Alzheimer’s care can lead to catastrophic medical bills for families

For Linda Gagnon, it was both a shock and no surprise at all.

At the start of 2012, her 88-year-old mother, Martha Gagnon, was bright, alert and still dropping in on her weekly quilting group.

By August, Martha Gagnon was incapable of walking unassisted or swallowing her food properly. Doctors diagnosed her with dementia, most likely Alzheimer’s.

Even though there’s a family history of dementia, the doctor’s report stunned Linda Gagnon.

"You never dream it’s going to happen to you," she says.

Now, as she struggles to come to terms with her mother’s fading health, Linda Gagnon also faces mounting costs for her mother’s care.

It’s a huge and growing expense, not just for the Gagnons, but for legions of families across the state and nation. No one tracks the local tab for Alzheimer’s care, but the Alzheimer’s Association says the nation will spend $200 billion in 2012 on care for patients with the disease. More than 15 million personal caregivers, such as families and friends, will provide another $210 billion worth of uncompensated care. What’s more, the Alzheimer’s Foundation of America says the disease costs U.S. businesses more than $60 billion a year in insurance costs, as well as lost productivity and absenteeism among caregiving family members.

Those costs are poised to explode. The country is just two years into a 20-year demographic tidal wave of retiring baby boomers. As the population ages, the cost of care for Alzheimer’s and other dementias will balloon by 2050 to $1.1 trillion in today’s dollars. That’s about twice what the nation spends each year on defense. It’s also enough to run the state of Nevada on its current budget for 62 years.

More than 5.4 million Americans, including about 30,000 Nevadans ages 65 and older, have Alzheimer’s, the Alzheimer’s Association reports. Those patients and their pioneering families give an idea of how much the disease could cost local families, and provide insight into how families can prepare for the financial havoc of an Alzheimer’s diagnosis. Their cases also point to the need for larger strategic plans to connect families with resources and encourage advance planning.

CARE, AND COSTS, START AT HOME

The price of Alzheimer’s care can rock almost any family’s finances. A local group home or assisted-living center costs $3,000 to $6,000 a month, says Kim Boyer, a certified elder law attorney and founder of the Boyer Law Group in Las Vegas. Valley nursing homes average $7,000 a month. For 24-hour, in-home care, expect to spend as much as $12,000 a month.

Those costs can endure for a decade or more. Patients newly diagnosed with Alzheimer’s can live two to 20 years, though five to 10 years is the average, Boyer says. Over five years, an Alzheimer’s patient could rack up $180,000 in expenses for a lower-cost group home, or $720,000 for round-the-clock care at home, though specific outlays depend on the disease’s stage and progression.

Medicare, the federal health-coverage plan for retirees, pays for inpatient hospital care, some doctors’ fees and prescription drugs, but it doesn’t cover long-term care costs. Medicaid may pay for long-term care, but Alzheimer’s patients typically don’t qualify for coverage if they earn more than the federal poverty level of $11,170 a year for a single or $15,130 for a couple, or if they have more than $2,000 to $3,000 in assets, excluding their home, a car and personal belongings. That means families end up footing the bill on nearly 20 percent of health care for Alzheimer’s patients.

The expense can get so steep that many families try to provide care themselves. More than 132,000 unpaid caregivers in Nevada donated about 151 million hours, or $1.8 billion worth, of help in 2011, according to the Alzheimer’s Association.

But that takes its own financial toll, Boyer says. Family members often cut back on hours at work to assist a spouse or parent with Alzheimer’s, and that eats into both earnings and potential Social Security income. Other households raid savings for college and retirement to cover unreimbursed expenses.

State Sen. Valerie Wiener, D-Las Vegas, says one family who testified before a state task force on Alzheimer’s told stories of how one of their kids had to become a full-time caregiver for her father.

"For many people right now, the care is their family," Wiener says.

For Linda Gagnon, the cost of her mother’s diagnosis has been both emotional and financial.

Gagnon, 64, was already retired after 34 years as a local teacher when her mother was diagnosed, so she didn’t have to slash work hours to provide care. She did, however, increasingly cut herself off from neighbors and friends, as caring for her mother full time consumed more of her waking hours. Martha Gagnon needed constant help to get around, and she began "sundowning," or sleeping all day and staying up all night. Linda Gagnon suddenly couldn’t sleep at all, over worries about her mom’s safety.

Things came to a head in August, after Martha Gagnon’s seizure and subsequent dementia diagnosis. She could no longer swallow properly, and she needed specially prepared food and 24-7 watching. Linda Gagnon couldn’t leave her mother alone even to run quick errands. She called about in-home respite care that would let her out of the house for an hour here or there, but the agency quoted her a four-hour minimum at $80.

Gagnon was at a loss. She has no other family in Nevada, and "you can only call on your friends so often, because most people work," she says.

"The best place for her was to be placed in a group home with nine other patients with Alzheimer’s disease," Gagnon adds.

Gagnon wouldn’t disclose the monthly tab, but she says her mom’s home is at the lower end of the cost spectrum. Still, Medicare doesn’t cover any of the expense, so Martha Gagnon’s life savings and Social Security income are covering her care. When Martha Gagnon’s savings run out, Linda Gagnon will apply for Medicaid nursing-home coverage.

"I cannot dip into my retirement savings, because then, I’ll have nothing, and I’ll end up on the street," she says.

There are other expenses, too, such as the cost of driving to and from appointments and attorney meetings. Linda Gagnon says she spent more than $200 in October alone on gasoline, driving around to handle banking and legal paperwork.

The experience has upended her life.

"I have never felt so completely alone, and so unable to know what to do," she says. "The feeling is that you are completely isolated, and you have nowhere to turn. The expense is great, both financially and emotionally, especially when you’re alone. My sister and uncle have done the best they can, but they’re in the Midwest. It’s not like I have someone to sit down at night with and talk to. During the first two months, when I was trying to set up guardianship, I would cry at the drop of a hat. And I usually never cry. But the stress is so high."

The stress doesn’t have to be so high, though. With advance planning, families can head off some of those catastrophic, unexpected medical bills.

FINANCIAL OPTIONS

Ask any elder law expert, and they’ll say long-term care insurance is the first line of defense against the financial ravages of Alzheimer’s.

Ironically, though, most people who buy long-term care insurance are higher-net-worth people who already have the assets to pay for care, Boyer says. That’s because coverage can be costly: A policy for a single person 55 or older averages about $2,000 a year, according to the American Association of Long-Term Care Insurance. For couples 55 and older, the expense jumps to $2,400. It’s tough to convince people it’s a worthwhile expense when they may never use the benefit.

Plus, the long-term care insurance industry is in flux, Boyer says. Several carriers dropped out of the market after taking steep losses underestimating how many policyholders would file claims. Insurers still in the market are boosting premiums substantially. An August report in Forbes magazine noted that industry leader Genworth says it will raise premiums over the next half a decade by 50 percent on policies written before 2003, and by 25 percent on post-2003 policies. It also plans stricter underwriting guidelines, including mandatory blood tests.

Still, there are long-term policies worth looking into, Boyer says. Some hybrid products combine long-term care insurance and life insurance. Policyholders who never use their long-term care coverage can still enjoy a life insurance benefit, so their premiums aren’t completely lost.

Also, Nevada and most other states offer long-term care partnership programs, which allow policyholders to keep more of their assets while still qualifying for Medicaid. With a plan, a consumer who buys a $150,000 policy could keep $150,000 in assets and still qualify for Medicaid, rather than spending his assets down to the $2,000 typically required under federal law. To qualify, consumers must buy a long-term care policy approved by the state.

If you aren’t interested in long-term care insurance, the least you should do is begin saving young – no later than your 40s – for nursing care later in life, Boyer says.

The federal government’s long-term care savings calculator shows that a 40-year-old male who sets aside $100 a month at 2 percent interest will have amassed nearly $75,000 for post-retirement health care, though that pales compared to the estimated, inflation-adjusted $845,000 that long-term care would cost him in Nevada. If he can set aside $500 a month, he’d have almost $370,000 to cover his costs. Remember that women generally need to save more, because they live longer.

You can also give family members as much as $13,000 a year tax-free, Boyer says. Such gifts may trigger a waiting period for Medicaid eligibility, but they’re a way to leave something to relatives now, if it’s important to you to ensure a legacy. Irrevocable trusts are another option. The trusts put assets out of reach of Medicaid calculations, but they also put assets out of your reach to some extent, so you do lose a bit of control over your money.

For couples already facing down an Alzheimer’s diagnosis, Medicaid allows division of assets to protect savings accounts, stocks, CDs and other investments for the healthy spouse. The Alzheimer’s-free spouse is entitled to keep half of all nonexempt assets up to $113,640, while the other half must be spent down to that $2,000 Medicaid asset-qualification level. An elder law attorney can argue in court to avoid or reduce further spend-down requirements.

As an easier solution, family members can simply spend down an Alzheimer’s patient’s resources to qualify more quickly for Medicaid. Boyer recommends spending down first on medical expenses for the patient that Medicare won’t cover, such as dental work, glasses, orthopedic shoes and other life-enhancing devices. Families can also prepay funeral expenses, buy a new home for the patient, remodel the existing home and pay off a mortgage or other debt.

Whatever your plan of action, set it in motion now, even if there’s no hint of trouble, Linda Gagnon advises. Families need to talk about how they’ll cope financially and legally if a relative becomes incapacitated. Talk about savings, and let each other know about every account so family members can quickly track down money to cover out-of-pocket expenses. Most importantly, she says, see a lawyer to set up a financial power of attorney and a medical power of attorney. Without those documents, it’s difficult to access funds for care or even get information about your loved one’s condition from doctors.

And if a loved one develops Alzheimer’s, join a support group immediately, Gagnon says.

Given her family history of dementia, Gagnon is meeting with Boyer now to set up a trust and assign powers of attorney to relatives.

"I never prepared for this (Martha Gagnon’s illness). You just get into a state of denial. You don’t think it’s going to happen to you," Gagnon says. "But start thinking about it. It can happen to you. If it doesn’t happen, at least you can be thankful you’re set up and have something going on. Alzheimer’s disease is a cruel disease."

Federal and state officials are looking at ways to make the condition a little less cruel, at least for loved ones looking for help.

"We have a fast-growing elderly population in our state, so the responsible thing is to determine ways in which we can address it," Wiener says.

proactive about the future

Wiener chaired the Nevada Legislature’s task force to develop a state plan to address Alzheimer’s. The task force wrapped up its work in October with a 23-point plan. Most of the initiatives deal with building information and referral systems for the newly diagnosed or removing regulatory barriers to medical practices that could open here and help more patients. One recommendation calls for removing age barriers so that patients with early onset Alzheimer’s, which can affect people in their 50s, can qualify for disability, legal and social services usually reserved for seniors.

But some of the plan’s elements need approval and funding from the state Legislature, and that could be tough to swing in a state still reeling from the Great Recession. Wiener says the task force’s plan notes that new sources for funds could emerge in coming years.

"That’s why continuing the task force is important," she says.

Plus, new medical breakthroughs could bring hope to legions of families in coming years, Wiener adds. Doctors at downtown’s Cleveland Clinic Lou Ruvo Center for Brain Health say trials are ongoing, and researchers may be within five years to 10 years of a pharmaceutical treatment that would slow the disease’s progress.

Once it’s possible to halt the disease, there will be more incentive to test early for it, Wiener says, because patients and their families would be able to take action. And early detection, in turn, would allow for better and more comprehensive care to protect the quality of life for patients and their loved ones.

For now, though, it’s up to individual families to be proactive, Linda Gagnon says.

"Educate yourself and be realistic about not only what could happen to a loved one, but what could happen to you."

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512. Follow @J_Robison1 on Twitter.

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