When constructing our monthly budgets, many of us conscientiously consider the cost of living, encompassing essentials like food, housing, and health care. However, one often underestimated aspect is the expense associated with end-of-life care in the United States. According to the National Bureau of Economic Research (NBER), the average out-of-pocket expenditure for end-of-life responsibilities stands at $11,618 in the final year of life, sourced from various channels. These costs extend beyond unforeseen health care expenses and include medications, care facilities, legal fees, and funeral and burial expenses.
As individuals age, there is a growing awareness among older adults about the necessity to prepare both financially and emotionally for the legacy they may leave behind. The objective is to alleviate the potential burden on loved ones during a challenging period. Unlike the predictability of birth, passing away can occur unexpectedly and without warning, leaving families financially unprepared for the ensuing final expenses.
For those considering setting aside resources to manage final expenses, whether for oneself or a terminally ill loved one, it is essential to be cognizant of the specific costs involved and the available alternatives and support throughout the process. This proactive approach ensures a more informed and prepared journey through the complexities of end-of-life care.
End-of-Life Health Care
End-of-life care entails addressing health concerns in the last years, months, and days of life. Treatment can involve serious interventions to cure illnesses or, alternatively, focus on minimizing pain when curative options are exhausted. The associated costs vary, with more intensive care incurring higher expenses compared to comfort-focused solutions.
Here are key types of end-of-life care and their average costs:
End-of-life care often arises unexpectedly due to sudden illness or injury. While many Americans express a preference to pass away at home, only about 25% do so. Those who pass away in hospitals accrue an average cost of $32,379 in the last month of life. Intensive care units, equipped with state-of-the-art procedures, can charge upwards of $10,000 per day.
This type of care complements conventional health care until life-saving measures conclude. Palliative care focuses on emotional support, stress relief, and symptom management, aiming to enhance overall quality of life. Reports indicate potential savings of up to $3,237 per patient during hospital stays compared to those without palliative care.
Following the completion of treatment for a chronic illness, hospice care becomes the next step. Hospice can occur at home or in care facilities, with the primary goal of pain control rather than life extension. In 2016, 1.4 million Medicare beneficiaries spent time in hospice care, with an average expense of $11,820 per patient.
Fortunately, various coverage choices exist for many end-of-life health care costs. Privatized insurance covers some expenses associated with hospital care, and following a terminal diagnosis, Medicare and Medicaid contribute to the costs of hospice care. Approximately 85% of all end-of-life costs are covered by a combination of government associations, privatized insurance, or charitable groups.
Reports suggest that the most economical option for end-of-life health care expenses is to pass away at home. While not universally available, the cost is approximately $4,760 for around thirty days of care in a home environment.
Often concealed within budgets, legal expenses related to end-of-life planning are a critical but overlooked aspect. The creation of legal documents such as wills, designation of end-of-life measures, appointment of power of attorney, and outlining burial or cremation arrangements is a substantial task. While online tools can provide assistance, this vital work is best conducted when one is in full control of their mental state and overseen by a professional. Communicating end-of-life instructions to both family and medical teams is crucial, ensuring that prepared information alleviates potential stresses or errors during medical care.
Funeral & Burial Costs
Although the last steps in end-of-life costs, funeral and burial expenses are far from insignificant. The National Funeral Director’s Association estimates that average funeral expenses, including viewing services and/or cremation, hover around $7,360. Despite cremation generally being less costly than burials, the Consumer Price Index reveals a staggering increase of over 200% in all funeral costs over the last 30 years.
To offset funeral costs, many older individuals opt for burial or final cost insurance or set aside a designated amount specifically for these expenses. Concerned about loved ones adhering to burial instructions? Detailing them in estate planning is an option, but it’s crucial to document them elsewhere and consistently discuss them with friends and family.
End-of-life decisions are complex, often fraught with emotional challenges that complicate even straightforward choices. Armed with information about expenses, you and your loved ones can make informed decisions that best suit your family’s needs. Importantly, this knowledge can not only empower you but also provide peace of mind, ensuring you don’t leave behind unexpected financial burdens.