One of the most difficult realizations of the waning days and end of life care of our loved ones is the financial cost involved. The ideal situation is for our loved one to remain in their home as long as possible, especially if their home is mortgage free. However, if the home is too large for your loved ones to manage on their own, the topic of selling and downsizing may need to be broached.
There may be ways to keep your loved one in their own home longer than they are able to manage on their own through housekeeping, lawn care resources, and home health care among other options. If a doctor recommends help for your loved one, the cost for home health care may be covered through Medicare or other insurance.
If you live in the same area as your parents then you may be able to assist them where they need the most help. Bear in mind that this will also be financially (and physically) costly to the family caregiver who provides the additional care. This is especially true for those who must travel back and forth a distance to provide care. Unpaid time off from jobs (if you don’t have to forego employment altogether), travel expenses as well as additional help for the family left at home must all be factored. It is wise to be honest and discuss with any siblings or other available family members how care giving may be affecting you financially (as well as physically, mentally, and emotionally) as you aid your elderly parents. Sharing the burden is the best way to ensure that one person is not bearing the load alone nor that they are or will suffer financial (or other) difficulty for themselves.
Families may also decide to have loved ones move in with them. This is also a great option for those who have the room to do so. Additional concerns are safety and security for your loved ones, especially dementia patients, and the cost of providing the necessary safeguards. Multi-generational homes must also determine what changes in routines and activities must be made and their subsequent costs.
The above options are ideal and are often the most desired by families. However, not everyone will be able to manage these options for various reasons. Often, despite one’s best planning, health needs and changes force a family to make much different plans than they had anticipated. We all hope for the best situation, but we need to be mindful of what we might consider to be the worse case scenario. This is why it is important for families to research as many options for paying for care as possible. Savings, social security, and retirement resources may only last so long. The first step is to protect all assets as soon as possible regardless of which scenario plays out for you. (See The Talk: Basic Documents.) The second step is to locate and understand other options available to pay for both living and healthcare costs.
Medicare is an option most of us are familiar with in regard to healthcare coverage for the elderly. At present, you must sign up for Medicare at the age of 65 or risk late fees and penalties or risk losing your social security benefits. (This is subject to change depending on changes in the law so stay informed on these matters.) There are many Medicare plans from which to choose. Read through them carefully to understand what each does and does not cover. Some Medicare plans will cover a limited amount of home health care, physical therapy as well as a certain amount of days in a rehabilitation facility. There are also plans which cover prescriptions and also vary in coverage by company. Do your homework to determine which plans would be best for your loved ones.
Medicare, however, will not cover all medical costs. It may be necessary for your family member to purchase supplemental health insurance to cover what Medicare does not. These plans are available through various companies. The best way to locate these plans and companies is to do a search for “Medicare supplemental insurance.”
Long term care (assisted living, memory care, or nursing home) is expensive. Costs vary from state to state. In Georgia, we have found that the closer the facility is to Atlanta the higher the cost of the facility. The other consideration is that no two facilities are the same. Some have only assisted living, others may include assisted living and memory care, while still others may strictly be skilled nursing (nursing home) care. If one family member needs assisted living and their spouse needs memory care you can expect to pay one price for assisted living and a higher price for memory care thus doubling the care costs. You may be able to arrange price breaks for having both family members there, but do not rely on that possibility.
Costs also vary based on need. Assisted living is usually significantly less than memory care or skilled nursing. If your loved one’s health needs change you may also need to be prepared for “levels of care” surcharges. This means as your loved one’s care needs increase the cost would also increase on a sliding scale. Some facilities are all inclusive, meaning the price quoted is fixed regardless of the increasing needs of your loved ones, while other facilities have the sliding scale of levels of care. You may also find that you need to move your loved one to a different facility if their healthcare needs exceed that of the community they are in presently. Ask as many questions as possible to learn as much as you can regarding your preferred facility’s policies.
A continuous care retirement community (CCRC), or a multi-level care facility, is another option your loved one may want to consider. A CCRC often provides independent living, assisted living, and nursing care all within one property. (Some may also provide memory care.) Some CCRCs are faith-based or non-profit. Although your loved one may need to move from section to section, they have the security of knowing they will not be put out of the facility or have to make a major move to another facility as their health declines. This option is the priciest and, therefore, needs to be planned for carefully. But, as the saying goes, you get what you pay for. As always, do your homework and comparison shop to ensure that the facility is one where your loved one will be well-cared for in their declining years.
Long term care insurance is an option and can cover home health care up to and including complete facility care depending on the policy. The ages of those purchasing long term care insurance is typically between 45 and 55. The younger you are the lower the payments. Those older can purchase this type of insurance, however, it may be more difficult and more expensive than it is for someone a decade or two younger. As with anything there are pros and cons to long term care insurance. It is important for you to research this option thoroughly to determine if this is a viable option for you or your loved one.
Whole term life insurance may also be an option to pay for long term care should the need arise. On the plus side is knowing that any benefits not used may go to the heirs. Again, do your homework to determine what is best for you.
VA Aid and Attendance is an option for those who served during specific times of war. There has been a recent change to the dates for the Vietnam War to include dates a few years prior to the actual start date of the war. There are qualifications that need to be met in addition to serving during wartime. It is worth researching to see if your loved one may qualify for this veteran’s benefit. Please note that a spouse of a qualifying service member may also be able to receive some benefits after the passing of their spouse. While not a guarantee, it would be worth researching to determine if it is an option. I will add that we were advised by a friend, who is the administrator at an assisted living facility, to find an eldercare attorney familiar with these VA benefits who may be able to assist in wading through the red tape involved should you feel you have stalled in your own attempts.
Medicaid benefits vary state to state. Some states cover medical costs only, while others also include “living expenses” such as in a memory care facility. You may need to contact your county’s medicaid office to speak to a social worker to help you understand your state’s benefits as well as to help you file any paperwork you may need in order to qualify for medicaid benefits. Keep in mind that Medicaid requires a five year look back of financial information to determine if your loved one is eligible. This is why it is so important to ensure that your loved ones’ assets are protected well in advance. Otherwise, your loved one may need to “spend down” their income before they will be eligible for medicaid benefits. Please note that if your loved one qualifies for Supplemental Security Income (SSI) they will automatically qualify for Medicaid. The SSI benefit is based on income levels of your loved one. It also has a look back into financial records.
Other resources and options for paying for long term healthcare:
Add a rider to your existing life insurance. There are riders available which may cover long term or chronic critical healthcare. Check with your policy issuer to learn more and to determine if this is a possibility for you or your loved one.
Health Savings Account (HSA). The funds in an HSA roll over year to year. It is possible to pay for long term healthcare as well as long term health insurance premiums with these funds. There is a cap for yearly contributions that changes as laws change. Currently, those 55+ years may also contribute an additional $1000 to their HSAs (which may be subject to change).
9 Ways to Pay for Long Term Care Without Buying Insurance by Forbes – great article with additional information
Paying for Care by the National Institute on Aging – good article for those seeking more information and resources
Paying for Senior Care – broad resource for cutting costs, locating resources, finding affordable care, and understanding insurance
There are varying statistics, however, most agree that an individual may need 2 to 5 years of long term healthcare. In 2015, the estimated cost was $70,000 for two years of average healthcare costs. As you plan for your long term care do so with these figures in mind. Keep in mind that your situation could fall well below or above the average. Estimate the most conservative costs as well as your worse case scenario. These figures are the “ballpark” you should be targeting in your financial planning. Most financial advisers encourage investors to diversify their financial investments. Following this advice would also be a good thing to remember when planning for end of life care. No one choice above is going to cover all the financial costs of long term healthcare or the daily expenses we all have. Therefore, planning to have multiple resources and options available is best to ensure that loved ones needs are met.