The Lifetime Risk of Spousal Nursing Home Use and its Economic Impact on the Community-Dwelling Spouse

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Abstract

A single person in a nursing home is relatively well-protected financially from nursing home expenses because Medicaid covers these once assets are depleted. Couples, however, are less well protected, because the high cost of nursing homes rapidly depletes household assets, possibly impoverishing the spouse living in the community, despite Medicaid provisions that shield spousal assets up to some threshold. In this paper, we estimate the lifetime risk that one spouse will reside in the community while the other resides in a nursing home, and the distribution of the accumulated number of days spent in a nursing home and costs. We use data from the longitudinal Health and Retirement Study and follow individuals and their spouses from age 70 to death. We also examine how spousal nursing home use affects families’ financial outcomes and to what extent Social Security income protects the community-residing spouse from the adverse effects of spousal nursing home use. We find that a 70- to 74-year-old married person who lives in the community faces a 34.3% chance that his or her spouse would move to a nursing home before death. When they do, spouses spend about nine months, on average, in nursing homes, and the average out-of-pocket cost is about $19,800 (2019 dollars). We find that spousal nursing home use significantly decreases households’ assets and increases the risk of further impoverishment. While Social Security income has an overall positive impact on families’ financial outcomes, it does not mitigate the financial effects of spousal nursing home use.

Key Findings

  • Households face considerable risk that one spouse moves to a nursing home while the other remains in the community.
  • For married persons ages 70 to 74 this risk is 34.3%; should this happen, the average cumulative duration of spousal nursing home stays is about nine months and the associated average out-of-pocket cost is about $19,800.
  • This risk varies by demographic characteristics, but it is sizeable for all.
  • Long spousal nursing home stays of 100 days or more tend to be associated with large increases in out-of-pocket expenditures on nursing home care, fast depletion of assets and, thus, increased risk of poverty.
  • While Social Security benefits generally reduce poverty at older ages, it does not protect families from the adverse effects of spousal nursing home use.

Citation

Citation
Hudomiet, Péter, Michael D. Hurd, and Susann Rohwedder. 2021. “The Lifetime Risk of Spousal Nursing Home Use and Its Economic Impact on the Community-Dwelling Spouse.” Ann Arbor, MI. University of Michigan Retirement and Disability Research Center (MRDRC) Working Paper; MRDRC WP 2021-433. https://mrdrc.isr.umich.edu/publications/papers/pdf/wp433.pdf

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Project

Paper ID

WP 2021-433

Publication Type

Working Paper

Publication Year

2021