Dementia Linked to Significant Increases in Care Use and Financial Burden

Dementia has a profound impact on American families and their finances. The complexity and intensity of managing dementia symptoms necessitate additional resources, significantly escalating the overall financial burden and underscoring the importance of early planning.

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Dementia Linked to Significant Increases in Care Use and Financial Burden
6 Min Read October 23rd, 2023

A new study has found that dementia is associated with significant increases in care use and financial burden among older adults.

The study, published in the Journal of the American Medical Association Internal Medicine, followed a group of over 4,000 older adults for eight years. Researchers found that those who developed dementia were much more likely to use long-term care services, such as nursing homes, assisted living facilities, and in-home care. They were also more likely to have out-of-pocket medical costs.

The study's lead author, Dr. HwaJung Choi, said that the findings highlight the need for better planning for the financial impact of dementia.

Dr. HwaJung Choi

"Dementia can have a devastating impact on families. The costs of care can be very high, and they can quickly deplete a family's savings."

The study found that the median out-of-pocket care costs for older adults with dementia increased from $4,005 per year to $10,006 per year throughout the study. The median wealth of older adults with dementia also declined significantly.

Planning Early for Aging Issues Critical

Choi said that the findings suggest that families need to start planning for the financial impact of dementia early.

It's important to talk to your loved ones about their wishes for care and to start saving for the potential costs of long-term care.

 The study also found that the availability of family caregivers can help to offset the costs of dementia care. Older adults with dementia who had family caregivers were less likely to use long-term care services and had lower out-of-pocket medical costs. However, the study did not review the physical, emotional, and financial impact that unpaid family caregivers faced when taking on the role of caregiver.

Choi said the findings suggest that family caregivers play a vital role in supporting older adults with dementia.

Family caregivers can provide a lot of support to older adults with dementia. They can help with activities of daily living, such as bathing and dressing, and they can also provide emotional support.

The study's findings suggest that dementia can significantly impact the financial well-being of older adults and their families. Families need to be aware of the potential costs of dementia and start planning for them early.

LTC Insurance - Potential Solution

The study did not discuss the positive impact of Long-Term Care Insurance in protecting an individual's assets, ensuring access to quality care choices, and giving loved ones the time to be family instead of caregivers.

The most recent data available, 2022, shows that the top insurance companies paid over $13 billion in LTC Insurance benefits, much of that money going to pay for in-home care, adult day care, assisted living, memory care, and nursing home care. 

Another study authored in part by Dr. Choi showed the majority of adults aged 55 and older with dementia do not have a spouse.

The study, published in the journal "Dementia and Geriatric Cognitive Disorders," found that 62% of adults with dementia did not have a spouse. Of those with a spouse, only about a quarter had a spouse without a disability.

The rate of having a spouse without a disability was lower for women than men (16% vs. 38%), for non-Hispanic blacks than other racial/ethnic groups (19% vs. 25-27%), for those with the lowest education level than those with the highest education level (22% vs. 36%), and for those in the lowest wealth group than those in the highest wealth group (9% vs. 41%).

The study also found that the rate of having a spouse working full-time is low overall (3.6%). However, the rate is higher for men (6%), those in younger age groups (15% for ages 55-64), those with higher education levels (6% for those with 16 or more years of schooling), and those with greater wealth (6% for those in the top 25% of the wealth distribution).

Family Caregivers Not an Ideal Solution

The findings suggest that many older adults with dementia lack spousal support. This lack of support can significantly impact the quality of life of the person with dementia and their spouse.

Renowned long-term care planning specialist Matt McCann emphasizes the importance of LTC Insurance in retirement strategies, highlighting the tax benefits and partnership programs accessible in most states. However, he says planning is more than just about protecting assets; it is about access to quality care and easing the burdens otherwise placed on family members. 

Since Long-Term Care Insurance is medically underwritten, the time to obtain coverage is before health issues come up, yet many consumers think if they are healthy, they don't need a policy. It is your good health today that allows you the ability to plan. Most of my clients are in their 50s and some even younger. Many of these people have seen their parent's health decline and understand the burdens and challenges long-term crae can have on families and finances.

According to the Alzheimer's Association, the most current data on the prevalence of dementia in the United States is as follows:

  • An estimated 6.5 million Americans age 65 and older are living with Alzheimer's dementia.
  • This number is projected to increase to 13.8 million by 2060.
  • Alzheimer's is the most common cause of dementia, accounting for 60-70% of cases.
  • Other causes of dementia include vascular dementia, Lewy body dementia, and frontotemporal dementia.
  • Dementia is a leading cause of death in the United States, ranking sixth in 2020.

The prevalence of dementia increases with age. For example, about 3% of adults ages 70 to 74 have dementia, compared with 22% of adults ages 85 to 89 and 33% of adults ages 90 and older.

Women are slightly more likely to have dementia than men. Among adults ages 70 and older, 11% of women and 8% of men have dementia.

Financial Impact of Dementia Care Significant  

Dementia is a significant public health concern. The direct costs of dementia care in the United States are estimated to be $321 billion in 2022. The indirect costs, such as lost productivity, are estimated to be an additional $259 billion.

This financial toll dementia care places on American families, and the government is substantial and continues to grow as the population ages. For families, the cost of care can be overwhelming, with expenses for medical treatments, caregiving, and other related services piling up quickly. 

Many families find themselves draining their savings, selling assets, or even quitting jobs to become full-time caregivers, which can lead to significant financial strain. The emotional and physical toll of caring for a loved one with dementia further compounds the financial challenges, creating a multifaceted burden on families.

On a larger scale, the impact on government resources is also significant. Medicaid, the primary public payer for long-term care services in the U.S., bears a substantial portion of the cost for individuals with dementia. As the number of Americans with dementia continues to rise, the strain on Medicaid and other public health programs will only increase, potentially leading to budget shortfalls and difficult resource allocation decisions. 

Additionally, the lost productivity and increased health care costs associated with dementia caregivers contribute to the overall economic burden of the disease. Addressing the financial impact of dementia requires a comprehensive approach that supports families and ensures the sustainability of public health programs.

More people should consider Long-Term Care Insurance, yet some people ignore the problem because they think long-term care is already covered by health insurance or Medicare (it is not) or it just won't happen to them.

However, those with an LTC policy find not only is the coverage affordable, but they will have access to the funds required to pay for their choice of quality care, protecting their income and assets and easing the burdens otherwise placed on their family. Ultimately, they also help the taxpayer as the chance of losing all their assets and qualifying for Medicaid is diminished. 

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About the Author

Linda Maxwell is a retired journalist who now focuses on writing about topics that captivate her, such as aging, health, long-term care, and retirement issues. Her aim is to maintain an active and engaged mind, and through her writing, she hopes to help others stay positively engaged with life.

LTC News Contributor Linda Maxwell

Linda Maxwell

Contributor since December 11th, 2017

Editor's Note

As you meticulously chart out your retirement plans, it's crucial to factor in the hurdles that aging can bring. Think about it: the twilight years should be a time of serenity and contentment, but the onset of chronic illness, mobility issues, or cognitive decline could drastically alter this landscape. Consider Long-Term Care Insurance as a vital component of your retirement strategy to ensure that you have the necessary support and resources in place.

Imagine a future where you might be grappling with dementia or physical frailty. It's a challenging thought but one that requires attention. An LTC policy is not just about covering expenses; it's about preserving your dignity and autonomy. With such a policy in place, you gain access to a spectrum of quality care options tailored to your unique needs. Whether it's assistance at home, a stay in an assisted living facility, or specialized nursing care, you have the power to choose.

Now, picture the alternative. Without a Long-Term Care Insurance policy, the financial and emotional burden of care often falls on family members. It's a common scenario; perhaps you've even witnessed it within your circle of friends or family. The stress and strain of caregiving can fray familial bonds, and the financial impact can be staggering. With an LTC policy, you're not just safeguarding your own future; you're also protecting your loved ones from potential hardship.

Incorporating Long-Term Care Insurance into your retirement plan is a proactive step towards ensuring a future where you have control over your care choices and access to high-quality services. It's about planning for the best while being prepared for the unexpected. 

Don't let the possibility of long-term care needs catch you off guard. Explore your options, understand the benefits, and make Long-Term Care Insurance a cornerstone of your retirement planning. This way, you can face the future with confidence, knowing that you are well-prepared for whatever comes your way.

An LTC Insurance Specialist - Your Partner in Finding Affordable Coverage

There are many licensed insurance agents, including financial advisors, who could help you with Long-Term Care Insurance. Some only work with one insurance company; others actually work 'for' the insurance company. However, there are very few independent Long-Term Care Insurance specialists. 

Long-Term Care Insurance necessitates the guidance of a professional specialist with profound knowledge and experience in the field. A select few specialists truly stand out, partnering with top-rated insurance companies and possessing a comprehensive understanding of underwriting, policy design, pricing, claims, and the intricacies of Partnership programs in LTC Insurance.

These experts are invaluable, offering you free accurate quotes from all the major insurance carriers providing Long-Term Care Insurance options. When seeking out an LTC Insurance specialist, keep an eye out for these crucial indicators of expertise:

  1. A seasoned LTC Insurance specialist will have assisted a substantial number of individuals, at least 100 or more, in navigating LTC Insurance solutions. Some specialists help hundreds every year. Don't hesitate to inquire about their experience; some specialists have successfully aided thousands of clients nationwide.
  2. A true specialist in LTC Insurance will collaborate with a broad array of leading insurance companies, ensuring a comprehensive selection of products rather than being limited to one or two providers.
  3. Look for a specialist with extensive experience in the field, helping many clients; many hold a Certified in Long-Term Care® (CLTC®) designation. This reflects their dedication and proficiency in Long-Term Care Insurance.
  4. An expert in LTC Insurance will possess a deep understanding of the current and future costs associated with long-term care, as well as the predominant ways care is provided. This knowledge enables them to make informed recommendations without the risk of over-insuring.
  5. A well-rounded LTC Insurance specialist will present you with a variety of long-term care solutions, ranging from traditional policies (including Partnership plans) to asset-based "hybrid" policies and short-term cash indemnity policies.
  6. They will be adept at navigating the underwriting rules of all major insurance companies, ensuring that your age, health, family history, and other factors are carefully considered to provide accurate and personalized quotes.
  7. Finally, an LTC Insurance specialist worth their salt will have hands-on experience assisting clients and their families through the claims process, providing invaluable support and expertise when it's needed most.

By seeking out a specialist with these qualifications, you're taking a vital step toward securing your future with a Long-Term Care Insurance policy that truly meets your needs.

Mom and Dad Deserves Quality Care (so will you) - How Can You Help?

If your parents exhibit declining health or dementia, they deserve quality care immediately. If they have a Long-Term Care Insurance policy, consider them lucky. Be sure to use the benefits from the LTC policy without delay.

LTC NEWS has combined efforts with Amada Senior Care, a leading in-home health care agency with locations throughout the country, to help you process a claim from any LTC Insurance policy.

There is no cost or obligation for this service - Filing a Long-Term Care Insurance Claim.

If they don't have an LTC policy, Amada can still help develop a plan of care and provide you with many affordable in-home care options. Learn more now - Find Quality In-Home Care.

Quality Care is Available

The LTC NEWS Caregiver Directory offers a convenient way to discover high-quality care providers in your vicinity or for a family member. Utilize the directory to explore top-notch care solutions - Long-Term Care Services Directory | Find Care Near You


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These four LTC NEWS guides will assist you in trying to find appropriate long-term health care services for a loved one:

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