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Preparing for the cost of Alzheimer’s disease and dementia

The cost of long-term care is increasing at a rapid rate. According to Genworth Financial, a long-term care insurance provider, the daily cost of nursing home care is approximately $230 per day, or over $80,000 per year. That amount is well beyond the reach of most people. In addition, annual costs for nursing home care have increased 5 percent over the last five years and experts do not predict that this rate of growth will slow in the near future. As such, people must prepare on how to pay for long-term care without impoverishing themselves or their families.

Alzheimer’s disease and dementia pose a particularly difficult problem. Both diseases are incurable and require extensive personal care. Unlike some other incurable fatal diseases, Alzheimer’s and dementia may require extended years of treatment. Outside of paying for this expense out-of-pocket, a person may need to obtain long-term care insurance in order to cover some of the cost. However, even if a person has long-term care insurance, the policy may only provide a certain number of years of treatment. Long-term care insurance can also be expensive and difficult to obtain for older adults.

According to the Alzheimer’s Association, the number of people over age 65 suffering from Alzheimer’s disease will increase by 40 percent in little over a decade. Absent any medical breakthroughs, there may be as many as 16 million people suffering from Alzheimer’s by 2050. The Alzheimer’s Association also notes that people suffering from Alzheimer’s will spend more time at the “severe stage” of the disease than at any other stage – a stage that requires around-the-clock care.

Medicare may pay for certain expenses, such as Meals on Wheels, but will not cover the cost of nursing home care or many of the expenses that arise from in-home care. Ultimately, Medicaid may be the best way to pay for the care a person with a cognitive brain disease needs. However, Medicaid is a needs-based system that will only provide insurance for people with low income and assets. In addition, Medicaid has a “look-back” period, meaning that if a person intentionally gifts assets to family members in order to qualify for Medicaid, he or she may not be eligible to receive benefits for a certain amount of time or may have to pay a financial penalty before receiving benefits.

Medicaid and elder law planning

Medicaid is a complicated government program and exceptions exist to the “look-back” period. Trusts may also be able to reduce the size of an estate or income in order to qualify for Medicaid. However, reducing an estate or attempting to legally qualify for Medicaid must be done carefully in order to avoid potential penalties.

Because Alzheimer’s and dementia require extensive and expensive long-term care, families concerned with paying for such treatment should contact an experienced elder law attorney to discuss their options regarding payment options.