Assisted Living Costs Considerations
In recent years, assisted living facilities have become a popular option for elderly people who don’t need the level of care offered in a nursing home but need assistance with activities of daily living.
To make an informed choice among the many facilities available, you need information about staff qualifications, services, costs, potential increases in fees and the circumstances that could lead to an involuntary discharge from the facility.
Long Term Care Insurance
Another option that can help pay for assisted living is long-term care insurance. However, these policies generally pay only for care, not living expenses.
In some cases long-term care insurance won’t pay anything, so review any existing policy, particularly one covering home-health-care-only, nursing-home-only, and coverage issued before 1990. If assisted living isn’t included, ask the insurer if it can be added and for how much.
The average monthly base rate varies from one state to another. Residents often pay additional fees for special care units and other services, such as medication administration and transportation. Two-thirds of assisted living residents pay out-of-pocket, although long-term care insurance may pay some costs for those with coverage.
In general, there are three rate structures to consider:
1. Flat Monthly Rate. This varies depending on the accommodations (semi-private or private rooms, suites shared bathrooms, studios with or without kitchens and one, two, or three bedroom apartments). The monthly rent usually includes daily meals, housekeeping, laundry and transportation services. Ask about the number of meals served, inclusion of snacks, size, location and view of the room. All of these can affect the rate.
2. Base Plus. Under this structure, you pay the flat monthly fee and choose other services, each adding to the bill. For example, the amount of care under the base rate could be 30 minutes a day and anything else, such as bathing, grooming, dressing and monitoring medications, will cost extra. This can add as much as $2,000 a month to the cost.
3. Tiered Rates. This structure blends the flat rate and a la carte menu into specific levels of care, with the costs increasing along with the assistance provided. A facility’s tiered structure might work like this:
The base rate plus
Three meals daily, daily snacks, therapeutic diets, weekly housekeeping, occasional assistance with daily activities, social, cultural and educational programs, scheduled transportation, emergency-call system, health and wellness assessments, and medication reminders
Tier One Services plus
Regular assistance with daily activities, assistance with self-managed incontinence, supervision of medication, occasional reality orientation, and occasional escort service to meals and activities
Tier One and Two Services plus
Frequent assistance with daily activities, assistance with manageable incontinence, daily housekeeping, medication administration, escort service to meals and activities, and frequent reality orientation
The tiered structure typically continues to a level five with additional fees as the care becomes more intensive.
The price you pay the first year is likely to increase over time, perhaps substantially, so look into the past decade of price changes at facilities you are interested in. That can give you an indication of future costs.
When calculating costs, keep in mind that many of the usual costs of living will no longer apply to the person moving into an assisted living facility, including:
- Homeowner’s insurance
- Possibly auto insurance
- Property tax
- Utility bills
- Home maintenance costs
- Selling a home can also help to defray expenses.
Important consideration: On average, people stay in assisted living facilities less than two years. Often, they move on to a higher level of care.
Even if assisted living costs wind up exceeding your parent’s projected cash flow, the facilities shouldn’t be eliminated. About one-fourth of all assisted living residents get some financing from other family members. Some programs allow several children to personally guarantee a loan that will help pay for a parent’s assisted living.
When deciding about assisted living facilities, knowing the costs and options can lead to informed decisions. Someone who needs help for an hour or two of daily assistance might be better off staying at home. But if more care is needed, paying for home care can be expensive, so assisted living may be the best choice.