A dementia diagnosis can be devastating—not only emotionally, but also financially. While the emotional toll of caring for a loved one with dementia is immense, the often-overlooked financial implications can be just as overwhelming. Understanding the potential costs and planning can help families avoid unnecessary financial strain.
The cost of care
Dementia is an umbrella term for various brain disorders that affect memory, thinking, behaviour, language, and physical ability. It gradually robs a person of their independence, with most patients eventually requiring full-time care. Life expectancy after diagnosis ranges from 5 to 15 years, depending on the type and stage of the condition.
From a medical aid perspective, although ‘treatable dementia’ is a Prescribed Minimum Benefit (PMB), cover is usually limited to the initial diagnosis and short-term treatment of acute psychotic episodes. In addition to basic medical costs, families must often cover expensive medication to slow down the disease progression and manage behavioural symptoms such as paranoia, aggression, or hallucinations. Specialist consultations, such as with geriatric psychiatrists, can cost over R3,000 per session, further adding to the financial strain.
The burden on families
With very few South Africans in a position to retire comfortably, the reality is that the financial responsibility for dementia care typically falls to family members, with the economic costs being difficult to quantify. Home nursing for dementia patients can range from R8,000 to R30,000 per month, depending on the level of care required, bearing in mind that dementia care is highly specialised and costs escalate as the disease progresses. For families unable to afford private care, the burden often shifts to economically active members, most often women. This not only impacts their careers and earning potential but can jeopardise the family’s financial stability.
While some retirement villages offer frail care or assisted living, facilities specialising in dementia care are rare and costly, with monthly fees ranging between R25,000 and R75,000, making them far beyond the reach of the average South African household.
Dread disease cover
One way to offset these costs is through dread disease insurance. Depending on the policy, payouts may be based on the stage of the illness and the patient’s ability to perform daily functions. Although terms and conditions vary, this type of cover can offer much-needed financial relief for families dealing with the high cost of dementia care.
Planning for incapacity
As dementia progresses, patients generally lose the capacity to manage their affairs, making estate and incapacity planning essential. There are several estate planning options available, although there are naturally costs attached to these:
- Special Trust Type A: If diagnosed early, the patient can set up a Special Trust Type A to manage their assets. This offers tax benefits and better control, but does come with legal and administration costs.
- Curator Bonis: In more severe cases, family members may apply to the High Court for the appointment of a curator bonis to manage the person’s estate. This process is costly (between R50,000 and R100,000), impersonal, and administratively burdensome, as all decisions must be approved by the Master of the Court.
- Administrator: A more cost-effective option is applying for the appointment of an administrator via the Master of the High Court, which can cost between R5,000 and R20,000, depending on whether you use a lawyer. Medical proof of the patient’s mental incapacity must accompany the application, and once appointed, the administrator must manage the person’s finances in line with their mental capacity, as determined by the court.
Update legal documents early.
If a person has been diagnosed with dementia but still has mental capacity, it is crucial to review and update their Will as soon as possible, bearing in mind that once their capacity is diminished, any changes made may no longer be legally valid. It is also worth preparing a Living Will or Advance Healthcare Directive to guide medical treatment preferences for end-of-life care – a valuable guide for doctors and family members.
The importance of planning ahead
While we all hope to avoid dementia, it’s essential to plan for the possibility, just as we would plan for any other eventuality in retirement. Our advice is to include a ‘what if I get dementia?’ scenario in your retirement plan to ensure that you, your spouse, and your children are protected financially. Dread disease cover, estate planning, and legal preparations are all key components of this strategy.
Dementia is not only a medical diagnosis—it’s a long-term financial challenge that can deeply affect an entire family. With specialised care costing thousands each month and minimal support from medical schemes, early planning is the most effective way to cushion the financial blow. By taking proactive steps now, you can protect your loved ones from unnecessary hardship and ensure your care is handled with dignity.
* Odendaal is an associate financial planner at Crue Invest.
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