If you have an elderly or terminally ill loved one that you provide care for, estimating their medical expenses, as well as the costs of the funeral and inheritance processes, is challenging.
However, after reading this article, you will get a clear idea of what your loved one’s health care, funeral, and legal expenses might look like.
End of Life Care Costs
According to the National Bureau of Economic Research, Americans spend an average of $11,618 on out-of-pocket medical costs during their final year of being alive. It is important to note that these expenses aren’t paid for by your or your elderly loved one’s Medicare, even though the program covers almost every person who is 65 years of age and older.
Out of the almost $12,000 in end of life care costs, an average of about $5,000 goes to nursing home/care facilities and hospitalizations. Another almost $1,500 pays for medications and drugs.
Equally as important are the funeral and burial costs, which, as the National Association of Funeral Directors’ numbers tell us, average out to between $7,460 and $9,135. You and/or your family may want to set some money aside if your sick/elderly loved one doesn’t have life insurance.
Additionally, you should account for the price of making a will or structuring a living trust, which can range from a few hundred dollars to over $1,000. We go over the breakdown of this number below.
In short, end of life costs can range from $19,000 to over $21,000. This includes wills/trusts, the funeral, and out-of-pocket medical expenses. However, at least half of this amount is spent on health care bills.
End of Life Health Care
Here is how the nearly $12,000 in end of life health care costs is spent, broken down by category:
- Nursing Home/Hospitalizations: $4,975 (or 43% of the total expenditures)
- Insurance: $1,746 (15%)
- Drugs: $1,496 (13%)
- Helpers: $1,249 (11%)
- Non-Medical: $721 (6%)
- Home Health: $617 (5%)
- Other Medical: $387 (3%)
- Physician: $335 (3%)
- Hospice: $51 (0.4%)
- Other Expenses: $41 (0.4%)
An elderly or sick loved one’s medical expenses are unique in comparison to the typical healthy person. During the last 12 months of their lives, patients spend a lot of money on treatments, injuries, and assisted living costs.
Illnesses and Treatments
Between prescription medications, outpatient physician visits, and health insurance, individuals pay an average of more than $3,500 towards the end of their lives.
Some of these costs could be related to a chronic or terminal illness. However, this number also includes insurance for treatments that are not covered by Medicare, such as:
- Long-term care
- Many types of dental treatment (dentures that replace damaged or fallen teeth are amongst them)
- Eye exams for a glasses or contact lenses prescription
- Hearing aids exams and fittings
To pay for these treatments, elderly patients might need to buy health insurance. Your loved one may purchase a long-term care policy, unless the insurance at their former place of employment covers them during retirement. Medigap, which might take care of some of the treatments above, is another option.
This end of life health costs category encompasses general medical problems that people naturally deal with as they age, alongside some expenses that aren’t covered by Medicaid.
For instance, your loved one could pay to install a wheelchair ramp by their home’s entrance or metal bars in their bathroom that make it easier for them to stand up without getting injured. In the same vein, they may have to purchase a wheelchair and specific foods for their dietary needs.
Overall, your sick family member or friend can expect to spend an average of $1,100 on these expenses, which fall under the ‘Non-Medical’ and ‘Other Medical’ categories in the end of life costs breakdown above.
Assisted Living Expenses
In short, this is the largest health cost that patients incur during their last 12 months. They account for more than half of their total end of life medical expenses.
Nursing homes and hospitalizations come with a near-$5,000 average annual price tag. Another almost $2,000 goes towards home health and helper costs.
Having said that, your sick loved one may not necessarily remit all of these expenses. Their personal medical circumstances determine whether they have to spend on home health services and helpers.
For example, these costs are higher than average for dementia patients. Those that need limited assistance, on the other hand, will pay a relatively lower bill.
Above all, your family member or friend’s personal situation similarly dictates what their legal and funeral costs will look like.
As mentioned earlier, preparing a will and/or living trust costs money, even more so when a lawyer is involved.
Typically, an individual would prepare a will or create a living trust while they’re alive. They also take care of the associated expenses.
If your loved one still hasn’t established any of the two, here are the costs that they have to cover:
- Basic Wills: $150
- Do It Yourself (DIY) Will Kits: $10
- Preparing a Will with a Lawyer’s Help: $300 to $1,000+
- Living Trusts: $1,000+
To clarify, basic wills are appropriate when a person’s finances and estate aren’t complicated. DIY wills are advantageous due to their cost, but they aren’t suitable if you want to create a customized will that takes your family’s unique and personal circumstances into consideration.
Those that have a variety of assets and complex estate structures may be better off with a living trust.
This is because they can have a professional financial firm manage their assets, distribute specified amounts to the beneficiaries every month/quarter/year, and ensure that their loved ones seamlessly get their inheritance after the funeral.
Funeral and Burial Costs
Here are the main funeral and burial expenses that Americans pay on average:
- Caskets: $2,500
- Funeral Home Service Fees: $2,195
- Vaults: $1,495
- Remains Transfers, Hearses, Service Cars/Vans, and Body Preparations: $1,095
- Funeral Ceremonies (including staff and facilities): $500
- Viewings (which also includes staff and viewing): $425
In sum, these expenses can range from almost $7,500 to more than $9,100. To get a better idea of what your loved one’s funeral will cost, ask yourself the following questions:
- Does your friend/family member have life insurance? These policies usually cover most of the funeral and burial expenses.
- Will you hold a large funeral that requires assistance from the funeral home staff? How many hours will you use their facilities for?
- Is a vault going to be used?
- Does your loved one want to be buried or cremated? If it’s the former, what type of material do they want their casket to be made out of?
- Is the funeral going to be held in the same city/town where the deceased person lives or gets medical treatment? If they need to be transferred to another area, the cost of transferring their remains will undoubtedly be higher.
Once you get an idea of what your answers will look like, you can use our above expenses breakdown to calculate an estimate of your family member/friend’s funeral costs.
In fact, your loved one’s personal and familial circumstances will also define their medical costs and legal expenses. To put it another way, the numbers that we outlined in this article can act as a starting point that you can use to estimate a family member or friends’ end of life costs based on their health, finances, preferences, and needs.