The Hidden Costs of Dying in America
Many of us figure the cost of living into our budget, automatically accounting for expenses like groceries, housing, and healthcare as part of our daily existence. One of the things we often underestimate, however, is what it costs to die in the United States.
The National Bureau of Economic Research indicates the average out-of-pocket cost for end-of-life obligations is $11,618 in the last year of life, but those expenditures can come from a variety of sources. Our deaths can become complicated not just by unexpected healthcare costs but also by medication, care facilities, legal expenses, and funeral and burial expenditures.
As they age, many older adults begin to prepare both financially and emotionally for what they might leave behind, anxious not to burden loved ones with additional stress during a difficult time. But unlike birth, the act of dying can come suddenly and without warning, catching families financially unprepared for the final expenses.
If you’re looking to set aside a nest egg to address final expenses for yourself or a terminally ill loved one, it helps to be aware of precisely what costs you can expect and what options and support you’ll have at each stage of the journey.
End-of-Life Healthcare
When we refer to end-of-life care, we’re talking about healthcare measures to address illness in the final years, months, or days of life. Sometimes this will involve aggressive treatments that seek to cure a disease, ailment, or injury. Other situations will focus on minimizing pain when treatment options have been exhausted. The costs associated with more substantive care are naturally higher than those that focus on solutions that provide comfort.
Here are a few types of care and the average costs associated with each.
Hospital Care: Sometimes, end-of-life care may come about suddenly due to an unexpected illness or injury. While 7 out of 10 Americans say they would prefer to die at home, only about 25% of them do. Those who die in a hospital rack up an average cost of $32,379 in the last month of life. Many deaths occur in intensive care units or ICUs, where charges for patients benefiting from cutting-edge procedures and advanced equipment can reach as much as $10,000 per day.
Palliative Care: This type of care can continue alongside traditional healthcare right up until life-saving measures conclude. Palliative care focuses on emotional support, stress relief, and assistance alleviating symptoms with an eye on improving overall quality of life. Studies show this type of care can reduce other medical expenses involved in end-of-life care, including medication. Hospitals reported a savings of as much as $3,237 per patient during a hospital stay compared with those hospital patients who did not receive palliative care.
Hospice Care: Once treatment for a terminal illness has concluded and options are exhausted, hospice care is typically the next step. Hospice can take place at home or in a care facility, and the goal of this kind of treatment is to manage pain, not prolong life. In 2016, 1.4 million Medicare beneficiaries spent some amount of time in hospice care with an average cost of $11,820 per patient.
The good news is that for many end-of-life healthcare expenses, there are coverage options. Not only does private insurance front at least some of the costs associated with hospital care, but also once a terminal diagnosis is made, Medicare and Medicaid cover most of the expenses related to hospice care. About 85% of all end-of-life expenses are covered by some combination of government entities, private insurance, or charitable organizations.
In terms of end-of-life healthcare expenses, studies show the most cost-effective option is to die at home. While it’s not always an option available to every patient, it costs on average about $4,760 for a month of care in a home environment.
Legal Expenses
This category of costs is a hidden expenditure that slips through the cracks of many budgets. The legal documentation required to produce a will, specify appropriate end-of-life measures, assign power of attorney, and stipulate burial, cremation, or other arrangements is not for the faint of heart (or wallet). While some online tools can help, it’s the sort of critical work best undertaken when in control of your full mental faculties and reviewed by a professional.
It’s also essential to make sure your family and the medical team are aware of any end-of-life directives. Preparing the information up-front will save you and your family from unwanted hassles or mistakes when you need medical care.
Funeral & Burial Costs
While they’re the last stop in terms of end-of-life expenses, funeral and burial costs may not be the least of your worries. The National Funeral Director’s Association estimates median funeral costs, such as viewing services and cremation, hover at $7,360. While cremation is generally less expensive than burial, the Consumer Price Index indicates that over the last thirty years, all funeral expenses have risen more than 200%.
One way many older adults have chosen to offset funeral costs is to purchase burial or final expense insurance or to set aside a stipulated amount specifically for those expenses. If you’re concerned about family or loved ones following your instructions for burial, you can specify them as part of your estate planning, but make sure to document them elsewhere as well as discuss them frequently with friends and family.
End-of-life decisions are difficult and often plagued with emotional landmines that make even simple choices complicated. Being armed with information about costs can help you and your loved ones make the best, most-compassionate decisions for your family. It can also ultimately save you money. In this case, knowledge isn’t only power — it’s also the peace of mind that comes with knowing you won’t leave financial burdens behind.
