The True Cost of Home Care vs Nursing Homes: A Financial Perspective
When evaluating different options for home care services for seniors, long-term care costs are always important to consider. If a price per hour can seem reasonable, the same cost can become quite expensive when calculated on a weekly, monthly or yearly basis. Nursing homes and independent living facilities are interesting options as well. In the end, the cost of any services for seniors varies greatly depending on factors such as location, hours of care required, and type of care. Here’s a complete guide regarding the financial perspective of long-term care costs, whether at home or not.
Are You Prepared or Preparing for the Costs of Long-Term Care?
The monthly cost of long-term care, either for you or to help aging loved ones, can represent a serious amount of money. Preparation and careful planning are necessary to ensure that a loved one will receive the level of care needed. These five steps will help you plan for long-term care.
1. Explore the Options and Their Costs
The first step is to have a clear idea of what is available to you. Begin by visiting the nursing homes and living facilities in your area. Compare the price for different options, such as private rooms and semi-private rooms. This will give you an overall understanding of the monthly cost of long-term care outside the home.
You should also establish a budget for aging at home, adding the fees for home care and other services that may be needed, like Meals on Wheels, housekeeping, lawn maintenance, etc.
Don’t hesitate to ask an expert or contact a service provider to learn how many hours a week would be necessary, depending on the needs of the client.
If your loved one has a degenerative disease or disorder, such as Alzheimer’s, more extensive care will eventually be necessary. Comparing home care to nursing homes, specifically for cases of dementia and Alzheimer’s, will ensure that you are making the right decision.
For aging at home, you should consider the cost of renovations or specialized equipment purchases. Know that there are government grants and tax credits that can help cover these costs, but it can still be a significant investment.
2. Identify the Available Revenue
Seniors receive a pension from the government and might have other revenue from private savings accounts or past employers. On top of this, grants and tax cuts can be used as financial support.
Ideally, even before retirement, having a global idea of the retirement revenue of a loved one is the best way to start planning. For savings accounts, a financial advisor can help you calculate how much a month is available, and for how long. To be sure of what you could receive from the government, you can contact them directly or ask a specialized accountant or a local organization.
3. Be Proactive in Saving Money
Just like any savings, the earlier you start, the better. Even with a low interest rate, money will grow over time. There are many ways to save for retirement, the most popular being the Registered Retirement Savings Plan (RRSP), but you could use other types of savings accounts.
Whether it’s for you or a loved one, starting early, even with small amounts, is the best strategy. As you approach retirement, it is smart to save bigger amounts and look for savings solutions with high interest rates. In any case, getting help from a financial advisor is the best way to maximize your savings and ensure you’ll have the funds for the care you want and need later in life.
4. Get Insurance Coverage
Insurance plans can help you save money on medication, care and other expenses related to aging. Some may have certain coverage through their retirement, but it’s not always the case. If you are currently insured, make sure that the policies will still apply after retirement, and to what extent. If you don’t have any insurance, it would be smart to start looking early. Usually, the cost will be lower if started earlier.
5. Adjust the Plan When Needed
Once you have a fair knowledge of the available options, their cost, and if they fit within the budget, it is still important to remain flexible. Unforeseen things can happen in life; an accident that renders the current house not ideal for aging in place, and moving becomes necessary. Sometimes, our tastes and preferences change. For example, a loved one might decide they’d prefer living in a retirement home or in an independent facility to have more social interaction throughout their day. Discussing a plan for the future is fundamental, but it’s crucial to accept that things might change, and flexibility is necessary.
How Much Does Home Care Cost for the Elderly?
The average cost of in-home care can be difficult to determine, as it is based on an hourly rate. Depending on the type of care, you can expect to pay between $38 per hour or more, and the industry average is about $43 per hour. Of course, the cost of nursing home care is more expensive than companionship or housekeeping.
For someone who needs only basic home care, such as meal preparation and housekeeping, it can cost anywhere from $200 to $1000 per week. However, if the person requires professional care 24/7, the cost can reach $28,000 each month.
Other than the number of hours needed, the location itself can be a factor, as the hourly rate can change significantly between a big city and a smaller community. The size of the house can have an impact as well in terms of maintenance costs.
Private home care for seniors is often more cost-effective than moving into a nursing home unless the person needs 24/7 care. In such cases, a facility might become more affordable, but it needs to be carefully assessed, as many factors are at play.
How Much Do Most Nursing Homes Cost a Month?
The monthly cost for a nursing home varies greatly depending on the location, the amenities offered, and the type of care needed. The average ranges between $6,000 to $12,000 each month. At the lower end of the price scale, you’ll often find semi-private rooms in more modest establishments. Semi-private implies that the person shares their room with someone else. A private room will always be more expensive.
There are quite luxurious nursing homes, with lots of services and bigger rooms. For higher-end nursing homes, prices can reach $15,000 a month, but you’ll find options around $8000.
In Quebec, there are the CHSLD, residential and long-term care centres, for which much of the cost is covered by the government. For residents, the monthly cost is $2,198 for individual rooms, $1,836 for two-bed rooms and $1,368 for three-bed rooms. These are usually the most affordable options, but availability may be scarce.
As you can see, the cost of home care vs nursing homes isn’t simple! Living in a public nursing home can be cheaper than aging at home. However, luxury nursing homes can be more expensive than having a nurse at home 24/7. However, aging at home is usually more cost-effective. The price might be similar, but your loved one may enjoy more comfort and privacy.
Is Home Health Care More Cost-Effective Than Nursing Facility Care?
Considering the average cost of a nursing home, aging at home is often more cost-effective, even if it means hiring private health care services. Sometimes, the costs of both options can end up being similar, but there’s a level of comfort and freedom that you get at home that is difficult to obtain in a nursing home. However, multiple factors need to be assessed to identify the true home health care cost.
- Type of Care
The level of care will influence the hourly rate of the provider. Registered nurses will be more expensive than an assistant nurse or a client care attendant. Some tasks can only be performed by a professional, such as health monitoring, IV medication, blood tests, etc. However, other tasks, like helping with bathing, grooming and nutrition, can be done by someone else.
- Amount of Care
Depending on the senior’s health, the total hours of care needed in a week can vary greatly. Some people need only a few hours a week for monitoring or wound care, while others require constant monitoring. This is usually when the cost of at-home care can become higher than nursing homes. When applied every month, 24-hour in-home care costs can easily reach $28,000.
- Location
Since the cost of living is higher in bigger cities than in small communities, this disparity is reflected in the hourly rate of nurses and client care attendants. The availability of certain services varies from one place to another, which can impact the cost.
- Family Caregiver
Having a family caregiver can greatly reduce the cost of aging at home, especially if the senior needs constant monitoring or a regular presence for security reasons.
Depending on the situation, the cost of at-home care may be comparable to that of a nursing home, so it's important to consider the other benefits. Aging at home often allows a loved one to maintain their independence and dignity by preserving their routine and making their own choices. Home care can also be personalized to match their preferences, offering greater flexibility overall.
In a nursing home, a senior can receive 24/7 care for a more affordable price. Around-the-clock supervision is sometimes essential for people with specific health needs. Nursing homes offer a more dynamic social environment, which can be beneficial for some individuals.
How to Pay for Assisted Living or Other Senior Care Services?
The cost of assisted living and other services for seniors can add up quickly. Paying them involves a combination of financial sources: pension, personal investments and savings, insurance, and government programs.
- Pension:
Every senior, apart from a few exceptions, receives a pension from the government. Some receive an additional one from their workplace.
- Personal Investment and Savings:
Many people have an RRSP or other forms of savings and investments, which are meant to be used during retirement. When planned wisely, these can cover much of the assisted living costs.
Selling assets, like a house, can be a strategy to pay for senior care. A reverse mortgage can also work for seniors who wish to stay home while receiving care.
- Insurance
Private insurance can help cover nursing home costs and at-home care. Make sure your plan, or that of one of your loved ones, covers these types of services.
- Government Programs
There is financial aid provided by the government. First, there are nursing homes available within the public system, called CHSLD, which are very affordable, as the government covers most of the cost.
Grants and tax credits for seniors can help cover the cost of home improvement and specialized equipment, as well as support for caregivers.
What Does the Canadian Government Cover for Seniors?
Both the federal and provincial governments have grants and tax credits for seniors, which can partially cover home nursing care costs. Here are the five main ones:
- Home Accessibility Tax Credit (HATC)
This federal tax credit is non-refundable and aims at helping with the cost of home renovations or modifications for seniors who wish to age in place. The tax credit has a maximum of $3,000.
- Tax Credit for Severe and Prolonged Impairment in Mental or Physical Functions
This credit is for individuals who have a prolonged and severe impairment, certified by a healthcare professional. Severe impairment refers to being unable to see or perform daily tasks without taking excessive time, even with therapeutic care, devices or medication.
- Independent Living Tax Credit for Seniors (Québec)
This refundable tax credit is meant for special equipment, such as hearing aids, walkers, walk-in showers or bathtubs, hospital beds and more. It covers 20% of eligible expenses, an initial threshold of $250.
- Tax Credit for Home-Support Services for Seniors (Quebec)
This provincial tax credit is for seniors aged 70 and over who incur expenses for home services. These services range from daily living assistance to yard maintenance. The credit covers part of the costs to make home care more accessible and affordable.
- Residential Adaptation Assistance Program (RAAP)
The Société d’habitation du Québec (SHQ) provides financial aid for physical modifications, such as installing ramps or adapted showers, crucial for safety and accessibility. This aid is available not only for seniors, but also to younger people with disabilities.
Making the Right Choice for Senior Care
Whether your loved one chooses to age at home or in a nursing home, the financial implications are significant, but manageable with the right planning. Understanding the true cost of home care vs nursing homes means looking beyond monthly rates and considering the level of care, flexibility, and quality of life each option provides. By starting early, exploring all sources of financial support, and creating a customized care plan, you can make confident, informed decisions that prioritize both comfort and affordability.
If you’re considering care at home, don’t hesitate to contact a trusted home care provider to explore the options available and build a plan that meets your loved one’s needs.