Old-age care
Care costs: which financing options are available?
The high costs of care in old age pose problems for many senior citizens. What financing options are available? And how can you preserve your assets for your children?
Content:
Content:
- More than half of the costs of care must be paid by the person receiving the care.
- Sixty percent of those affected must make use of supplementary benefits due to a lack of their own funds.
- If you want to preserve your family assets for your heirs, it’s worth making a budget plan for your pension.
- Care insurance is available at lower premiums in your younger years.
- To the conclusion
Covering the costs of long-term care will become an even more important issue for many people in the future. This is because demand for care services will rise sharply in the coming years as the population ages. Demand for elderly and long-term care is forecast to increase by more than half by 2040. Above all, more places in nursing homes will be needed. There are currently around 100,000.
At present, more than 5 percent of over-65s are cared for in a nursing home, while a further 12 percent are covered by outpatient services. In the 80-plus age group, the proportions are 15 percent (nursing home) and 27 percent (outpatient service).
While the increasing need is already becoming apparent, the question arises for many: how expensive is old-age care and how can it be paid for?
The cost of long-term care depends on the level of care needed and where the person lives. Residents live in a care facility for an average of two and a half years. According to the Swiss Federal Statistical Office, the average daily cost of a stay in a nursing home is CHF 332. The total costs can therefore amount to just under CHF 300,000.
Breakdown of nursing home costs*
Provide title | Provide title | Costs per month | Costs per month | Share | Share | Financed through | Financed through |
|---|---|---|---|---|---|---|---|
Provide title | HIA care | Costs per month | CHF 4,434 | Share | 43% | Financed through | Health insurance fund, municipality Private share maximum CHF 23 per day |
Provide title | Accommodation | Costs per month | CHF 4,198 | Share | 40% | Financed through | Private |
Provide title | Support | Costs per month | CHF 1,501 | Share | 15% | Financed through | Private |
Provide title | Additional costs, | Costs per month | CHF 161 | Share | 2% | Financed through | Health insurance fund |
The total costs are divided into the shares for care, accommodation, support and additional costs. The largest shares:
- Care costs. Compulsory health insurance and the municipalities cover most of the cost of care, while the person in need of care pays a small contribution. The amount depends on the canton. The maximum is CHF 23 per day. In the highest care bracket (12), the health insurance fund covers a maximum of CHF 115.20 per day, the rest is borne by the municipality. In addition, there is the deductible for the health insurance fund, which must be covered by the patient.
- Accommodation and support costs. The amounts for accommodation, care fees and food are borne by the residents of the retirement and nursing homes themselves. They account for more than half of total costs.
In total, they amount to about CHF 6,900 per month for nursing home residents in need of care, which is charged privately.
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In principle, people in need of care have their pension, income and assets at their disposal to cover their share of the financing. Another possibility is care insurance benefits.
If the person’s own funds are not sufficient to cover the private share of care costs, they can apply for supplementary benefits.
This applies to a large proportion of those in need of care. According to the industry association of service providers for people in old age (Curaviva), only 40 percent are able to pay for accommodation, support and the share of care which they must finance themselves. Sixty percent require supplementary benefits. Depending on the canton, other limits may apply, such as those for reimbursable housing costs, as well as other rules regarding the reasonable use of assets.
OASI or disability insurance recipients who live in Switzerland are entitled to these supplementary benefits. Without Swiss or EU citizenship, public assistance can only be received if the person in need of care has lived in Switzerland continuously for at least ten years.
Certain allowances apply to your assets. However, to be entitled to supplementary benefits, your assets must fall below a certain threshold. There is no entitlement for those whose assets exceed CHF 100,000 for single persons or more than CHF 200,000 for married persons. Real estate is also taken into account, with any mortgage and an allowance of CHF 112,500 being deducted from the taxable value. In addition, it is rare for the social welfare office to ask the close relatives of those in need of care for a contribution to the costs of care. They would need relatively high levels of wealth and income for this to happen.
In view of the high private costs of care in old age, many still fear for their savings and their children’s inheritance. Assets cannot be preserved by passing them on as an advance on inheritance or as a gift. What has been given to relatives is added to the assets of the person in need of care. It’s possible you will not receive supplementary benefits, or only a reduced amount. However, the longer ago the money was provided, the less it will be taken into account: for each year that has passed, you can deduct CHF 10,000 from the amount for calculation purposes.
Before you consider making advances on inheritance from your assets, it’s best to make a budget plan to check how much capital you’re likely to have after retirement.
To ensure you have sufficient funds to cover the cost of care in old age, you should start making regular provisions early on. If this saved capital is not needed after all, it goes to the heirs. Another option for retirement planning is to take out care insurance.
Private care insurance is intended to help those affected to bear the high private costs of long-term care. However, it is rather expensive. This is due to the comparatively high premiums for limited benefits. These are linked, for example, to requirements such as the level of care required or moving to a nursing home. Another restriction arises from waiting periods because daily allowances are only paid after they expire. If you die beforehand, you will not receive anything.
If you want to take out care insurance, you should think about it as early as possible. The younger you are when you take out the policy, the cheaper it will be. If, on the other hand, you contact an insurance company shortly before retirement age, it’s unlikely you will pass the health examination.
The benefits provided by health insurance and municipalities only cover part of the costs incurred in the event of a need for care. To be able to afford the private component without supplementary benefits, personal provision is advisable. In addition to possible long-term care insurance, there are many options available.
Building wealth in a targeted way with an investment fund account: If you regularly set aside amounts for possible care costs, you can accumulate a large sum over the years. For example, with a monthly deposit of CHF 350 and an expected return of 2.5 percent, you would have almost CHF 110,000 at your disposal after 20 years.
Disclaimer
Disclaimer
