Three-Quarters of Middle-Class Seniors Priced Out of Assisted Living by 2033

In general, middle-income seniors have income and assets that make them less likely to qualify for Medicaid. At the same time, they may not have adequate resources to pay for the rising costs of housing and care options they need.

NORC study done in 2019 and updated in 2022 shows that nearly three-quarters of middle-income seniors in the US will be unable to afford assisted living programs by 2033 without selling their homes. It is the first study of its kind focused on a growing health care crisis.

Data Used in the NORC Study

The researchers examined gender, race, and education and estimated people’s health, cognitive function, and mobility status using the data for these conditions in 2018.

They evaluated financial resources in 2018, starting from actual income and assets. Then grew them based on the historical changes in each category, annuitized across each senior participant’s life expectancy and their spouses.

Data for financial resources included fixed income streams, such as Social Security, and annuitized assets like retirement savings or mutual funds. The study did not assume adult children could provide support. While housing equity is considered, the reality is that some individuals may be reluctant to sell their homes or have a spouse who continues to live there. Also, many seniors may want to keep their homes as a resource to protect against outliving their assets or having a catastrophic medical event.

With 16 million middle-income seniors in 2033 and 11 million over the age of 75, the size of this demographic will double to include the following statistics:

  • Roughly 9.5 million will be unmarried, widowed, or divorced
  • Four in 10 will not have family members living nearby to offer care or support
  • Over age 75, 54% will have three or more chronic health conditions, 56% will have mobility limitations, and 31% will have cognitive impairments
  • Average financial resources of less than $65,000 in income and annuitized assets will not cover health, personal care, and housing services

Even after selling their homes, seniors in 2033 will struggle to pay for assisted living or require additional help from family members. Health limitations will make it hard to live independently. Without government assistance like Medicaid, this creates a significant problem. Clearly, efforts must be made to improve the affordability of long-term care for seniors, particularly for those of lower middle incomes.

What It Means for the Future

Without a long-term care system able to accommodate a more diverse set of older adults and families, only the individuals with the lowest incomes will be provided with care. Others will be reliant on their families.

Combined public and private policymakers should examine healthcare and housing policies to extend funding for in-home care and caregiving support to prevent middle-income seniors from spending down all their assets to transition to nursing homes. And the long-term care industry must offer more affordable senior housing and in-home care options.

An Immediate Solution

Estate planning and elder law services are necessary to prepare for long-term care costs in the future. By starting early, a thorough evaluation of income and assets can provide resources and options over time. Long-term care and Medicaid planning, including using trusts to protect assets from being spent down for care, can prevent your clients from having a financial and medical crisis.




The Basics of Hospice Care and How to Avoid Providers Involved in Medicare Fraud

When faced with a terminal illness or condition, more people than ever are choosing hospice care over starting or continuing expensive medical treatments. Hospice care is for patients who choose not to undergo specific treatments or when they are no longer effective. Instead, the focus is on the patient’s comfort and quality of life. Care is received at home or in a facility, such as a hospital or a nursing home.

In addition to supporting the patient’s end-of-life needs, hospice care includes the needs and concerns of the patient’s family. Before opting for hospice care, patients should talk with their doctor and their family. Doctors recommend hospice care when they believe their patient has less than six months to live if their condition runs its course naturally.

The hospice care concept was brought to the United States in the 1960s by an English doctor and social worker named Cicely Saunders. It was designed to allow terminally ill patients to die with dignity in their homes surrounded by their loved ones instead of in hospitals while receiving expensive treatments that weren’t helpful. By the early 1980s, many hospice programs had become available throughout the United States. Recognizing the potential cost savings of hospice care over expensive and ineffective end-of-life treatments, President Ronald Reagan authorized Medicare to cover the costs of hospice care.

Benefits of Hospice Care

The biggest benefit for the hospice care patient is avoiding unnecessary and costly treatments when fighting a losing battle against their illness. Hospice patients can receive care that brings them pain relief and comfort while living their final days in their homes.

Though opting for hospice care means waiving treatment for the terminal illness, it doesn’t mean discontinuing all treatments. For example, if a patient has cancer that is not responding to chemotherapy but is also receiving treatment for high blood pressure, they can choose to start hospice care. Their chemotherapy would cease, but they could continue treatment for their high blood pressure. Hospice patients are less likely to receive medications and undergo tests they don’t need compared with patients without hospice care.

Even after starting hospice care, patients may choose to return to treatment for their terminal condition. They may choose to do this for any number of reasons. For example, they may be expecting a grandchild or great-grandchild. Later, the patient may continue with hospice care.

Medicare pays for some or all hospice care costs, and some private insurance plans may also cover certain expenses. Patients should check with their insurance provider to understand their coverage.

Some Hospice Care Providers are Exploiting the System

What started as a field of medicine primarily handled by nonprofits and charities now has a rapidly growing number of for-profit enterprises. According to a ProPublica article published in November 2022, for-profit hospice providers accounted for 30% of providers in 2000, and now they account for more than 70% of providers. The article states that between 2011 and 2019, the number of hospices owned by private-equity firms tripled.

Since Medicare covers hospice care expenses for eligible patients, providers bill Medicare for their services. Medicare pays hospice providers a set rate per patient per day, regardless of how much care they receive. Under this reimbursement arrangement, providers more interested in profiting from their patients than caring for them are incentivized to have as many patients as possible.

Since hospice patients often choose to live out the ends of their lives in their homes, a significant portion of their care is handled by family members who aren’t compensated for their efforts. Nurses aren’t required to visit more than twice a month. This makes it easy for unscrupulous providers to receive payment for minimal care.

Also, judging a patient’s eligibility for hospice care is difficult. Regulating the hospice care industry is challenging because no government agency wants to be seen as limiting a valuable service. Surveyors are only required to inspect hospice operations once every three years, allowing providers to operate with very little oversight.

A Call for More Oversight

In response to ProPublica’s article, the National Hospice and Palliative Care Organization released a statement condemning fraudulent and abusive behavior by bad actors. The NHPCO asserts that most hospice care providers are committed to the original vision of what hospice care should be: providing relief from suffering as well as comfort and support to people nearing the end of their lives.

In its statement, NHPCO referenced a letter that they, along with other national hospice care organizations, sent to the head of the Centers for Medicare & Medicaid Services (CMS) expressing concern about the rapid increase of new hospice care providers in certain states. Their letter to CMS encouraged the organization to increase federal oversight of their industry and invited them to meet and discuss suggestions for better regulation in this area of the healthcare industry.

Avoiding Hospice Care Providers Involved in Medicare Fraud

Knowing that unethical hospice care providers are out there looking for new patients can make it challenging to find a good provider. However, there are helpful resources.

A simple but effective way of finding a reputable provider is talking with trusted people. A patient’s family, friends, and members of their religious organization are a great place to start. Online reviews can narrow down the selections, along with deeper research on the top choices. Learn whether a hospice provider is a nonprofit or for-profit company, how long they have been in business, and who owns them.

NHPCO has a program called CaringInfo that is a resource for people looking for hospice or palliative care. CMS’s Hospice Center and the National Institute on Aging are other great resources for end-of-life questions.



Southwood Case Reminds Us That Incapacity Planning is Important

As we age, our likelihood of mental incapacity increases.  After all, our bodies and minds deteriorate as we age.  Mental incapacity could result from dementia, stroke, brain injury, or other illness.  What is mental incapacity and in what ways can you plan to be best prepared for it?

You are mentally incapacitated if you are unable to carry out your affairs.  Meaning, you can’t make meaningful decisions that are in your best interests regarding your finances or your property.  Now that doesn’t mean that if you make financial decisions that others don’t agree with that you are incapacitated.  Just because you decide to spend your money in an unusual way doesn’t mean that you can’t handle your affairs.  Instead, some questions to ask are:  Do you have a sound reason for this decision?  Do you understand the nature of and repercussions of this decision?  Is this decision detrimental to your financial health?

If someone thinks you lack mental capacity, they can sue you in a court of law to have a judge issue an order saying you are incapacitated.  In the court proceeding, an evaluation will be done on you to determine if a doctor thinks you are incapacitated.  Hearings will be held, witnesses will be called, and testimony will be examined.  In the end, if you are found to lack capacity, the judge will appoint someone, a guardian, to now be in charge of your finances.  This guardian will have complete control over your affairs and will be responsible for taking care of you financially.  This guardian could be someone you trust (someone you would have chosen) or someone you don’t even know.

If you haven’t been proactive and done planning, then a guardian could be necessary.  And, appointing this guardian timely could be needed to obtain Medicaid benefits.  In a recent case out of Indiana, Southwood Healthcare Center v. Indiana Family and Social Services Administration, a nursing home resident was incapacitated but did not have a guardian appointed.  The resident could not access their financial accounts due to their incapacity and so could not provide the necessary documentation to the Medicaid office in order to get their application for benefits approved.  The court ruled that the inability to access an account did not render the account an uncountable asset for Medicaid eligibility.  Because the resident had the legal right to the funds in the account, the account was still countable.  The resident would have to first go through the lengthy court process to get a guardian appointed, the guardian could access this account, and then another Medicaid application could be submitted.

If the nursing home resident had instead planned for his incapacity before it happened, he could have been able to have a Medicaid application submitted on his behalf without going through the court process of getting a guardian appointed.  This planning involves creating a Financial Power of Attorney.

A Financial Power of Attorney is a document that you can sign while you still have capacity that allows another to act on your behalf in the event you later become incapacitated.  This person named in the Financial Power of Attorney is your agent.  As with a guardian, an agent must act in your best interests and there are consequences if the agent doesn’t do so.  But by signing this document before you become incapacitated, you can bypass a costly court proceeding and simply have your agent act on your behalf in the event you are unable to do so.

What are some other ways to plan for incapacity?

  • You can sign a Health Care Power of Attorney. Just as a Financial Power of Attorney allows someone to act on your behalf if you become incapacitated, so does a Health Care Power of Attorney.  The former gives the agent authority to make financial decisions for you; the latter gives the agent the authority to make health care decisions for you.
  • You can sign a HIPAA document. This document gives doctors and other health care providers permission to give information about your condition to the authorized recipients that you name.
  • You can create a revocable living trust. This is a contract between you and your Trustee to hold and manage property in a certain manner.  After you sign the contract, you transfer your property to the trust.  Because you no longer own property in your personal name, if you become incapacitated the Successor Trustee can step in and manage the trust property according to your written instructions in the trust document.

Why should you be proactive and plan for your incapacity?  First, it gives you control.  The person you want to handle your affairs will be named.  The things you want to happen will happen.  Second, it will save your family the grief and expense of going through a court process.  They won’t have to take time off work, they won’t have to get up on the witness stand, and they won’t have the headache of coming up with thousands of dollars in lawyer’s fees.  Finally, as we learned from the Southwood case, above, sometimes you need someone to act quickly for you.  If you have a plan in place, then things that need to get done can be done in a timely manner.  Your agent can access financial accounts and records and submit an application for public benefits for you, your agent can manage your investments so they are taken care of, your bills can get paid on time, and your property can be maintained.  Planning is all about peace of mind.  If you are one of the lucky ones and never become mentally incapacitated, then your agent won’t have to act on your behalf.  But if you are one of the millions that will need an agent as you age, you will have a plan in place to give you and your family that peace of mind.