When we hear the phrase, “the cost of dementia,” we no doubt tend to think of the emotional cost: the pain of slowly losing a loved one to a disease that robs them of their memories and, eventually, their very personality. In that sense, the cost of dementia is impossible to calculate.

However, there’s another cost of dementia, one that may be simpler to measure but that causes family pain of a different kind. This cost of dementia is the dollars-and-cents drain of the disease, a cost that, in many cases, can drive families over the financial brink, even into bankruptcy. We discovered more about this sobering fiscal disaster when we came across this news story on the MSN website.  MSN’s brief report spotlights a recent academic study that dives more deeply into the terrible financial toll that dementia can exact on the families of those dealing with it.

We’ll review the MSN story and then take a look at a few highlights from the new data. This article is a vital reminder that families need to be better prepared for the potentially devastating health costs that may be lurking in the future.

Cost of Dementia is Emotional, Mental, Financial

Researchers have recently spotlighted the financial burden that dementia places on families, according to article author Melissa Rudy, who writes, “Among people who were diagnosed with dementia, out-of-pocket health care costs more than doubled within the first eight years.”

She adds, “Dementia patients also experienced more than a 60 percent reduction in their net worth, according to the study findings, which were published in JAMA Internal Medicine.”

For comparison, researchers found that study participants without dementia but belonging to the same age group saw no significant financial change.  

Cost of Dementia Measured in Both Dollars and Time Spent

The cost of care isn’t just money, as any caregiver will tell you. A dementia diagnosis also results in higher time requirements from others, the study found. Rudy writes, “Two years after symptoms began, dementia patients required triple the amount of caregiving hours than those without the condition.”

The study continues that entering a nursing home is five times more common for those with dementia within two years, as opposed to individuals without dementia, with all the associated costs. Even at home, dementia patients are more likely to pay out of pocket for care.

Rudy adds, “In addition, researchers found that people with dementia were more than twice as likely to enroll in Medicaid within eight years of diagnosis, a sign of financial distress.”

Cost of Dementia: Looking at the Data

This is clearly a topic that impacts millions of families nationwide, so we wanted to go a bit deeper. For that we went to the source: the in-depth report on the University of Michigan website, published under the title, “Dementia’s financial and family impact.” It’s important reading.

The Health and Retirement Study is where all of this data is coming from. It’s a long-term in-depth study based on interviews and health exams, meant to reveal trends that previous studies using Medicare data alone didn’t have the scope for.

The University of Michigan report explains, “The researchers analyzed data from nearly 2,400 adults who had the onset of dementia, and an equal number of older adults who were carefully matched based on extensive socioeconomic characteristics, health and healthcare status. They looked at data for both groups from before the dementia onset, all the way to eight years after the diagnosis.”

Cost of Dementia Exceeded Researchers’ Expectations

The study’s lead author, health economist and research associate professor HwaJung Choi, expressed a bit of surprise at the findings, saying, “The differences between these two groups, both in terms of use of care and financial impacts, were even larger than we had expected.”

She adds, “What we found regarding unpaid caregiving from family and others is the most striking and persistent care use difference, with 45 hours per month on average for people with dementia, compared with 13 hours for those without, by the end of two years.”

The report states, “[Choi] notes that the high rate of hours of care provided by family members for people with dementia persisted across the eight years, even as paid home-based care and hospital stays decreased as more individuals were admitted to nursing homes.”

Along with this, staff shortages in nursing homes exacerbate the demand on at-home caregivers, both professional and family-based.

Over Just Two Years, Average Wealth Plummets, Spending Doubles

“At baseline, the time before their dementia diagnosis, study participants’ wealth averaged $79,000 when all assets and debts were counted. Overall, the wealth of the peer group without dementia was about the same,” according to the report. “Both groups had annual out-of-pocket spending for medical expenses such as co-pays, deductibles, over-the-counter purchases and home care of about $4,000 at baseline.”

But by the end of two years, the people with dementia saw their average wealth drop to $58,000, and their out-of-pocket costs doubled to around $8,000. These impacts did not affect their peers without dementia.

“By the end of eight years, people with dementia had spent twice as much as their peers out of their own pockets for health expenses and had seen their wealth drop to an average of $30,500 while their peers saw no significant drop,” the report states.

Cost of Dementia: Home Care is the Preferred Option

“What we’re really seeing here is two very different situations over a relatively short time for very similar families, determined just by a single diagnosis,” says Choi’s colleague, Cathleen Connell. “It’s a really striking comparison and may be driven largely by the ‘spend down’ of assets by many families in order to qualify for Medicaid coverage of long-term care in a nursing home.”

One of the key goals of recent major policy proposals is to keep people with dementia living in either their own home or a non-nursing home setting, such as assisted living. But that means that Medicare, rather than Medicaid, would pay more of the cost.

Availability of Family Support is a Crucial Factor

A major factor in whether a dementia patient moved to a nursing home, both at baseline and by the end of eight years after diagnosis, was the availability of family support. The report states, “Nearly one in three people with dementia who had no spouse or child at baseline were living in nursing homes by their eighth year after dementia onset. The rate was nearly as high – about 1 in 4 – among those who had a spouse with a disability and a child who lived nearby, and those who had no spouse but had a child who lived nearby.”

For comparison, among those who either lived with a non-disabled spouse when they were first diagnosed, or who had both a spouse and a child living with them (whether or not their spouse had a disability), nursing home residence was half as common.

To conclude, the study was funded by the National Institute on Aging of the National Institutes of Health and outlines what is an increasingly relevant issue, as 6.7 million Americans are currently diagnosed with dementia and the number is expected to rise in years to come.

Choi insists that this data is essential to form a realistic picture of the impact the condition has on families, for the sake of state and national policy as well as personal and family-level planning.

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(originally reported at www.msn.com)