cost of staying at a nursing home for a year. If living expenses are added to costs for custodial aides, LTC home care costs can be more expensive than nursing home costs.

For three shifts of paid LTC custodial services, home care costs may exceed $100,000 annually; more than triple the current estimated cost for nursing home care. These numbers should not be surprising.  In a nursing home environment, one caregiver may be able to provide care for multiple patient/residents. This reduces the cost per patient. In your private home, your personal caregiver can give only care to a single patient.

Custodial Aide Costs

Costs for custodial aides in the fragmented, rapidly expanding, competitive home care industry may increase at a faster rate than the Consumer Price Index [CPI]. Employed aides will replace family caregivers. The Bureau of Labor Statistics [BLS] indicates that jobs for home health aides, human service workers, and personal and home care aides are expected to grow faster than any other industry in terms of total jobs.

In the next decade, there will be more than 2 million home care jobs, and they will become a larger component of total gross domestic product expenditures. Using an estimated three-year home care requirement and current estimated costs, and allowing for 15 years of inflation at 5 percent, $225,000 per person is a reasonable estimate to use for financial planning purposes.

Assessment

However, in some metropolitan or suburban areas, such as New York City, the cost should be increased by at least 100 percent. Of course, three years of required care is an estimate. About one-third of the people who require nursing home care will need it for more than three years. Presumably, nursing home care will be preceded by home care. Moreover, only one full-time aide was assumed. Some elders also will require additional part-time help.

And so, your thoughts and comments on this Medical Executive-Post, which represents the first in a series of four parts on: At Home or Nursing Home Care for Long Term Care, are appreciated. Comments from physicians and LTC insurance agents are especially valued.

Conclusion

Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

• PRACTICES: www.BusinessofMedicalPractice.com
• HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
• CLINICS: http://www.crcpress.com/product/isbn/9781439879900
• ADVISORS: www.CertifiedMedicalPlanner.org
• FINANCE: Financial Planning for Physicians and Advisors
• INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
• Dictionary of Health Economics and Finance
• Dictionary of Health Information Technology and Security
• Dictionary of Health Insurance and Managed Care

Filed under: "Doctors Only", Funding Basics, Health Economics, Health Insurance, Healthcare Finance, iMBA, Insurance Matters, Research & Development, Risk Management | Tagged: david marcinko, hope hetico, long term care insurance, LTC, LTC insurance, nursing homes, thomas muldowney | 4 Comments »