Home care and assisted living costs for older adults and people with disabilities have surged over the past five years, straining affordability for middle class families who struggle to pick up the tab, AARP said in a March 12 report.
The AARP report said the cost of the most common type of long-term services − home care and assisted living services − surged nearly 50% from 2019 through 2024, far outpacing median income growth of 22% for senior households.
Costs of other long-term services also grew more quickly than income for households that must pay for this care without public aid. Adult day service costs jumped 33%, and nursing home care costs increased up to 25%, AARP said.
The report details rising costs of “long-term services and supports,” a broad category that describes supportive care such as eating, bathing and dressing people might need due to aging, illness or disability. Authors said the report underscores an affordability crisis millions of families are dealing with as the cost of services for older adults and people with disabilities exceed families means to afford them.
“When this hits, it hits families harder than they expect – and at a higher cost,” said Alan Weil, director of AARP’s public policy institute.
Families aren’t ready to pay for long-term care
More than half of adults who turned 65 between 2021 and 2025 will need long-term care services in their lifetime, according to the U.S. Department of Health and Human Services.
But families often aren’t prepared to handle costs of caring for aging adults, Weil said.
An AARP survey in 2022 said about half of the adults aged 50 or older mistakenly believed Medicare, the federal health insurance program for adults 65 and older, covers care in a nursing home or home care from a home health aide.
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While Medicare doesn’t cover such costs, Medicaid, the federal-state health program for low income families, does pay for nursing home care for millions of low-income adults.
But for middle-income families who don’t qualify for Medicaid, costs can rise quickly. About 1 in 7 older adults had out-of-pocket costs that exceeded $100,000 in 2020, AARP said.
For families who can’t afford to hire home health assistants, the burden of providing care often falls on unpaid caregivers. These caregivers, often family members, contributed about $600 billion in care in 2021, AARP said.
Why care expenses surged this decade
The surge in costs over the five years AARP studied followed a decade of more modest caregiving expense increases.
States and the federal government greatly expanded Medicaid assistance to long-term care services during the COVID-19 pandemic, according to long-term care experts not affiliated with AARP.
The public support was meant to address a shortage of workers at nursing homes and home care settings during the worst days of COVID-19. Other factors include minimum wage hikes that raised expenses for lower-wage workers, including nursing home employees and home health aides.
While the more generous Medicaid payments waned at the end of the pandemic, the Trump administration’s immigration crackdowns have pressured nursing homes and home health agencies that rely on immigrant labor, said Marc Cohen, a professor of gerontology and co-director of LeadingAge LTSS Center at University of Massachusetts, Boston.
“The people who care for our most vulnerable citizens are being shut out of the system,” Cohen said.
Cohen said rising nursing home and home health aide costs often land disproportionately on people who pay for their own care. That’s because Medicaid often reimburses care at lower rates, and providers seek to offset the lower public payments by shifting costs to consumers who pay their own way.
Cohen said it creates a financial squeeze on middle-class families. Some states such as California are studying how to help families who earn too much to qualify for Medicaid but not enough to afford living expenses and the rising costs of long-term care.
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“If they had a long-term care need, they would be up the creek without a paddle,” Cohen said. “The pressure on the family support system is growing.”
Families reach ‘breaking point’
Average annual costs for care range from $26,000 for adult day services to more than $127,000 for a private nursing home, AARP said.
These costs can be difficult to manage for older adults who live on an average Social Security benefit of $23,700 per year and average annual household income of nearly $60,000.
The report also shows the costs of services varies widely by state. Home health aide services range from $34,320 in Louisiana to $68,640 in South Dakota.
The report also measures affordability, taking into account how much a service costs and average household income. By that measure, home health aides are most affordable in Maryland and least affordable in Maine.
Weil said the purpose of the report is to detail home long-term care services have become mush less affordable as costs have risen.
He called it a “breaking point” for families and caregivers.
“That’s really the crisis this report shines a light on,” Weil said. “And I think we have to be honest that part of the breaking point is people are going to go without services.”
This article originally appeared on USA TODAY: AARP details nation’s worsening home care crisis
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