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If you’re wealthy, you’ll be able to afford help in your home or care in an assisted living facility or a nursing home. If you’re poor, you can turn to Medicaid for nursing homes or aides at home. But if you’re middle-class, you’ll have a thorny decision to make: whether to buy long-term care insurance. It’s a more complex decision than for other types of insurance because it’s very difficult to accurately predict your finances or health decades into the future.
What’s the difference between long-term care insurance and medical insurance?
Long-term care insurance is for people who may develop permanent cognitive problems like Alzheimer’s disease or who will need help with basic daily tasks like bathing or dressing. It can help pay for personal aides, adult day care, or institutional housing in an assisted living facility or a nursing home. Medicare does not cover such costs for the chronically ill.
How does it work?
Policies generally pay a set rate per day, week, or month — say, up to $1,400 a week for home care aides. Before buying a policy, ask which services it covers and how much it pays out for each kind of care, such as a nursing home, an assisted living facility, a home personal care service, or adult day care. Some policies will pay family members who are providing the care; ask who qualifies as a family member and whether the policy pays for their training.
You should check to see if benefits are increased to take inflation into account, and by how much. Ask about the maximum amount the policy will pay out and if the benefits can be shared by a domestic partner or spouse.
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How much does it cost?
In 2023, a 60-year-old man buying a $165,000 policy would typically pay about $2,585 annually for a policy that grew at 3% a year to take inflation into account, according to a survey by the American Association for Long-Term Care Insurance, a nonprofit that tracks insurance rates. A woman of the same age would pay $4,450 for the same policy because women tend to live longer and are more likely to use it. The higher the inflation adjustment, the more the policy will cost.
If a company has been paying out more than it anticipated, it’s more likely to raise rates. Companies need the approval of your state’s regulators, so you should find out if the insurer is asking the state insurance department to increase rates for the next few years — and, if so, by how much — since companies can’t raise premiums without permission. You can find contacts for your state’s insurance department through the National Association of Insurance Commissioners’ directory.
Should I buy it?
It’s probably not worth the cost if you don’t own your home or have a significant amount of money saved and won’t have a sizable pension beyond Social Security. If that describes you, you’ll probably qualify for Medicaid once you spend what you have. But insurance may be worth it if the value of all your savings and possessions, excluding your primary home, is at least $75,000, according to a consumer guide from the insurance commissioners’ association.
Even if you have savings and valuable things that you can sell, you should think about whether you can afford the premiums. While insurers can’t cancel a policy once they’ve sold it to you, they can — and often do — raise the premium rate each year. The insurance commissioners’ group says you probably should consider coverage only if it’s less than 7% of your current income and if you can still pay it without pain if the premium were raised by 25%.
Many insurers are selling hybrid policies that combine life insurance and long-term care insurance. Those are popular because if you don’t use the long-term care benefit, the policy pays out to a beneficiary after you die. But compared with long-term care policies, hybrid policies “are even more expensive, and the coverage is not great,” said Howard Bedlin, government relations and advocacy principal at the National Council on Aging.
When should I buy a policy?
Wait too long and you may have developed medical conditions that make you too risky for any insurer. Buy too early and you may be diverting money that would be better invested in your retirement account, your children’s tuition, or other financial priorities. Jesse Slome, executive director of the American Association for Long-Term Care Insurance, says the “sweet spot” is when you’re between ages 55 and 65. People younger than that often have other financial priorities, he said, that make the premiums more painful.
When can I tap the benefits?
Make sure you know which circumstances allow you to draw benefits. That’s known as the “trigger.” Policies often require proof that you need help with at least two of the six “activities of daily living,” which are: bathing, dressing, eating, being able to get out of bed and move, continence, and being able to get to and use the toilet. You can also tap your policy if you have a diagnosis of dementia or some other kind of cognitive impairment. Insurance companies will generally send a representative to do an evaluation, or require a doctor’s assessment.
Many policies won’t start paying until after you’ve paid out of your own pocket for a set period, such as 20 days or 100 days. This is known as the “elimination period.”
For 35 years, Angela Jemmott and her five brothers paid premiums on a long-term care insurance policy for their 91-year-old mother. But the policy does not cover home health aides whose assistance allows her to stay in her Sacramento, California, bungalow, near the friends and neighbors she loves. Her family pays $4,000 a month for that.
“We want her to stay in her house,” Jemmott said. “That’s what’s probably keeping her alive, because she’s in her element, not in a strange place.”
The private insurance market has proved wildly inadequate in providing financial security for most of the millions of older Americans who might need home health aides, assisted living, or other types of assistance with daily living.
For decades, the industry severely underestimated how many policyholders would use their coverage, how long they would live, and how much their care would cost.
And as Jemmott belatedly discovered, the older generation of plans — those from the 1980s — often covered only nursing homes.
Only 3% to 4% of Americans 50 and older pay for a long-term care policy, according to LIMRA, an insurance marketing and research association. That stands in stark contrast to federal estimates that 70% of people 65 and older will need critical services before they die.
Repeated government efforts to create a functioning market for long-term care insurance — or to provide public alternatives — have never taken hold. Today, most insurers have stopped selling stand-alone long-term care policies: The ones that still exist are too expensive for most people. And they have become less affordable each year, with insurers raising premiums higher and higher. Many policyholders face painful choices to pay more, pare benefits, or drop coverage altogether.
“It’s a giant bait-and-switch,” said Laura Lunceford, 69, of Sandy, Utah, whose annual premium with her husband leaped to more than $5,700 in 2019 from less than $3,800. Her stomach knots up a couple of months before the next premium is due, as she fears another spike. “They had a business model that just wasn’t sustainable from the get-go,” she said. “Why they didn’t know that is beyond me, but now we’re getting punished for their lack of foresight.”
“We want her to stay in her house,” Angela Jemmott says of her mother, Jewell Thomas. “That’s what’s probably keeping her alive, because she’s in her element, not in a strange place.”(Bryan Meltz for The New York Times)
The glaring gaps in access to coverage persist despite steady increases in overall payouts. Last year, insurers paid more than $13 billion to cover 345,000 long-term care claims, according to industry figures. Many policyholders and their relatives reported that their plans helped them avert financial catastrophes when they faced long-term care costs that would have otherwise eviscerated their savings.
But others have been startled to learn that policies they paid into over decades will not fully cover the escalating present-day costs of home health aides, assisted living facilities, or nursing homes. And in other cases, people entitled to benefits confront lengthy response times to coverage requests or outright denials, according to records kept by the National Association of Insurance Commissioners, the organization of state regulators.
Jesse Slome, executive director of the American Association for Long-Term Care Insurance, an industry trade group, said long-term care was the most challenging type of insurance to manage. “You need multiple crystal balls,” Slome said. “And you have to look 20 years into the future and be right.”
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The Pandemic Paused a Long-Term Decline
The industry’s wobbly finances haven’t steadied despite a brief profitable surge during the coronavirus pandemic. Earnings rose because thousands of people who were drawing benefits, many in nursing homes or assisted living facilities, died from covid-19, and other policyholders died before using their insurance. Others stopped tapping their benefits because they fled facilities and went to live with their families, who provided unpaid care.
Overall, earnings went from $2.3 billion in losses in 2019 to two years of profits totaling $1.1 billion, before receding into the red in 2022 by losing $304 million, according to Fitch Ratings.
Still, none of that was enough to reverse the industry’s long-term decline. Doug Baker, a director in Fitch’s U.S. life insurance group, said long-term care insurance “is one of the riskiest in our universe” because of the lingering financial burden from underestimating the number of people who would tap their policies.
More insurers now offer hybrid plans that combine life insurance with long-term care. Those policies are less generous than the ones offered a decade ago — and using the long-term care benefit drains some or all of the money policyholders hoped to leave to their heirs.
“I don’t think people will offer unlimited again,” said Tom McInerney, the chief executive of Genworth Financial, which suspended selling plans through brokers in 2019. “One way or another, taxpayers are going to have to pay more for long-term care needs of the baby boomers.”
Many experts believe it’s untenable to expect that a private insurance market can protect most people from the growing burden of long-term care costs.
“The whole situation is poorly suited to that kind of insurance offering,” said Robert Saldin, a political science professor at the University of Montana who studies the industry.
Falling Profits and Skyrocketing Premiums
Ann Kempski at her home in Maryland where her mother, Alice Kempski, moved in during the pandemic. Alice Kempski had paid premiums on a long-term care insurance policy for 16 years, but when the family tried to file a claim, they discovered that the company was insolvent.(Shuran Huang for The New York Times)
Starting in the 1970s, long-term care insurance was touted as a way to keep older people from eroding their retirement savings or resorting to Medicaid, the state-federal program for the poor and disabled. Early plans were limited to nursing home care but later expanded to cover in-home care and assisted living centers. Sales of the policies doubled from 1990 to 2002.
As demand grew, however, there were signs the industry had vastly miscalculated the cost of its products. Insurers set early policy prices competitively low, based on actuarial models that turned out to be markedly inaccurate. Forecasters’ estimates of policyholders’ longevity were wrong. U.S. life expectancy increased to nearly 77 years in 2000 from about 68 years in 1950, federal records show. And as people lived longer, their need for care increased.
Industry officials also failed to account for the behavior of savvy consumers determined to keep their long-term care coverage. Insurers counted on policy lapse rates — people giving up their policies or defaulting on payments — of about 4% annually. The actual lapse rate was closer to 1%.
As the miscalculations sent profits plummeting, insurers raised premiums or exited the market. By 2020, sales of traditional policies had dropped to 49,000 and the number of carriers offering plans had fallen to fewer than a dozen from more than 100.
Premiums for some consumers doubled in just a year or two. Three class-action lawsuits accused Genworth of failing to disclose to policyholders that it had planned multiyear rate increases, leaving them without information they needed to decide whether to keep their policies. Genworth settled the lawsuits with offers to allow customers to adjust their policies, and in some cases it paid cash damage to those who accepted reduced benefits. The company did not admit wrongdoing.
The increases continue. AM Best, a rating agency, said in a report last November that Genworth “will continue to need annual rate increases for at least several more years to reach economic break-even.”
Prices for new policies have jumped, too. A decade ago, a couple aged 55 could expect to pay about $3,725 a year for a policy that included $162,000 in total benefits and 3% annual inflation protection, according to the American Association for Long-Term Care Insurance. Today, a policy that is virtually the same would cost $5,025, 35% more, even as rising health costs and inflation have eroded the value of the benefits.
And that’s only for the people who can qualify. To limit their losses, insurers have narrowed the eligible pool of clients. In 2021, about 30% of applicants ages 60 to 64 were denied long-term care insurance. For applicants 70 to 74, the rejection rate was 47%. Even among people in their 50s, more than 1 in 5 were turned down. Chronic health conditions, a history of stroke or diabetes, or psychiatric illness may all be grounds for disqualification.
At the same time, insurers began scrutinizing claims more closely. “They tightened their belts,” said Alan Kassan, a senior partner with the California law firm Kantor & Kantor, which represents clients challenging denials. “Then they tightened their claim administration and started denying claims more and more.”
Despite efforts to limit liability, financial problems forced several high-profile insurance providers to drastically revise policy terms and premiums or go into insolvency, affecting the investments of thousands of clients.
They included Alice Kempski, a retired nurse who, after her husband died, bought a policy from the insurance company Penn Treaty and American Network in 2004 on the advice of a financial adviser, paying premiums of $180 a month for 16 years. By 2017, she was hobbled by osteoporosis and was struggling to manage her multiple medications, according to her daughter, Ann Kempski. She sold the family home in Wilmington, Delaware, in 2017 and, now needing help bathing, moved to an assisted living center there. But when the family tried to file a claim, they discovered that Penn Treaty was insolvent and the policy had been taken over by the Pennsylvania state insurance guaranty fund.
The fund had frozen Kempski’s benefits and increased her premiums to about $280 a month, her daughter said. Her doctor told Penn that she had “mild dementia” and osteoporosis and should be in an assisted living facility. But the insurer said that there was not enough evidence that she needed help with two daily living activities or had severe cognitive impairment, conditions that would trigger coverage, according to correspondence between Kempski and the company.
Kempski was paying roughly $5,400 a month out-of-pocket to the assisted living center. She moved in with her daughter when the pandemic hit, but she continued to pay full rent to the facility to save her spot until she returned in 2021. In March of that year, when her daughter was preparing to refile a claim for long-term care insurance and her premiums had reached $320 a month, Kempski had a massive stroke. She died the next month. The insurer never paid for any of her care.
Coverage in a Facility but Not at Home
Jewell Thomas’ children jointly pay about $4,000 a month for two home health aides, while still paying her long-term care insurance premium of more than $2,500 a year.(Bryan Meltz for The New York Times)
The policy held by Angela Jemmott’s mother, Jewell Thomas, went unused for a different reason: Like many older policies, it covered only skilled nursing care in a facility. Her children had purchased the policy after Thomas’ husband died at 56.
But decades later, once Thomas developed dementia in her 80s, her children realized how desperately their mother wanted to stay home. Jemmott said they tried to add a rider to the policy to cover home care but were told that their mother’s age (older than 75) barred add-ons. Now the siblings jointly pay about $4,000 a month for two home health aides, while still paying the insurance premium of more than $2,500 a year. “We feel like if we stop paying it, another unforeseen need will arise and cause us to wish we kept it,” Jemmott said.
Not all policyholders are displeased.
Bert Minushkin, of Royal Palm Beach, Florida, paid monthly premiums for 27 years, beginning in 1993 when the policy was offered as a benefit by Westinghouse Electric Corp., where he worked as a nuclear engineer. Over time, he paid about $120,000 toward the policy, said his daughter Lisa Heffley, 61, of Louisville, Kentucky.
Diagnosed with dementia, Minushkin began declining swiftly in 2019. His wife spent $220,000 on assisted living facilities and private aides for him over three years, with about $90,000 of the cost offset by his policy, Heffley said. He died in February 2022 at age 91.
“He didn’t break even, but thank God he had it,” she said.
Turning to Crowdfunding
Without warning, Jeffrey Tanck had to assume charge of his father’s care, moving him into an assisted living center, and get his mother into a skilled nursing facility.(Shuran Huang for The New York Times)
Many experts say what’s needed is a government-subsidized or public program that requires people to carry long-term care insurance, as the Netherlands and Singapore have. But federal efforts to create such a system, including the CLASS Act, which was repealed in 2013, and the WISH Act, introduced in 2021, have failed to gain traction in Congress. At the state level, Washington this summer started a first-in-the-nation program that will provide long-term care benefits for residents who pay into a fund, but it is voluntary, and the maximum benefit of $36,500 will not cover a year in most assisted living facilities.
Lack of a safety net leaves some people unprotected, like Jeffrey Tanck, a real estate broker in Washington, D.C. In 2021, his mother, Sue Tanck, at 75, suffered a serious fall, leaving her with broken arms and a traumatic brain injury. She had been the primary caretaker for his father, Roger, then 77, who had rapidly worsening dementia.
Without warning, Jeffrey Tanck had to assume charge of his father’s care, moving him into an assisted living center in Ocala, Florida, that now charges $4,600 a month, and had to get his mother into a skilled nursing facility paid for by Medicaid. With no money to cover his father’s costs until he sold their house, Tanck resorted to a plea on the crowdfunding site GoFundMe.
Wanting to shield himself from a similar financial crisis somewhere down the road, Tanck, who is 51, applied for long-term care insurance, only to be denied. The reason? He takes antidepressants, which help him cope with the anxiety and stress of caring for his parents.
“What are people supposed to do?” Tanck asked. “I’m going to need something.”
Assisted living centers have become an appealing retirement option for hundreds of thousands of boomers who can no longer live independently, promising a cheerful alternative to the institutional feel of a nursing home.
But their cost is so crushingly high that most Americans can’t afford them.
These highly profitable facilities often charge $5,000 a month or more and then layer on fees at every step. Residents’ bills and price lists from a dozen facilities offer a glimpse of the charges: $12 for a blood pressure check; $50 per injection (more for insulin); $93 a month to order medications from a pharmacy not used by the facility; $315 a month for daily help with an inhaler.
The facilities charge extra to help residents get to the shower, bathroom, or dining room; to deliver meals to their rooms; to have staff check-ins for daily “reassurance” or simply to remind residents when it’s time to eat or take their medication. Some even charge for routine billing of a resident’s insurance for care.
“They say, ‘Your mother forgot one time to take her medications, and so now you’ve got to add this on, and we’re billing you for it,’” said Lori Smetanka, executive director of the National Consumer Voice for Quality Long-Term Care, a nonprofit.
About 850,000 older Americans reside in assisted living facilities, which have become one of the most lucrative branches of the long-term care industry that caters to people 65 and older. Investors, regional companies, and international real estate trusts have jumped in: Half of operators in the business of assisted living earn returns of 20% or more than it costs to run the sites, an industry survey shows. That is far higher than the money made in most other health sectors.
Rents are often rivaled or exceeded by charges for services, which are either packaged in a bundle or levied à la carte. Overall prices have been rising faster than inflation, and rent increases since the start of last year have been higher than at any previous time since at least 2007, according to the National Investment Center for Seniors Housing & Care, which provides data and other information to companies.
There are now 31,000 assisted living facilities nationwide — twice the number of skilled nursing homes. Four of every five facilities are run as for-profits. Members of racial or ethnic minority groups account for only a tenth of residents, even though they make up a quarter of the population of people 65 or older in the United States.
A public opinion survey conducted by KFF found that 83% of adults said it would be impossible or very difficult to pay $60,000 a year for an assisted living facility. Almost half of those surveyed who either lived in a long-term care residence or had a loved one who did encountered unexpected add-on fees for things they assumed were included in the price.
Assisted living is part of a broader affordability crisis in long-term care for the swelling population of older Americans. Over the past decade, the market for long-term care insurance has virtually collapsed, covering just a tiny portion of older people. Home health workers who can help people stay safely in their homes are generally poorly paid and hard to find.
And even older people who can afford an assisted living facility often find their life savings rapidly drained.
Jon Guckenberg gets help from his legal guardian, Nancy Pilger, in his room at New Perspective Cloquet, an assisted living facility in Cloquet, Minnesota.(Tim Gruber for The New York Times)Guckenberg’s rent for a single room at the assisted living facility was $4,140 a month before adding in a raft of other charges.(Tim Gruber for The New York Times)
Unlike most residents of nursing homes, where care is generally paid for by Medicaid, the federal-state program for the poor and disabled, assisted living residents or their families usually must shoulder the full costs. Most centers require those who can no longer pay to move out.
The industry says its pricing structures pay for increased staffing that helps the more infirm residents and avoids saddling others with costs of services they don’t need.
Prices escalate greatly when a resident develops dementia or other serious illnesses. At one facility in California, the monthly cost of care packages for people with dementia or other cognitive issues increased from $1,325 for those needing the least amount of help to $4,625 as residents’ needs grew.
“It’s profiteering at its worst,” said Mark Bonitz, who explored multiple places in Minnesota for his mother, Elizabeth. “They have a fixed amount of rooms,” he said. “The way you make the most money is you get so many add-ons.” Last year, he moved his mother to a nonprofit center, where she lived until her death in July at age 96.
LaShuan Bethea, executive director of the National Center for Assisted Living, a trade association of owners and operators, said the industry would require financial support from the government and private lenders to bring prices down.
“Assisted living providers are ready and willing to provide more affordable options, especially for a growing elderly population,” Bethea said. “But we need the support of policymakers and other industries.” She said offering affordable assisted living “requires an entirely different business model.”
Others defend the extras as a way to appeal to the waves of boomers who are retiring. “People want choice,” said Beth Burnham Mace, a special adviser for the National Investment Center for Seniors Housing & Care. “If you price it more à la carte, you’re paying for what you actually desire and need.”
Yet residents don’t always get the heightened attention they paid for. Class-action lawsuits have accused several assisted living chains of failing to raise staffing levels to accommodate residents’ needs or of failing to fulfill billed services.
“We still receive many complaints about staffing shortages and services not being provided as promised,” said Aisha Elmquist, until recently the deputy ombudsman for long-term care in Minnesota, a state-funded advocate. “Some residents have reported to us they called 911 for things like getting in and out of bed.”
‘Can You Find Me a Money Tree?’
Anne Palm watches as a nursing aide helps transfer Donald Reiners, Palm’s father, between a lift and a wheelchair in his room at a Department of Veterans Affairs facility.(Tim Gruber for The New York Times)
Florence Reiners, 94, adores living at the Waters of Excelsior, an upscale assisted living facility in the Minneapolis suburb of Excelsior. The 115-unit building has a theater, a library, a hair salon, and a spacious dining room.
“The windows, the brightness, and the people overall are very cheerful and very friendly,” Reiners, a retired nursing assistant, said. Most important, she was just a floor away from her husband, Donald, 95, a retired water department worker who served in the military after World War II and has severe dementia.
She resisted her children’s pleas to move him to a less expensive facility available to veterans.
Reiners is healthy enough to be on a floor for people who can live independently, so her rent is $3,330 plus $275 for a pendant alarm. When she needs help, she’s billed an exact amount, like a $26.67 charge for the 31 minutes an aide spent helping her to the bathroom one night.
Her husband’s specialty care at the facility cost much more: $6,150 a month on top of $3,825 in rent.
Month by month, their savings, mainly from the sale of their home, and monthly retirement income of $6,600 from Social Security and his municipal pension, dwindled. In three years, their assets and savings dropped to about $300,000 from around $550,000.
Her children warned her that she would run out of money if her health worsened. “She about cried because she doesn’t want to leave her community,” Anne Palm, one of her daughters, said.
In June, they moved Donald Reiners to the VA home across the city. His care there costs $3,900 a month, 60% less than at the Waters. But his wife is not allowed to live at the veterans’ facility.
After nearly 60 years together, she was devastated. When an admissions worker asked her if she had any questions, she answered, “Can you find me a money tree so I don’t have to move him?”
Heidi Elliott, vice president for operations at the Waters, said employees carefully review potential residents’ financial assets with them, and explain how costs can increase over time.
“Oftentimes, our senior living consultants will ask, ‘After you’ve reviewed this, Mr. Smith, how many years do you think Mom is going to be able to, to afford this?’” she said. “And sometimes we lose prospects because they’ve realized, ‘You know what? Nope, we don’t have it.’”
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Florence and Donald Reiners used to live a floor apart at the Waters of Excelsior, but, given the cost of Donald’s specialty care, he has since moved to a separate facility. (Tim Gruber for The New York Times)
Donald Reiners moved in June to a veterans’ facility across the city. His wife is not allowed to live there. (Tim Gruber for The New York Times)
Potential Buyers From the Bahamas
For residents, the median annual price of assisted living has increased 31% faster than inflation, nearly doubling from 2004 to 2021, to $54,000, according to surveys by the insurance firm Genworth. Monthly fees at memory care centers, which specialize in people with dementia and other cognitive issues, can exceed $10,000 in areas where real estate is expensive or the residents’ needs are high.
Diane Lepsig, president of CarePatrol of Bellevue-Eastside, in the Seattle suburbs, which helps place people, said that she has warned those seeking advice that they should expect to pay at least $7,000 a month. “A million dollars in assets really doesn’t last that long,” she said.
Prices rose even faster during the pandemic as wages and supply costs grew. Brookdale Senior Living, one of the nation’s largest assisted living owners and operators, reported to stockholders rate increases that were higher than usual for this year. In its assisted living and memory care division, Brookdale’s revenue per occupied unit rose 9.4% in 2023 from 2022, primarily because of rent increases, financial disclosures show.
In a statement, Brookdale said it worked with prospective residents and their families to explain the pricing and care options available: “These discussions begin in the initial stages of moving in but also continue throughout the span that one lives at a community, especially as their needs change.”
Many assisted living facilities are owned by real estate investment trusts. Their shareholders expect the high returns that are typically gained from housing investments rather than the more marginal profits of the heavily regulated health care sector. Even during the pandemic, earnings remained robust, financial filings show.
Ventas, a publicly traded real estate investment trust, reported earning revenues in the third quarter of this year that were 24% above operating costs from its investments in 576 senior housing properties, which include those run by Atria Senior Living and Sunrise Senior Living.
Ventas said the prices for its services were affordable. “In markets where we operate, on average it costs residents a comparable amount to live in our communities as it does to stay in their own homes and replicate services,” said Molly McEvily, a spokesperson.
In the same period, Welltower, another large real estate investment trust, reported a 24% operating margin from its 883 senior housing properties, which include ones operated by Sunrise, Atria, Oakmont Management Group, and Belmont Village. Welltower did not respond to requests for comment.
The median operating margin for assisted living facilities in 2021 was 23% if they offered memory care and 20% if they didn’t, according to David Schless, chief executive of the American Seniors Housing Association, a trade group that surveys the industry each year.
Bethea said those returns could be invested back into facilities’ services, technology, and building updates. “This is partly why assisted living also enjoys high customer satisfaction rates,” she said.
Brandon Barnes, an administrator at a family business that owns three small residences in Esko, Minnesota, said he and other small operators had been approached by brokers for companies, including one based in the Bahamas. “I don’t even know how you’d run them from that far away,” he said.
Rating the Cost of a Shower, on a Point Scale
Charles Barker with his daughter, Celenie Singley. Singley moved her father from one memory care unit to another after she had safety concerns about the facility.(Ariana Drehsler for The New York Times)
To consistently get such impressive returns, some assisted living facilities have devised sophisticated pricing methods. Each service is assigned points based on an estimate of how much it costs in extra labor, to the minute. When residents arrive, they are evaluated to see what services they need, and the facility adds up the points. The number of points determines which tier of services you require; facilities often have four or five levels of care, each with its own price.
Charles Barker, an 81-year-old retired psychiatrist with Alzheimer’s, moved into Oakmont of Pacific Beach, a memory care facility in San Diego, in November 2020. In the initial estimate, he was assigned 135 points: 5 for mealtime reminders; 12 for shaving and grooming reminders; 18 for help with clothes selection twice a day; 36 to manage medications; and 30 for the attention, prompting, and redirection he would need because of his dementia, according to a copy of his assessment provided by his daughter, Celenie Singley.
Barker’s points fell into the second-lowest of five service levels, with a charge of $2,340 on top of his $7,895 monthly rent.
Singley became distraught over safety issues that she said did not seem as important to Oakmont as its point system. She complained in a May 2021 letter to Courtney Siegel, the company’s chief executive, that she repeatedly found the doors to the facility, located on a busy street, unlocked — a lapse at memory care centers, where secured exits keep people with dementia from wandering away. “Even when it’s expensive, you really don’t know what you’re getting,” she said in an interview.
Singley, 50, moved her father to another memory care unit. Oakmont did not respond to requests for comment.
Other residents and their families brought a class-action lawsuit against Oakmont in 2017 that said the company, an assisted living and memory care provider based in Irvine, California, had not provided enough staffing to meet the needs of residents it identified through its own assessments.
Jane Burton-Whitaker, a plaintiff who moved into Oakmont of Mariner Point in Alameda, California, in 2016, paid $5,795 monthly rent and $270 a month for assistance with her urinary catheter, but sometimes the staff would empty the bag just once a day when it required multiple changes, the lawsuit said.
She paid an additional $153 a month for checks of her “fragile” skin “up to three times a day, but most days staff did not provide any skin checks,” according to the lawsuit. (Skin breakdown is a hazard for older people that can lead to bedsores and infections.) Sometimes it took the staff 45 minutes to respond to her call button, so she left the facility in 2017 out of concern she would not get attention should she have a medical emergency, the lawsuit said.
Oakmont paid $9 million in 2020 to settle the class-action suit and agreed to provide enough staffing, without admitting fault.
Similar cases have been brought against other assisted living companies. In 2021, Aegis Living, a company based in Bellevue, Washington, agreed to a $16 million settlement in a case claiming that its point system — which charged 64 cents per point per day — was “based solely on budget considerations and desired profit margins.” Aegis did not admit fault in the settlement or respond to requests for comment.
When the Money Is Gone
Jon Guckenberg ran through his life savings a year after moving into his assisted living facility.(Tim Gruber for The New York Times)
Jon Guckenberg’s rent for a single room in an assisted living cottage in rural Minnesota was $4,140 a month before adding in a raft of other charges.
The facility, New Perspective Cloquet, charged him $500 to reserve a spot and a $2,000 “entrance fee” before he set foot inside two years ago. Each month, he also paid $1,080 for a care plan that helped him cope with bipolar disorder and kidney problems, $750 for meals, and another $750 to make sure he took his daily medications. Cable service in his room was an extra $50 a month.
A year after moving in, Guckenberg, 83, a retired pizza parlor owner, had run through his life’s savings and was put on a state health plan for the poor.
Doug Anderson, a senior vice president at New Perspective, said in a statement that “the cost and complexity of providing care and housing to seniors has increased exponentially due to the pandemic and record-high inflation.”
In one way, Guckenberg has been luckier than most people who run out of money to pay for their care. His residential center accepts Medicaid to cover the health services he receives.
Most states have similar programs, though a resident must be frail enough to qualify for a nursing home before Medicaid will cover the health care costs in an assisted living facility. But enrollment is restricted. In 37 states, people are on waiting lists for months or years.
“We recognize the current system of having residents spend down their assets and then qualify for Medicaid in order to stay in their assisted living home is broken,” said Bethea, with the trade association. “Residents shouldn’t have to impoverish themselves in order to continue receiving assisted living care.”
Only 18% of residential care facilities agree to take Medicaid payments, which tend to be lower than what they charge self-paying clients, according to a federal survey of facilities. And even places that accept Medicaid often limit coverage to a minority of their beds.
For those with some retirement income, Medicaid isn’t free. Nancy Pilger, Guckenberg’s guardian, said that he was able to keep only about $200 of his $2,831 monthly retirement income, with the rest going to paying rent and a portion of his costs covered by the government.
In September, Guckenberg moved to a nearby assisted living building run by a nonprofit. Pilger said the price was the same. But for other residents who have not yet exhausted their assets, Guckenberg’s new home charges $12 a tray for meal delivery to the room; $50 a month to bill a person’s long-term care insurance plan; and $55 for a set of bed rails.
Even after Guckenberg had left New Perspective, however, the company had one more charge for him: a $200 late payment fee for money it said he still owed.
Are you confused about what an assisted living facility is, and how it differs from a nursing home? And what you can expect to pay? Here’s a guide to this type of housing for older people.
What is assisted living?
Assisted living facilities occupy the middle ground of housing for people who can no longer live independently but don’t need the full-time medical supervision provided at a nursing home. They might be right for those who have trouble moving about, bathing, eating, or dressing, or who have Alzheimer’s disease or other forms of dementia.
Assisted living facilities can look like luxury apartments or modest group homes, but they are staffed with aides who can help residents take a shower, get out of bed, get to the dining room, take medications, or help with other daily tasks and needs. Meals, activities, and housekeeping are usually provided. Some facilities have trained nurses on-site, but in many states the facilities are not required to have them at the ready, or at all. Popular buildings — or specialized units within them, such as ones for dementia — have waiting lists.
“The key is to start early,” said Eilon Caspi, an assistant research professor at the University of Connecticut. “You don’t want to wait for the crisis and then have 24 hours to make a decision.”
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How can I know how much assisted living will cost me?
The monthly costs to live in a facility generally range from $3,000 to $12,000 or more. Charges are frequently broken into two components: rent and a care plan. Rents are set similarly to the way landlords establish them for apartments, with larger units in more expensive regions having higher rents and rent concessions being more likely when many units are unoccupied.
The costs of care plans are based on how much assistance the facility thinks residents will need, at least when they first move in. Most of them assign residents a “level” or “tier” based on the extent of their needs, but some will itemize charges for specific services. It’s like the difference between a prix fixe and an à la carte menu (except you don’t get to choose which approach you prefer within each facility). Assisted living units or facilities devoted to dementia residents are more likely to set one comprehensive price, though many have tiers.
Make sure the facility’s assessment reflects what the resident will need, or it might increase the price if it is providing more assistance than expected. Check if meals are priced separately.
Happy hour in the independent-living wing of the Waters of Excelsior in Minnesota features live entertainment.(Tim Gruber for The New York Times)
What charges might catch me by surprise?
Facilities often have nonrecurring initial charges, like move-in fees or “community fees.” You should ask whether there are extra charges for things residents might need or use, like nurse visits, cable television, or other kinds of assistance; such charges can pile up quickly if they’re not detailed as included in the care plan. Some places even charge more if you get medications from a pharmacy other than the one they have a business relationship with.
It’s worth checking a few months after moving in to see if the care plan is more than the resident needs. If so, ask for the price to be lowered to remove services that aren’t being used.
Is it better to go with a facility that charges a set monthly amount or one that bills for each service?
If you want predictability in your monthly bill, you’re safer with a facility that is all-inclusive or that charges by tiers or bundled services. That’s also true if you need assistance with many things. If you don’t need a lot of help, à la carte may be better. Some facilities have an independent-living wing or a program with à la carte pricing, which may be best for those who need only sporadic assistance. If you need more help as time goes on, you can transition to the assisted living section or program and get a care bundle.
What happens when a resident ages and becomes frailer?
Care plans for those needing the most assistance can be double or triple the cost of those for the most independent residents. Ask the facility to explain what causes price increases. Be honest with yourself, and the facility, about what you can afford when the bill rises, because it’s going to. “You’ve got to understand your future is coming,” said Karen Van Dyke, a certified senior adviser in San Diego who helps families find the right facility for them.
Also make sure you understand the maximum level of care the place can provide. If you require more, the home may make you move out. For instance, some places will care for people who have occasional lapses of memory or disorientation but not those whose dementia causes delusions, agitation, or aggression. There are fewer legal protections against evictions in assisted living facilities than in nursing homes. Be realistic about what you need: No one wants to move into a nursing home, but it’s dangerous for residents to stay in an assisted living facility that can’t take care of them.
What happens if I run out of money?
You may have to leave. Most assisted living facilities are for-profit, and they have no legal obligation to keep the indigent. About 1 in 5 facilities accept Medicaid to help pay for the cost of providing care, but Medicaid doesn’t cover rent at assisted living facilities, so even then you may be forced out. Some states or counties will help cover the cost of housing if you have no savings and little retirement income, so it’s worth finding out if that’s available. (Call your local Area Agency on Aging for assistance.) Some facility owners will accept lower fees for longtime residents, but they are the exception.
How can I find out how good a facility is?
While it’s easy to get wowed by fancy dining options, sparkly chandeliers, and other building amenities, none of those are markers of quality care. If you’re considering multiple facilities, ask about the ratio of residents to aides — on nights and weekends as well as weekdays — and whether there are licensed nurses in the building, and when they are there.
The person running the facility is often known as the administrator or director. Ask about how often this position has turned over. If a facility has churned through several administrators in a few years, that’s a troubling sign about the quality of its management and owners.
Which are better — nonprofit or for-profit assisted living facilities?
Researchers have found that for-profit facilities in Minnesota and Florida are more likely to be cited for violating state health regulations, but there’s not solid evidence nationwide. There are good and bad facilities of both ownership types: A small for-profit residence with an engaged owner on-site may provide better care than a mediocre nonprofit. Be aware that nonprofits generally aren’t less expensive than for-profits; while they don’t have to provide returns to investors, they do run like a business and need to earn more than they spend each month for capital improvements and to avoid cash flow problems. Nonprofits often use the same pricing methods as for-profits, and many charge more.
Florence Reiners and her husband, Donald, exercise in the memory unit at the Waters of Excelsior assisted living facility in March. Donald Reiners has since had to move away from his wife to a less expensive facility.(Tim Gruber for The New York Times)
What should I look for during a tour?
Kristine Sundberg, executive director of Elder Voice Advocates in Minnesota, a coalition of family members, tells people to watch how residents engage with a facility’s workers. “Are they active and busy with things, or are they slouched over in a chair, being ignored?” she said. You might aim to visit on weekends, when staffing is often lightest. Ask the facility if it will let families put cameras in residents’ rooms so you can keep tabs on them remotely.
Who can help me?
Along with consumer groups like Sundberg’s, some of the most knowledgeable independent experts are long-term care ombudsmen, who are federally funded advocates for residents of nursing homes and other facilities for older people. Every state has such a program with advocates assigned to particular regions. An Area Agency on Aging is another source. These agencies are local government or nonprofit organizations that each state designates to help older people. They can help you understand your financial options and find facilities. You can locate your agency via https://eldercare.acl.gov/Public/Index.aspx.
If you want to check out a facility’s history of infractions, find the state agency that licenses assisted living facilities. In some states, it’s part of the health department, while others assign this job to their human service or social service agency. A report is written up after a facility is inspected. Licensing agencies may publish inspection reports on their websites, although they aren’t always easy to find. It’s a red flag if a facility is repeatedly cited for the same problem.
There’s no cure, yet, for Alzheimer’s disease. But dozens of programs developed in the past 20 years can improve the lives of both people living with dementia and their caregivers.
Unlike support groups, these programs teach caregivers concrete skills such as how to cope with stress, make home environments safe, communicate effectively with someone who’s confused, or solve problems that arise as this devastating illness progresses.
Some of these programs, known as “comprehensive dementia care,” also employ coaches or navigators who help assess patients’ and caregivers’ needs, develop individualized care plans, connect families to community resources, coordinate medical and social services, and offer ongoing practical and emotional support.
Unfortunately, despite a significant body of research documenting their effectiveness, these programs aren’t broadly available or widely known. Only a small fraction of families coping with dementia participate, even in the face of pervasive unmet care needs. And funding is scant, compared with the amount of money that has flooded into the decades-long, headline-grabbing quest for pharmaceutical therapies.
“It’s distressing that the public conversation about dementia is dominated by drug development, as if all that’s needed were a magic pill,” said Laura Gitlin, a prominent dementia researcher and dean of the College of Nursing and Health Professions at Drexel University in Philadelphia.
“We need a much more comprehensive approach that recognizes the prolonged, degenerative nature of this illness and the fact that dementia is a family affair,” she said.
In the U.S., more than 11 million unpaid and largely untrained family members and friends provide more than 80% of care to people with dementia, supplying assistance worth $272 billion in 2021, according to the Alzheimer’s Association. (This excludes patients living in nursing homes and other institutions.) Research shows these “informal” caretakers devote longer hours to tending to those with dementia and have a higher burden of psychological and physical distress than other caregivers.
Despite those contributions, Medicare expected to spend $146 billion on people with Alzheimer’s disease or other types of dementia in 2022, while Medicaid, which pays for nursing home care for people with low incomes or disabilities, expected to spend about $61 billion.
“What we offer people, for the most part, is entirely inadequate,” said Carolyn Clevenger, associate dean for transformative clinical practice at Emory University’s Nell Hodgson Woodruff School of Nursing.
Clevenger helped create the Integrated Memory Care program at Emory, a primary care practice run by nurse practitioners with expertise in dementia. Like other comprehensive care programs, they pay considerable attention to caregivers’ as well as patients’ needs. “We spent a great deal of time answering all kinds of questions and coaching,” she told me. This year, Clevenger said, she hopes three additional sites will open across the country.
Over the past decade, a growing bodyof research has shown these programs improve the quality of life for people with dementia; alleviate troublesome symptoms; help avoid unnecessary emergency room visits or hospitalizations; and delay nursing home placement, while also reducing depression symptoms, physical and emotional strain, and overall stress for caregivers.
In an important development in 2021, an expert panel organized by the National Academies of Sciences, Engineering, and Medicine said there was sufficient evidence of benefit to recommend that comprehensive dementia care programs be broadly implemented.
Now, leaders of these programs and dementia advocates are lobbying Medicare to launch a pilot project to test a new model to pay for comprehensive dementia care. They have been meeting with staff at the Center for Medicare and Medicaid Innovation and “CMMI has expressed a considerable amount of interest in this,” according to Dr. David Reuben, chief of geriatric medicine at UCLA and a leader of its dementia care program.
“I’m very optimistic that something will happen” later this year, said Dr. Malaz Boustani, a professor at Indiana University who helped develop Eskenazi Health’s Aging Brain Care program and who has been part of the discussions with the Centers for Medicare & Medicaid Services.
The Alzheimer’s Association also advocates for a pilot project of this kind, which could be adopted “Medicare-wide” if it’s shown to beneficial and cost-effective, said Matthew Baumgart, the association’s vice president of health policy. Under a model proposed by the association, comprehensive dementia care programs would receive between $175 and $225 per month for each patient in addition to what Medicare pays for other types of care.
A study commissioned by the association estimates that implementing a comprehensive care dementia model could save Medicare and Medicaid $21 billion over 10 years, largely by reducing patients’ use of intensive health care services.
Several challenges await, even if Medicare experiments with ways to support comprehensive dementia care. There aren’t enough health care professionals trained in dementia care, especially in rural areas and low-income urban areas. Moving programs into clinical settings, including primary care practices and medical clinics, may be challenging given the extent of dementia patients’ needs. And training needs for program staff members are significant.
Even if families receive some assistance, they may not be able to afford necessary help in the home or other services such as adult day care. And many families coping with dementia may remain at a loss to find help.
To address that, the Benjamin Rose Institute on Aging later this year plans to publish an online consumer directory of evidence-based programs for dementia caregivers. For the first time, people will be able to search, by ZIP code, for assistance available near them. “We want to get the word out to caregivers that help is available,” said David Bass, a senior vice president at the Benjamin Rose Institute who’s leading that effort.
Generally, programs for dementia caregivers are financed by grants or government funding and free to families. Often, they’re available through Area Agencies on Aging — organizations that families should consult if they’re looking for help. Some examples:
Savvy Caregiver, delivered over six weeks to small groups in person or over Zoom. Each week, a group leader (often a social worker) gives a mini-lecture, discusses useful strategies, and guides group members through exercises designed to help them manage issues associated with dementia. Now offered in 20 states, Savvy Caregiver recently introduced an online, seven-session version of the program that caregivers can follow on their schedule.
REACH Community, a streamlined version of a program recommended in the 2021 National Academy of Sciences report. In four hour-long sessions in person or over the phone, a coach teaches caregivers about dementia, problem-solving strategies, and managing symptoms, moods, stress, and safety. A similar program, REACH VA, is available across the country through the Department of Veterans Affairs.
Tailored Activity Program. In up to eight in-home sessions over four months, an occupational therapist assesses the interests, functional abilities, and home environment of a person living with dementia. Activities that can keep the individual meaningfully engaged are suggested, along with advice on how to carry them out and tips for simplifying the activities as dementia progresses. The program is being rolled out across health care settings in Australia and is being reviewed as a possible component of geriatric home-based care by the VA, Gitlin said.
We’re eager to hear from readers about questions you’d like answered, problems you’ve been having with your care, and advice you need in dealing with the health care system. Visit khn.org/columnists to submit your requests or tips.
