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  • Study: 54% of Middle-Income Seniors Won't be Able to Afford Assisted Living Costs, Medical Expenses in 10 Years

    Authors of a new study say that as the wave of aging baby boomers advances, the middle-income elderly population could find itself in a particularly problematic situation—at least when it comes to finding housing that can accommodate declining mobility and increased care needs. By researchers' estimates, in as few as 10 years, over half of middle-income adults 75 and older, too affluent to qualify for Medicaid assistance, won't be able to afford many of the private seniors' housing options available today.

    The study, appearing in Health Affairs, looked at the current population of adults 75 and older in terms of population, demographics, and income status, and compared those data with projections for 2029. Authors then extended trends for health and mobility limitations to create a glimpse into what the housing landscape could be like in a decade. The results aren't encouraging for middle-class seniors, defined as those 75 and older with annuitized financial resources of between $25,000 and $74,298 in 2014 dollars.

    Among the findings:

    The senior population will increase dramatically, with middle-income seniors outpacing the high- and low-income group.
    The population of individuals 75 and older is expected to balloon from an estimated 20 million in 2014 to 33.5 million in 2029—a 68% increase. Of those 33.5 million, 43% will be seniors at the middle-income level, approximately 14.4 million people. The number of middle-income seniors ages 75-84 will nearly double, from 5.57 million in 2014 to 10.81 million in 2029. By that point, middle-income seniors will constitute the largest segment of the 75-and-older population.

    1 in 5 middle-income seniors will have 3 or more chronic conditions and 1 or more limitations in activities of daily living (ADL) by 2029—and 60% will have mobility limitations that could prevent them from living independently.
    If current prevalence levels continue, 20% of middle-income seniors will classify as "high needs," and 3 in 5 will have significant mobility limitations—factors that increase the chances that they will require more assistance in living arrangements. Additionally, an estimated 6% of middle-income seniors 75-84, and 15% of those 85 and older, are expected to have cognitive impairments.

    An estimated 54% of middle-income seniors won't have enough annual financial resources to pay for average assisted living costs and medical expenses—and that's a best-case scenario.
    Researchers say that in 2014 dollars, the annual average cost for assisted living rent and "estimated medical out-of-pocket spending" is about $62,000. Only 46% of the middle-income population will have that much available to them. The percentage drops even further among middle-income seniors who lack equity in housing, where only 19% are anticipated to have enough money to pay for average costs.

    "This confluence of factors creates a significant unmet future need, which demands new housing and care solutions to support the emerging generation of America's seniors," authors write, suggesting that responses need to come from both the public and private sectors. And those responses need to take a 2-pronged approach, by lowering the cost of assisted living and making it easier for seniors to continue living in their own homes for as long as possible.

    Researchers say that in the private sector, technology improvements could make a difference by increasing staff efficiency and thereby reducing costs, as could systems that "more formally involve family caregivers, outside volunteers, and healthier residents" in providing care, and those that offer "a la carte" care models. Authors also suggest that the private sector could respond to the coming gap by dialing back expectations for return on investments by, among other things, "charging less rent and reducing profit margins." Some of that sacrifice, they add, could be buffered through tax incentives

    In the public sector, authors suggest raising eligibility limits for housing assistance, providing subsidies and voucher programs, and encouraging "housing communities with sufficient capacity to establish their own Medicare Advantage plan." They also contemplate wider use of a 2019 change to Medicare Advantage that allows administrators to offer supplemental benefits to cover nonmedical services, including in-home modifications.

    Authors add that Medicaid could also play a role by "broadening eligibility and expanding coverage to home and community-based services for beneficiaries with higher incomes and less acute health needs." Doing so, they write, may "forestall health and functional deterioration and keep seniors in noninstitutional settings longer, when preferred."

    Research-related stories featured in PT in Motion News are intended to highlight a topic of interest only and do not constitute an endorsement by APTA. For synthesized research and evidence-based practice information, visit the association's PTNow website.