How Assisted Living or Long Term Care Can Lead to Bankruptcy

nj bankruptcy

According to the New York Times, the rate of people 65 and older filing for bankruptcy is currently three times what it was thirty years ago. Disappearing pensions, the all-time-high cost of medical expenses, and insufficient savings are all contributing to the financial instability of America’s elderly. It can be easy to underestimate how expensive long-term care and assisted living can be. When this happens, retirees find themselves unprepared to pay for the care they need. This can burden a family’s personal finances and in some cases lead to bankruptcy.

A lot of the issues impacting this crisis come down to sheer numbers. By 2050, there will be about 88 million adults over 65 living in the US. By this point, nearly 62 million of these people will need long-term care of some kind. The medical cost of this group is expected to be very high. A huge chunk of a family’s financial resources will be earmarked for long-term nursing care at home or an assisted living community. Family members will also need to find funds for co-pays, food, physical therapy, and medical equipment (walkers, adjustable beds and chairs, handicap accessories for the bathroom, etc.).

In 2016, the average yearly costs for senior care were:

$82,128 a year to stay in a nursing home

$43,536 a year to receive assisted living care

$20.50 an hour for in-home care

What’s more, many of these costs are increasingly the responsibility of elderly individuals and their family, as federal and state assistance for the elderly is consistently diminishing. Medicaid, for example, will cover most fees associated with short term stays in assisted living—but only for those who meet the program’s strict financial guidelines. Medicare also cannot be relied upon, as it will only pay up to 100 days per illness, leaving the individual holding the bill for any additional long-term care requirements. Similarly, even those with long-term care insurance can find their care is not covered under a policy’s conditions, exclusions, and benefit limits.

Nearly a quarter of long-term care costs are paid directly by individuals and their families. What this means is that when a senior can no longer care for themselves and must move into an assisted living facility or receive in-home care, the burden often falls on their family to pay for it. For many, financial contributions to mortgages, college costs, and retirement savings mean there is little disposable income to cover the cost of their parents’ long-term care. When a family cannot afford a loved-one’s care out of pocket, they are now forced to use their own personal and/or retirement savings. Some adult children of today’s older Americans are taking out personal loans to cover care expenses.

For many American families, it simply is not possible to cover the rising cost of long-term care for an elderly loved one. Bankruptcy can result when medical debt becomes unmanageable. Veitengruber Law is a full-service estate planning, debt management, and bankruptcy law firm. We can help you plan for the future, make your debts more manageable, and discuss your options when medical debt becomes overwhelming. Bankruptcy can help alleviate stress from medical debt and help you get your finances back under control.

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