Pharmacy U

What are the costs of long-term care?

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By Mike Jaczko, BSc Phm, CIM® and Max Beairsto, B.Sc. Pharm., MBA, CVA

Most people want to remain in their homes as long as possible – an option that can be affordable if you need only a few hours of help per day or week.

Based on some personal research, we have found that rough estimates of home-care costs are about $30 an hour. (This cost is in addition to a base level of home care covered by provincial programs.) If you need up to two hours a day for seven days a week, that works out to $1,820 monthly. As for a long-term-care facility, a resource called The Care Guide https://www.thecareguide.com/ shows that costs for long-term care or nursing homes across the country range from roughly $1,000 to $3,250 a month, depending on income level.

In Ontario, for example, the province has set a monthly maximum rate of $1,848.73 for a basic room in a long-term facility, $2,228.63 a month for a semi-private room and $2,640.78 for a private room. Low-income seniors may qualify for a government subsidy of up to $1,848.73 a month.

In a few cases, we’ve modelled selling the family home to provide a source of money to pay for long-term care, but it’s not without challenges. For example, what if a client has parents where one of them has to go into long-term care, while the other stays in the house? This scenario is more common than you might think.

A well-developed strategic wealth plan can project whether you have saved enough money to cover year-by-year living costs during the early and middle stages of retirement plus the cost of long-term or home care in the final stages.

We should all appreciate that decisions about long-term care are indeed a family matter. Interestingly enough, most of our work with families involves Boomers and Gen Xers subsidizing senior parents with long-term care as opposed to seniors funding their own long-term care themselves.

Here are just a few of the key questions you and your older parents should be considering when developing a long-term plan:

  1. How are you going to fund retirement and beyond? A good retirement plan needs to start well in advance of actual retirement and consider a number of care-related scenarios.
  2. Is your wealth management/long-term care plan flexible enough to change with your needs?
  3. Will you be using the family home as part of your retirement and care plan? As people age, their needs differ, so while you may want to “age in place,” your plan should also consider other long-term housing options.

Long-term care should definitely be an important part of the conversation between parents and adult children through a comprehensive strategic wealth planning process. That’s where you’ll appreciate working with a professional planner and developing a flexible plan sensitive to your changing needs.

 

Mike Jaczko, BSc Phm, CIM®, a pharmacist by background, is a portfolio manager and partner of KJ Harrison, a Toronto-based private investment management firm serving individuals and families across Canada. For more information, email:mjaczko@kjharrison.com.

Max Beairsto, B.Sc. Pharm., MBA, CVA is a certified valuation analyst and business intermediary with Enterprise Valuators, an Edmonton-based valuation and business sales advisory firm. Their Pharmacy Edge division assists pharmacy entrepreneurs across the country needing transactional and valuation advice. For more information, email: max@enterprisevaluators.com