DEALING WITH THE STAGGERING COST OF DEMENTIA

[Selected by Rob Carrick for his Personal Finance Reader in The Globe and Mail]

The Actuary magazine (yes there is one and it's pretty good) has a scary article about the dementia epidemic (PDF) by Karen Henderson of the Long Term Care Planning Network.

The most common form of dementia is Alzheimer’s Disease. It's tough enough to say ("Alltimers" or "ol' timers") and spell. Symptoms of this fatal brain disease affect include loss of memory, delusions, paranoia and aggressiveness. Patients may need help with everyday activities like bathing, eating, dressing and toileting.

Imagine the toll on families and caregivers.

I have no personal experience but know several people whose parents are affected. There's a Hollywood interpretation in The Notebook (IMDB link).

The Disease

Dementia affects all ages and cultures. Alzheimer's Disease primarily affects women and the incidence rates double every five years after age 65. However, you can get it if you're younger or a male. The disease is progressive and fatal. There is currently no cure.

The Prevalence

In Canada, 0.5 million have dementia. What about the US? The usual rule of thumb — Canada x 10 — projects 5 million. The latest estimate is 5.3 million. That's enough to fill cities. Worldwide, 35.6 million are afflicted. That's enough to fill countries.

The Cost

The cost of dementia is estimated at $604 billion ($US) — 1.3% of North America's GDP or about 1.5 times Wal-Mart's annual revenue. Big, big, big numbers. As an economy, dementia ranks as the world’s 18th largest. That’s about the size of Turkey and larger than the economies of Belgium and Sweden. In North America, we have the world’s highest costs at $48.6K per patient per year ($8.4K for medical care, $22.2K for nonmedical care and $18.0K for informal unpaid care). Here 71% of caregivers are females and 52% are spouses. In the urban US, 70-79% of patients live at home.

Even if the figures are overstated, dementia is a big problem and big business.

Giving Care

If you're caring for a family member (especially your spouse), can you concentrate at work? Can you even work? Do you neglect other family members? Tough questions.

About 40% of family caregivers show signs of depression, rage and trouble coping. The patient may no longer be able to live at home as the condition deteriorates or exceeds the abilities of the caregivers.

What you can do? You can hope for the best but prepare for the worst.

Insurance

Critical illness insurance may provide coverage for Alzheimer’s and other dreadful diseases. Some designs return your premiums if you don't make a claim. Your car insurance and home insurance don't. Yet critical illness insurance remains unsuccessful.

Long Term Care insurance makes payments when activities of daily living can no longer be performed.
Before you buy, consider the three keys to getting your claim paid. Plans differ. You don't want to delude yourself into thinking you’re better protected than you are. If your advisor only sells products from one company, be especially cautious. If you already have coverage, how good is it compared with the latest plans? Is the amount of coverage  still adequate? It's a good idea to get a review to make sure you're properly protected.

As with other forms of life and health insurance, the longer you wait

• the higher the premiums (read about the major recent hikes for life insurance)
• the more likely that insurers won't insure you (insurance is a business and insurers aren't obligated to take on risks they don't want)
• newer plans may offer less protection or be unavailable (Last month, MetLife stopped selling Long Term Care insurance in the US)

Dementia is hardly the only disease that can knock us down. At least there are ways to offset the financial costs.

Links

• The Actuary magazine: website and dementia issue (Dec 2010/Jan 2011)
• World Alzheimer Report 2010: executive summary (PDF, 12 pages) and full (PDF, 56 pages)
• Critical Illness insurance: The basics
• Do you care about Long Term Care insurance? (new)
• MetLife to stop selling Long Term Care insurance (Klipinger, Nov 2010)
• Long Term Care Planning Network (LTCplanningnetwork.com)
• Long Term Care News and Views (LTCnewsandviews.com)
• Eight movies about Alzheimer's Disease you shouldn't miss (about.com)
• Three keys to getting your insurance claim paid
• image courtesy of The Society of Actuaries

Podcast Episode 96 (5:28)

direct download | Internet Archive page

PS The post is meant to inform, not alarm.