Everyone has a story.
The consequences of not covering the cost of long-term care can be devastating both financially and emotionally. Almost everybody has some exposure to it. The crises happens when a family member or loved one becomes challenged with the normal activities of daily living. In my own family my mom fought cancer for four years and burned through several hundred thousand of dollars (my inheritance!).
For the past 20 years it has been my duty to encourage friends and acquaintances to live their life without the fear of falling into the financial black hole that comes in the vintage years. Peace of mind comes at a premium and that’s having up-to-date legal documents in place and a solid plan to pay for long term care.
That kind of care gets paid for in one of three ways
Qualify for Medicaid
(that’s the government’s poverty level and assets need to be spent down!)
Use Up Your Savings
Home Care or Long Term Care Insurance Contract
Getting ready for it is better than dealing with a crisis when you may not be at your best. Our work is to help people through the Medicare maze and provide the necessary legal and financial tools that will give you peace of mind.
The emotional impact of witnessing the decline of a family member or helping to care for one is often the reason people seek coverage for long-term care, people who work in the aging field say.
Anything relating to long-term care triggers a lot of emotions, because most of us want to believe we’ll never need it, Many people who consider the policies have firsthand experience caring for an aging parent, and most of them want coverage that will pay for care in their homes.
Emotions that come with Long Term Care Needs
From the perspective of the person going into care
Typically, people facing long term care needs experience the five phases of grief. First, they deny that their condition is a life altering experience. Surly, medical science has a cure. Then they get angry that their life has been turned upside down and they have become dependent. They become angry at the people or circumstances that brought them to this point in their lives. Then it’s ‘let’s make a deal’. What do they have to give up to resume their normal life? Depression soon follows that they must give up so much of the many things that were of value to them. Finally, they come to terms with their new life and accept their circumstances and either make the best of it or let depression swallow up the time they have left.
From the perspective of the adult children
Long-term care can be needed for a variety of reasons when a person can no longer care for themselves and must rely on others for their daily needs, Most often the initial burden for providing care falls on family members. This places an enormous emotional and financial strain on the family. Family care givers can experience a variety of difficulties including depression, fatigue, stress and even lead to the breakup of the family. Feelings of resentment of rejection are common symptoms within families.
5 Most Important Financial Questions to Ask Your Parent
1. Do you have a durable power of attorney?
2. Have you updated your will, insurance and retirement account information recently?
3. Do you have plans or insurance in place to pay for long term care?
4. Who is advising you?
5. Where is all the important information: passports, social security cards, bank accounts, etc.?
How Boomers Should Approach Aging Parent Issues
Boomers who had a rough time getting through ‘the talk’ with their kids might find that there is another uncomfortable discussion they face – the one with their parents.
Get yourself mentally and emotionally prepared. Think about how you would want to be talked to in the same situation. Keep the conversation casual and as calm as possible. The conversation will be counterproductive if your frustration and anxiety comes through.
Show your support with regular communication. It is easier to talk about ‘touchy’ areas when you are already in the habit of talking about everyday things. Ask questions about their life, what they are doing and their concerns. Asking for their advice can also make them feel more valued.
Holidays can be a good time to talk about the future. However, telling them that it is not safe to live alone with everyone around the holiday table is not a good idea. Take them aside and voice your concerns and potential fixes.
Regarding financial information, it may be best to use the indirect approach. Break the ice with stories like: Phil and Doris are having trouble paying their utility bills or Frank had to get a part time job to make ends meet. This might help them open up about their personal financial situation.
If you hear that they are getting financial advice, it would be helpful to know from whom.
It’s still their life so when talking about moving to a long-term care facility present options that include in-home care or moving in with a friend or relative. Leave them feeling that they are still in control and can make their own choices.
For more information regarding Alzheimer from Dr. Wes Ashford click:
The cost of long term care depends on where it is received. The four stages begin with staying at home and receiving care from a variety of providers such as, family, home health aides and visiting nurses. The typical cost is $4,000 to $6,000 per month assuming care is needed three hours a day for five days a week. Natural progression leads to assisted living. This is facility care which includes help with the activities of daily living. The cost is $4000 to $8000 per month. Next comes full blown nursing home care. It includes all the above as well as specialty nursing services. Now we’re talking real money: $10,000 to $12,000 a month. That’s per month. That kind of money comes from one of four places (1) out of pocket, (2) Government- Medicaid for poverty level people (3) Veterans benefits, which are most often means tested, or (4) long term care insurance.
On average, a 50-year-old couple who buy a policy now will pay more than $3,700 a year for $162,000 each in “current” benefits, which will grow to $329,000 each when they turn 85 (at an inflation rate of 3 percent, compounded annually).
This example is based on a typical “three-year” policy that uses a daily rate of $150 to calculate a maximum, three-year payout. That doesn’t mean, though, that it pays benefits only for three years. Rather, that time period is used to calculate a pool of money that can be tapped as needed.
The cost also is different depending what state you are in and the level of care you need. The cost of care is generally lower in the south and higher in other parts of the country. Click on the link to see what it cost in different zip codes.
Important Elements of Long Term Care Insurance Policies
Monthly Benefit: Maximum amount the insurance company will pay for custodial care.
Total Benefit: Total amount the insurance company will pay for your care.
Time Limit the policy will cover: Often expressed in years and months.
Elimination Period: The period before bills begin to be paid by the insurance company.
Inflation: The percentage the monthly benefit and total benefit increase every year
Options with Long Term Care Insurance Policies
There are 3 kinds of policies…
1. Traditional contracts
Traditional contracts provide benefits for long term care only. This means that if you don’t use it, it doesn’t pay anything. Similar to auto or fire insurance policies. These polices have a unique value for people who live in a Partnership state. Under these conditions, the Medicaid ‘spend down’ formula changes. Medicaid allows for the retention of $119,000 that does not have to be used for long term care. In Partnership states, the value is increased by the face amount of the policy. For example, Jim buys a $300,000 traditional Long Term Care Policy. Because he lives in New Hampshire (a Partnership State), the spend-down stops at $419,000.
2. Hybrid Long Term Care Policies
Hybrid Long Term Care Policies function differently. These contracts are really life insurance policies with a long term care rider. With this type of policy, the death benefit can also be used for long term care. For example, Jim decides to by a $300,000 hybrid policy because, if he is one of the 1/3rd of the population that will die before they need long term care, the policy will pay off. There is no ‘use it or lose it’. Unfortunately, these policies are not eligible for the Partnership Plan.
3. Home Only Coverage
Home Only Coverage policies are great options for people who may not be able to qualify for a Traditional or Hybrid contract as there is no medical or financial underwriting. Policies are issued as long as the applicant is not currently receiving help with their activities of daily living. The coverage covers all areas of home care. Rather than a dollar amount of coverage, home only policies are measured in hours of care.
Designating a Health Care Proxy:
Who is going to make the life or death health care decision for you if you are unable. Appointing a Health Care Proxy is important for everybody over the age of 18? Bad things can happen at any time to anybody. The critical element to the document is the appointment. Choosing somebody you trust and discussing your wishes with them is critical. The link below is poised to an online form but it would be better to have your attorney draw it up and keep a copy in their file.
Do Not Resuscitate:
Literally, this means that if you stop breathing, you do not want any heroic efforts to bring you back to life. DNR orders come from physicians, not from patients. If a patient wants CPR to be withheld, he or she has to discuss the decision with a physician to get the order written. It is not good enough to have it in a will or verbally expressing your wishes. The Doctor must write the order. Also, it is important to remember that the DNR order probably doesn’t stop other life sustaining efforts like transfusions or dialysis.
Wills and Trusts:
There are so many legal considerations to make regarding end of life wishes and asset protection. If you want to get to the point of become Medicaid eligible, you have to find legal ways to divest all of you assets. You have to be at the federal poverty level to be eligible for Medicaid then the government tells you what kind of care you will get. There are five year ‘look back’ rules, spousal considerations, and probate laws that require the skills of a good local elder care attorney.
5 Most Important Financial Questions to Ask Your Parent and Yourself
1. Is there a financial and medial durable power of attorney in place?
2. Is the will, insurance and retirement account information available?
3. How will custodial care be paid for?
4. Who is the advisor?
5. Where is all the important information: passports, social security cards, bank accounts, passwords, etc.?