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Health insurance: The financial toll of Alzheimer's

The costs of caring for people with Alzheimer’s disease have ballooned, creating a financial burden that many folks may not be prepared to handle.

“For many families, it borders on an impossible task -- in terms of dealing with the finances -- because of the explosion in costs,” says Matthew Baumgart, senior director of public policy at the Chicago-based Alzheimer’s Association.

An estimated 5.1 million Americans have Alzheimer’s disease, and that figure is expected to double in the coming years, as the number of American age 65 or older is predicted to double between 2010 and 2050.

Alzheimer's: $33 billion burden for families

Although individual health insurance, Medicare, Medicaid, long-term care insurance and life insurance cover some expenses, U.S. families each year still bear about $33 billion – or 17 percent – of the costs related to Alzheimer’s, according to the Alzheimer’s Association.

Depending on the stage of the disease, the yearly cost of caring for someone with Alzheimer's ranges from nearly $18,500 to more than $36,000, according to the New York-based Alzheimer’s Foundation of America.

alzheimersSome people with Alzheimer’s and their caregivers carry the weight of those expenses when making decisions about day-to-day life.

“Seniors should not have to decide between eating and paying for the medicine they need, or eating and heat,” said Teri Swezey, founder of the North Carolina-based nonprofit Seniors Obtaining Assistance and Resources, whose mother had Alzheimer's.

Plan of action

The high price and prevalence of Alzheimer’s has spawned the U.S. Department of Health and Human Services’ National Plan to Address Alzheimer’s Disease. The plan aims to create effective prevention and treatment approaches for Alzheimer’s disease and related dementias by 2025. The plan calls for a $100 million boost in funding for research, caregiver support, education, awareness and other Alzheimer’s initiatives.

Alzheimer’s disease, the country's sixth leading cause of death, is the only cause of death among the top 10 without a way to prevent it, cure it or slow its progression, according to the Alzheimer’s Association.

As the world awaits a cure, Baumgart says finding treatments that delay the onset of Alzheimer's or slow its progression can help ease the financial dilemma of treating the disease. The hoped-for treatments could result in fewer hospital stays as well as a delay in when an Alzheimer's patient must enter a nursing home.

Facing the costs

People should not assume that government programs and various forms of insurance will cover all of the costs of Alzheimer’s, experts say. Out-of-pocket amounts vary, depending on the stage of the disease and medical coverage.

In general, Medicare and regular health insurance barely provide a “minimum” of coverage, says Marion Somers, who has more than 40 years of experience as a geriatric care manager and caregiver.

The costs, according to the Alzheimer’s Association, include:

• Medical treatment (diagnosis, doctor’s visits, hospitalization).

• Treatment of other conditions, such as diabetes and cancer.

• Prescription drugs.

• Residential care services, including assisted living facilities and nursing homes.

• In-home care.

• Adult day care services.

• Personal care supplies, such as incontinence pads.

“These costs, they can go on for 20 years, and somebody is going to be financially responsible for that individual,” says Somers, author of “Elder Care Made Easier: Doctor Marion’s 10 Steps to Help You Care for an Aging Loved One.” “That person is no longer functioning independently. Even the smallest thing, it’s an out-of-pocket expense that can add up very quickly.”

The lack of independence that people with Alzheimer’s face stems from the disease being a form of cognitive impairment. That's when someone has trouble remembering, concentrating, making everyday decisions or learning new tasks.

Most Alzheimer’s patients have at least one chronic medical condition that drives up health care costs, such as heart disease, diabetes or high blood pressure. Alzheimer’s Association figures show that a senior with diabetes and Alzheimer’s will cost the Medicare system 81 percent more than someone with diabetes but not Alzheimer’s.

Having Alzheimer’s can complicate treatment of those chronic conditions. For example, when someone is hospitalized, the stay can last three times longer than for someone who doesn't have Alzheimer’s, Baumgart says.

Covering care

Government programs and a variety of private insurance plans can help cover the costs of Alzheimer’s, although the Alzheimer’s Association says that after the symptoms of the disease appear, it usually isn't possible to buy many of these types of insurance.

The options include:

Medicare: Federal health insurance for people 65 and older that covers inpatient hospital care as well as some doctor’s fees, prescription drugs and medical items such as walkers and wheelchairs. It does not cover long-term nursing home care. It could pay for some home health services – if the individual is being cared for by a doctor who certifies that the services are considered “reasonable and necessary” for the treatment of the illness, if the person is homebound, and if the home health agency is approved by Medicare.)

Medigap: Fills gaps in Medicare coverage, such as paying for co-insurance. Other items, such as insurance deductibles and charges from physicians who don’t accept Medicare as payment in full, can be covered by costlier policies.

Disability insurance: Applies to people who no longer can work. An employer-paid disability policy provides 60 percent to 70 percent of someone's gross income.

Life insurance: People with Alzheimer’s or another type of dementia could receive a portion of the policy's face value as a loan that would paid off when the person dies.

Long-term care insurance: Pays for care at nursing homes and similar settings if Alzheimer’s is not excluded in the policy.

Long-term care

For the overall population, about 4 percent of people will end up in a nursing home by time they’re 80. For those with Alzheimer’s disease, it's about 75 percent. Alzheimer’s Association data show that almost 65 percent of residents in nursing homes have Alzheimer’s or some other form of dementia.

“Not only is long-term care incredibly expensive, but it falls very heavily on the Alzheimer’s population,” Baumgart says.

Even when an Alzheimer's patent is not in a nursing home, the cost of care can add up. In 2011, more than 15 million family members and friends provided 17.4 billion hours of unpaid care for people with Alzheimer’s or other forms of dementia, according to the Alzheimer’s Association. The economic value: More than $210 billion.

Even if someone chooses other care options, costs abound. Somers says the average cost of a room in a nursing home is more than $80,000 a year, while home care aides charge an average of $21 an hour.

“The average American has $40,000 in savings, and believe me, it goes in a blink when you start paying for out-of-pocket costs,” Somers says.

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