As we enter a new year, many of us reflect on our goals and resolutions. For those who are stepping into the role of financial caregiver for an aging parent, the resolutions may take on a more personal and immediate significance. The transition into caregiving can be daunting, but with intentional planning and prioritization, you can provide meaningful support to your parent while also safeguarding your own well-being. Here are the top five priorities for financial caregivers to consider when making their New Year’s resolutions.
My father is 89 and seems to be forgetting things like taking his medications and practicing good hygiene. Last week, while visiting him at his home, it was clear he hadn't bathed for several days and he looked unkempt. I've been looking into nursing homes in the area where I live, but a friend suggested I look into an assisted living facility instead. What are the differences and is one generally more expensive than another?
It’s understandable to feel apprehensive when you notice changes in a loved one’s well-being, especially in their later years. Aging brings a myriad of challenges, and your attentiveness to these issues is commendable.
Your father’s situation—forgetting about medications and neglecting personal hygiene—is not uncommon among seniors. It can be difficult for them to maintain independence while also ensuring their needs are met adequately. Given these circumstances, exploring options like nursing homes and assisted living facilities is a wise move.
I just found out my dad has been diagnosed with Alzheimer's disease. My mom called me and through tears asked if I would take over their financial affairs while she tends to Dad's care. I have no idea where to start, what they have, or where to find anything. I think they are fairly well off. They live comfortably and own a vacation property in Idaho that we all use occasionally. I have an older brother, so I'm not sure if I have the authority to do anything. She did say they have Wills in a safe deposit box, but I don't know how to access it. What should I do now?
Receiving news about a loved one’s Alzheimer’s diagnosis is undoubtedly a heavy burden. It’s challenging to process the emotional ramifications, and on top of that, your mother is reaching out for help regarding their financial affairs. It’s natural to feel overwhelmed and unsure of where to start, but you’re not alone in this.
While this will be a profoundly personal journey, here are a few tips to begin the process of taking over financial decisions.
I'm confused. My 78 year old dad recently had heart surgery and was released to a long term care facility for several weeks of rehab. He has Medicare and has a Medigap policy as well, but a long term care expert recently told me that Medicare won't pay for long term care. We've yet to get a bill from the facility, but now I'm concerned he's going to have to pay for this out of his pocket. Can you clarify this please?
Sorting through health insurance details can sometimes feel like navigating a maze, especially when it comes to your dad’s recovery after heart surgery. If you’ve recently been told that Medicare won’t cover long-term care while he’s in a facility for rehabilitation, you’re certainly not alone in your confusion.
Medicare and Rehab Services
First off, let’s tackle the terminology. When we talk about long-term care, we often think of assistance provided in a nursing facility over an extended period. However, after a hospital stay, what your dad is receiving at that facility is actually classified as rehabilitationservices – not long-term care —and that’s where Medicare comes into play.
To qualify for Medicare coverage in a skilled nursing facility (SNF), your dad needs to meet a few key requirements:
Hospital Stay: He must have a qualifying hospital stay of at least three consecutive days. Two days just won’t cut it, nor does admittance “for observation.” It must be an actual admittance for treatmentin a hospital for at least three consecutive days!
Timely Admission: He needs to be admitted to a Medicare-certified skilled nursing facility within 30 days of being discharged from the hospital.
Type of Care: The services provided must primarily be skilled nursing care or rehabilitation therapy (think physical or occupational therapy).
Coverage Duration
Now that we’ve established that Medicare does indeed help with rehabilitation in a long-term care facility, let’s cover the specifics of what’s included:
Days 1-20: Medicare Part A kicks in and covers 100% of the costs in a Medicare-qualified rehab facility. It just so happens that many of these facilities are also nursing homes.
Days 21-100: From day 21 onward, there’s typically a daily copayment involved. For 2024, this amount is expected to be around $200 per day. Definitely something to factor into your budgeting.
Days 101 and Beyond: After the first 100 days, Medicare steps back and does not cover any costs. It’s all out-of-pocket!
Out-of-Pocket Costs and Medigap Magic
With the basics in mind, let’s get to the crucial part: out-of-pocket expenses. This is where your dad’s Medigap policy can really come to the rescue.
What is Medigap? A Medigap policy is basically supplemental insurance that covers some of the costs that traditional Medicare doesn’t. Most Medigap plans help cover the daily copayment that starts after day 20.
Plan F: Offers full coverage of those copayments after the 20th day.
Plan G: Generally covers the copayments but requires that annual Part B deductible to be paid first.
Plan N: This one can require some copayments for certain services, but it still provides significant coverage for the days beyond 20.
Taking a closer look at your dad’s specific Medigap plan will give you the clarity needed to manage these potential costs.
Tips for Managing Long-Term Care Costs
Communicate with the Facility: When that first bill rolls in, don’t hesitate to reach out for clarification. Ask them questions about what Medicare is covering to understand your father’s financial responsibilities better.
Review the Medigap Policy: Make sure you’re familiar with the details of your dad’s Medigap plan. Each plan can have different coverage options, so understanding what’s included can help avoid surprises down the line.
Explore Other Aid: If costs start feeling overwhelming, consider looking into additional resources, like Medicaid or veterans’ benefits, which may help cover expenses once Medicare and Medigap benefits have been exhausted.
Get Professional Guidance: If you find yourself feeling lost in the financial fog, consulting with a financial advisor who specializes in elder care can provide direction and peace of mind.
While it’s easy to mix up the terminology surrounding Medicare, particularly when dealing with rehabilitation services in a long-term care facility, the key takeaway is this: If your dad is eligible and receiving rehab services, Medicare can help cover those costs—at least for a while! Understanding how Medicare and Medigap work together will empower you to make informed decisions about your father’s care and manage any potential financial burden.
Remember, you’re not alone as you navigate this. It may feel complicated now, but with a bit of persistence and the right information, you’ll find your way through!
My wife and I are in our mid-seventies and concerned with how we will pay for care as we age. We do not have long term care insurance and likely could not qualify due to health reasons. We own our $700,000 home debt-free but have modest liquid assets. Can we use our home equity to pay for care without having to sell it or go into debt? We would like to stay in our home as long as possible.
As we age, the need for long-term care becomes a critical consideration for many families. For older adults who have not purchased long-term care insurance or do not have sufficient liquid assets to cover extensive care costs, their primary asset—the family home—often becomes a focal point for financial planning. Many individuals feel that their home is the one asset they’ll be able to leave to family members. However, most polls show that children don’t really want mom and dad’s home. Inheriting the home also means inheriting taxes, maintenance, insurance, and squabbles over division. Most homes are sold at a discount with the cash divided among heirs.
It makes sense then that the home should be an available resource for long term care expenses. Your wishes to stay in your home as you age and move from independence to dependence is also typical. Most people would prefer to “age in place.”
Let’s look at four less-traditional ways to use your home equity to pay for long-term care.
As the baby boomer generation continues to age, the demand for suitable housing options for seniors is on the rise. With an increasing number of seniors needing long-term care and assistance, the strain on traditional housing solutions such as senior living communities, continual care retirement communities (CCRs), assisted living facilities, and nursing homes is becoming more apparent. However, amidst this growing demand and shortage of appropriate housing, Accessory Dwelling Units (ADUs) emerge as a promising alternative that offers numerous advantages for seniors and their families.
The Demographic Realities: Baby Boomers and Long-Term Care
The baby boomer generation, born between 1946 and 1964, comprises a significant portion of the population in many countries. As this generation ages, the need for long-term care and housing solutions tailored to their needs is becoming increasingly urgent. According to demographic projections, the number of individuals aged 65 and older is expected to substantially increase over the coming decades, putting significant pressure on the long-term care industry.
Supply-Demand Mismatch in the Long-Term Care Industry
One of the critical challenges facing the long-term care industry is the growing gap between the demand for caregivers and the available supply of workers. As the aging population swells, the need for trained professionals to provide care and support to seniors also rises. However, the supply of qualified caregivers is struggling to keep pace with this demand, leading to concerns about the quality and availability of care for seniors.
In a little over a decade—by 2030—there is projected to be a national shortage of 3.8 million unpaid family caregivers and 151,000 paid care workers. By 2040, the shortfall is expected to grow to 11 million family caregivers and 355,000 paid workers.
Shortage of Housing Options
In addition to the labor shortage in the long-term care industry, there is also a shortage of suitable housing options for seniors. Traditional senior living facilities often have lengthy waiting lists, and the cost of admission can be prohibitive for many families. This shortage of housing exacerbates the challenges faced by seniors and their families in finding appropriate accommodations that meet their needs for safety, accessibility, and affordability.
The Rise of Accessory Dwelling Units (ADUs)
In this landscape of increasing demand and limited supply, Accessory Dwelling Units (ADUs) present a compelling solution for seniors seeking alternative housing options. ADUs, also known as granny flats, in-law suites, or secondary dwelling units, are self-contained living spaces that are either attached to or located on the same property as the primary residence. These units offer several advantages for seniors and their families:
Multigenerational Living: Adult children can build ADUs on their residential lots to provide housing for their aging parents. This arrangement allows seniors to maintain close familial ties while still enjoying a sense of independence and privacy.
Age in Place: Seniors can construct ADUs on their own properties, allowing them to age in place while receiving support from family members or paid caregivers. ADUs can be customized to accommodate the specific needs of seniors, including features such as grab bars, wheelchair ramps, and widened doorways for accessibility.
Affordability: Compared to traditional senior living communities or assisted living facilities, ADUs can be a more affordable housing option. They typically require less upfront investment and offer the potential for rental income if not occupied by family members, making them financially feasible for many seniors and their families.
Flexibility: ADUs are versatile living spaces that can serve multiple purposes over time. As seniors’ needs change, ADUs can be repurposed to accommodate caregivers, visiting family members, or even rented out to generate additional income.
ADUs Have Been Promoted by the US Dept. of Housing and Urban Development (HUD)
In June of 2008 during the midst of the housing crisis, the U.S. Department of Housing and Urban Development Office of Policy Development and Research published a research paper promoting ADUs as a solution to elder housing and to housing affordability in general. The research included case studies from several suburban cities that have included favorable ordinances supporting the use of ADUs while maintaining the integrity of the neighborhoods within the community. The research concludes, stating:
Communities find that allowing accessory dwelling units is advantageous in many ways. In addition to providing practical housing options for the elderly, disabled, empty nesters, and young workers, ADUs can provide additional rental income for homeowners. ADUs are smaller in size, do not require the extra expense of purchasing land, can be developed by converting existing structures, and do not require additional infrastructure. They are an inexpensive way for municipalities to increase their housing supply, while also
increasing their property tax base. By providing affordable housing options for low- and moderate-income residents, communities can retain population groups that might otherwise be priced out of the housing market.
Conclusion
In light of the demographic realities of an aging population, the supply-demand mismatch in the long-term care industry, and the shortage of suitable housing options for seniors, Accessory Dwelling Units (ADUs) emerge as a viable solution that addresses these challenges. By providing affordable, flexible, and age-in-place housing options, ADUs offer seniors the opportunity to maintain independence, receive necessary care and support, and remain connected to their families and communities. As policymakers, urban planners, and families grapple with the complexities of aging demographics, ADUs represent a promising pathway towards meeting the evolving needs of seniors in the 21st century.
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HGC, an Aging-In-Place research and product development company based in Connecticut partnered with non-profit Arctos Foundation to survey Americans’ preparedness for long term care.
Most respondents have not spoken with a family member or loved one about wishes for Long Term Care.
Those with a spouse or partner are more likely to expect a need for long-term care services and supports, but are no more likely to have long-term care insurance in place.
In the video below, Robert Powell, editor of The Street’s Retirement Daily, and Angie O’Leary, head of wealth management with RBC Wealth Management, talked about the need to plan ahead for the possibility of dementia and the type of plans to put in place.
According to O’Leary, the plan should include having key legal documents – a power of attorney, healthcare directive, and will – in place as well as having assets properly titled and beneficiary designations current. Consider too, she said, the benefits of a trust and professional executor services, as well as supplemental insurance, including long-term care options.
O’Leary also noted the need to understand early warning signs and, after a diagnosis, acting swiftly to protect the family from financial missteps, abuse and liability.
Having a plan is essential, and key legal documents—a power of attorney, healthcare directive, and will—should be in place.
If you are struggling through the financial transitions of aging, Wealth and Honor is here to provide you with resources to help you and your family through it.
