Whether it’s for yourself or for a loved one, elder care can get expensive fast, especially if medical issues are involved.
In 2021, the median yearly cost of in-home care with a home health aide was $61,776, and the median cost for a private room in a nursing home was $108,405.
Most people need some type of elder care eventually. So it’s better to prepare now for ways you can save on the cost.
In this article, we’ll look at four broad categories in which you can save money on your elder care expenses. Let’s get started!
1. Focus on prevention
One of the best ways to save on elder care costs is to take care of your health now. By maintaining a healthy lifestyle, you can avoid the need for costly treatments. Think diabetes, heart problems, and obesity. You can often prevent conditions like these.
How? By keeping a nutritious and balanced diet, staying active through regular exercise, and getting plenty of fresh air. Your body needs these things and if you neglect them, you’ll probably pay for it later in life.
Plus, even if you do need to live in a care home someday, you may be able to lower the price by showing that you don’t have any special health needs and thus require less work from the facility.
As they say, “an apple a day keeps the doctor away.”
2. Consider adult group care programs
Another way to save on elder care costs is by taking advantage of adult group care programs. These can be much less expensive than hiring an in-home care provider or living in an assisted living facility, for example.
Adult group care programs often provide a casual setting for the elderly to play games, do crafts, and participate in other activities. Some programs are non-profit and may be run by a local church or charity organization with volunteer members. Others are for-profit and may cost a little bit more. Some may just be local community centers.
In every case, an adult group care center can be an excellent way for the elderly to spend some of their day, and it gives the caregiver a well-deserved break. Just be careful not to call it a “daycare,” which is associated mostly with children and can be insulting if applied to an adult.
3. Research financial assistance programs
Fortunately, there are many financial assistance programs out there that can help you pay for the cost of elder care. These include the following:
- Medicare is a federal health insurance program for American adults over the age of 65. Though it doesn’t cover everything (including costs of daily living), it can cover some doctor and hospital bills like medical supplies and doctor-prescribed home health services (e.g. physical or occupational therapy but not personal care). It may also cover skilled nursing facilities and hospice care, but only for up to 100 days. After that, you’re on your own.
- Medicaid is a joint federal and state program that helps provide health-related services to low-income individuals and families. Though the benefits vary by state, Medicaid may cover nursing home services or in-home care services. However, you will need to qualify by making below a certain amount of income and not owning assets above a certain value (e.g. in New York, an individual must make no more than $934/month and have no more than $28,133 in assets). If you don’t currently qualify, you may be able to by spending down your assets with an irrevocable trust or gifting them to family members. Just keep in mind gifted assets will count toward your Medicaid eligibility for five years, so this strategy takes some planning.
- FreedomCare is a program that allows seniors with Medicaid benefits to choose a family member to be their in-home caregiver. That family member will then get paid for their work and even earn other benefits like free counseling services and access to a caregiver wellness program and a caregiver support program. So, if a family member is taking care of you, you might as well help them get paid!
- Veterans Aid and Attendance (A&A) and Household Allowance are veterans programs that provide monthly payments for veterans who need help with daily activities or are housebound. So if you served in the U.S. military, this could be a great source of financial aid.
There are countless other sources of financial aid out there, including discount prescription drug programs and disability assistance programs. A good place to start looking for them is healthcare.gov or your state’s healthcare program website. They’ll be able to tell you what you may qualify for and point you in the right direction.
4. Look into long-term care insurance
Long-term care insurance can cover the cost of adult group care programs, home care, home health care, and personal care (including assistance with basic tasks like dressing, eating, and bathing).
It can cover what Medicaid and other programs won’t, while offering more flexibility and options than government programs do.
That said, long-term care insurance can also be expensive, so whether it’s right for you really depends on your needs and how old you are. The average annual premium for adults at age 55 is $2,200 for single males, $3,700 for single females, and $5,025 for couples. And after the age of 65, the cost goes way up. So the sooner you get insured, the better.
Also, keep in mind that you won’t be able to get long-term care insurance if you already have a debilitating condition.
5. Look for tax breaks
Lastly, there are several ways to get tax breaks for your elder care expenses.
For example, your family caregiver may qualify for a dependent care tax credit if you are their qualified tax dependent. Or you may be able to contribute to a variety of tax-advantaged accounts that can help pay for elder care. These include:
- Dependent Care Flexible Spending Account (DCFSA)
- Health Savings Account (HSA)
- Health Reimbursement Account (HRA)
- Flexible Spending Account (FSA) (to help pay for qualified medical, dental, and vision expenses)
Each of these may help stretch your elder care dollars further. Just be sure to carefully read the IRS guidelines regarding elder care tax breaks and consult a tax professional who can guide you toward the right option for your situation.
The bottom line
Elder care is a common expense that most of us will deal with at some point. Now that you know some different ways to save on this major expense that takes many Americans by surprise, you’re better prepared to transition smoothly into your golden years.