We all know that our parents will age, but it can still be difficult to make the transition to having to assist your parents. If you find yourself in the situation of caring for them as they age, it can be helpful to consider the following questions:
- Do your parents have a plan in place?
- If so, where do you fit in personally and financially?
- Are you aware of all the options for ongoing care?
As with all aspects of a financial plan, it’s essential to have a well-constructed, thoughtful plan before the plan is needed.
Today, we’ll review how to navigate long-term care for aging parents.
Physical Wellbeing
While it’s key to ensure your parents’ finances are sound, there are a number of questions around your health you’ll want to consider.
- How is your parent’s health? It’s hard to watch a parent’s health decline, but it’s better to face head-on. As they get older, they may not be able to continue taking care of themselves independently. Even if your parents are in good health, those who are 65 today have a nearly 70% chance of requiring long-term care in their lifetime.
- Do you have the option to be their primary care provider? Caregiving is an all-encompassing role. Depending on your loved one’s needs, it may require you to scale back at work or bring in extra help. Be honest with yourself about your ability to care for your loved ones and the type of medical/professional care they need. You may come to find that you need outside help, at least in some capacity.
- If you are currently their primary care provider, how is that role impacting your relationship with them? If you aren’t yet caring for them, but plan to, have you thought about the extra emotional toll that responsibility might bring on top of watching their health worsen? This question isn’t meant to discourage you from personally leading their care; instead, it’s a consideration people often overlook. Obtaining additional long-term care resources like in-home health aids, adult daycare or other family members can go a long way toward protecting your emotional and social wellbeing.
If you have siblings or other family members, setting expectations up front is important. Having conversations early in the process can reduce conflict in what is likely to be a stressful situation for all involved.
Carefully Weigh All The Options
When it comes to options, there are a number of choices for care.
At Home Care
As you might expect, the vast majority of people (over 90%, according to Home Health Care News) prefer to age in place.
If a person can continue to safely live in their own home, having in-home care, either part or full time, may be helpful. Depending on the degree and type of care needed, care might be provided by you, a nurse, home care aide or therapist, or some combination thereof.
The key is to bring together resources that best support your parent and you. You might provide routine care, but have professionals come periodically or part-time to offer support.
Long-term Care Facilities
There is a great deal of variety among long term care facilities, and some have expertise in specific types of care. Some facilities focus on dementia, while others provide memory care. Still others work with residents who have limited capabilities.
Continuing care retirement communities, or CCRCs, are often attractive to those who want to ensure they can remain in the same community. CCRCs offer multiple levels of care within the same community. If a resident’s health deteriorates, he or she can move to a higher level of care. This in-place transition is a good deal less disruptive than moving to another facility.
Crunch The Numbers
After you’ve identified the options you can then determine what is financially viable. While direct costs are easily identifiable, don’t overlook indirect costs. Unpaid care provided by family members has the lowest direct cost, which is part of the reason it’s so often the route families take. Still, it has high indirect costs such as any time they take off work, expenses for care, and emotional labor.
Long-term care costs vary not only by the level and quantity of care, but they are also location-dependent. Research the costs of care in your area. Genworth has an easy-to-use calculator for checking averages by type of care near you. This tool can help you get a frame of reference for planning.
Once you’ve done some checking, compare those costs with your parent’s budget. If talking about finances with your parents is challenging, bringing in a financial planner to help facilitate can be useful.
Ultimately, you’ll budget for long-term care the same way you budget for anything else—compare the expense with your means of paying for it. One key difference you should bear in mind with long-term care costs is inflation. Over the last few decades, the cost of long-term care has risen a good deal more quickly than most non-medical expenses.
What About Medicare and Medicaid?
Unfortunately, many people are surprised to learn after it’s too late that Medicare does not cover long-term care expenses. Medicare covers medical expenses, and by definition, long-term care isn’t medical care. Long-term care supports the performance of basic tasks of daily living such as bathing, dressing, and eating.
On the other hand, Medicaid will pay for long-term care, but only after you deplete most of your savings. To qualify for Medicaid in Georgia, your monthly income can’t exceed $2,523 per month, and your financial resources can’t exceed $2,000. So, relying on Medicaid isn’t reliable even if you have modest savings or assets.
- Consider a Medicaid Annuity. Rather than spending down their assets to qualify for Medicaid, your parents can purchase annuities for long-term care. These can be complex, but here are the basics. If one parent needs long-term care and the other doesn’t, they use their financial assets to purchase an annuity in the healthy spouse’s name. Doing so depletes the assets but leaves the healthy spouse with at least some guaranteed income stream. Be careful, as the annuity needs to be specifically compliant with Medicaid to work and they are only available in some states (they are available in Georgia).
- What about long-term care insurance? If your savings are sufficient such that depleting your assets to qualify for Medicaid doesn’t make sense, but you think that relying on your ability to pay for long-term care out of pocket isn’t the best route, then long-term care insurance could be an excellent way to address this need. Typically, policies will specify coverage in terms of how long your benefits will last and how much the policy will pay per day of care. Most people begin considering long term care policies in their late 50s to early 60s, but you can get a quote to consider at any time.
Beginning to care for a parent can be daunting, but proceeding step-by-step can help decrease the stress for everyone involved. If, after assessing the situation, you feel it would be helpful to put together a formal financial plan, we’d be happy to help schedule an introductory call with you.