Tough time talking money? It's one of those thorny subjects that adult children and their parents often avoid -- to everyone's detriment. Americans, particularly those who came of age during World War II, tend to view money as a private matter. But it is precisely this attitude that prevents candid conversations about savings, net worth, debt and assets. This in turn prohibits family caregivers from creating a senior care strategy based on realistic options. To plan ahead you must understand how to pay for care.
When his 76-year-old father fractured his hip, Frank was ill-prepared. Despite many months of rehabilitation, his dad continued to deteriorate. Frank's mother suffered from chronic obstructive pulmonary disorder, and could not manage her husband's care. When Frank finally began to explore nursing homes for his father, he was startled by the price tag: $75,000 a year!
"I had mistakenly thought Medicare would pay for a nursing home. Apparently, Medicare only pays for short term skilled care, and my Dad used up those days. When I finally got the whole story about my parents' finances, it was bleak. There was little savings, no long term care insurance, and a small mortgage left on the home. They were 'over-income' for Medicaid but did not have more than six months of private pay funding for a nursing home. I wish I had started the process of planning much sooner."
Frank is not alone. Many adult children and seniors postpone the 'money talk' until a crisis forces the issue.
The result? Confusion, high stress, and most importantly: limited care options. First, Frank had to hire a financial planner and an elder law attorney. Only then was he able to sort out the finances, get his parents on a Medicaid "spend down," and use the existing private funds to pay for immediate care.
While 80% of care in the U.S. is provided by unpaid family and friends, many family caregivers like Frank, find themselves unable to handle the entire burden of care alone.
The following tips will help you proactively plan for the financial aspects of caregiving:
- Study up. Learn the difference between Medicare and Medicaid. Don't assume Medicare will pay for long term care in a nursing home. For more information go to http://www.medicare.gov/.
- Plan ahead. Don't wait until the discharge date to worry about recovery care. Begin researching your parent's finances while they are still in the hospital, or before frailty sets in. If your parent is incapacitated, talk to a spouse or a friend. You may even have to go through their file cabinets. Remember that Medicaid eligibility can sometimes require years of advanced planning.
- Research other funding sources. Is your father a Veteran? Does your mother have long term care insurance? Would a reverse mortgage be an option?
- Consult the pros. Spend a little to learn a lot.. Elder law attorneys, financial planners, and geriatric care managers can be very helpful in sorting out options for care and funding.
- Consider indirect expenses. When analyzing the cost of senior care, include the price of additional expenses such as: senior transportation services, missed work (yours), financial and legal assistance, and your travel.
- Explore benefits through your own workplace. Your company might be one of the many that has begun to support caregiving employees through resources such as expert consultation, backup care, provider referrals, and geriatric care management. If not, inform your HR representative about the Care.com Workplace Solutions.
Whether your parents can age in place, or they require a nursing home in their later years, there is good news: There are many excellent options along the continuum of care. Learn how to plan for and pay for care. Prevent a crisis -- start now and choose the best option for your loved one for when the time comes.
Learn 4 strategies to start the caregiving conversation with a parent
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