How to plan for the care of your aging parent
For T.J. Mancuso, 40, of Apex, N.C., the health of his parents took center stage five years ago when a medical condition left his father unable to qualify for long-term care insurance. Seeing his mother deal with the challenges of being a full-time caregiver, Mancuso decided that it was time for the family to come up with a better plan.
“Knowing that we couldn’t do anything for my dad, I was like, ‘Let’s do something for Mom,’ ” Mancuso says. So he and his wife, Erica, purchased a long-term care policy for his mother.
“I’d rather spend money on a monthly premium today,” Mancuso says. “Maybe she’ll never need it, but I know what I’m spending monthly today is probably what a day or two of help would be down the road.”
Like the Mancusos, many Americans are grappling with the financial realities of caring for an elderly parent. In 2017, the national median cost of a semiprivate room in a nursing home was $7,148 a month, and assisted-living facilities averaged $3,750, according to the Genworth Cost of Care Survey. With costs so prohibitive, many families feel they have no other option but to take care of Mom and Dad at home. Ideally, families will figure out how to cover the costs of aging long before the money is needed.
Here are some strategies that can help:
Talk things out
“Everything begins with communication,” says Christopher Krell, a principal with Cassaday & Co., a wealth manage- ment firm in McLean, Va. Krell suggests holding what he calls a family wealth summit, where adult children find out what financial resources aging parents have in place for future health care and other challenges.
Also “make sure you have a medical and a financial power of attorney in place,” says Patrick Simasko, an elder-law attorney and wealth preservation specialist at Simasko Law in Mount Clemens, Mich. If aging parents have enough assets in place to cover future health care costs, adult children can learn through the conversation how to access them down the road, but if not, it’s time to turn to Plan B.
Look to insurance
Traditional long-term care insurance policies are designed to pay for costs that occur when you no longer can handle certain activities of daily living such as bathing, dressing or moving around. Money can be used for nursing home care, assisted living or in-home care. There also are hybrid long-term care/life insurance policies, where policyholders can tap into the death benefit early to pay for long-term care if they need it. If they don’t, the money would go to the beneficiary upon the policyholder’s death as planned.
“If you don’t wind up needing nursing home care, your premiums are still giving benefit to your family,” says Marcy Keckler, vice president of Financial Advice Strategy at Minneapolis-based Ameriprise Financial. While an Ameriprise study released in March found that future health problems topped most respondents’ lists of financial fears, only 25% had long-term care insurance in place.
The older the policyholder, the more expensive the policy. Also, those with physical ailments may not qualify, so you should apply when you are healthy. If the elderly parents can’t afford it, adult children can pool their money together and pay those costs since it may be less expensive than paying for care later on, Keckler adds.
Look into public programs
If long-term care insurance isn’t an option and your family doesn’t have the financial resources to care for an elderly relative, you may need to look to government services to pick up the slack. Contrary to popular belief, Medicare does not pay for long-term nursing home care. Medicaid, however, will pay for long-term care — if the elderly person has limited income and assets. There also are benefits available to veterans through the Veterans Administration, Simasko says.
Consider the needs of family caregivers
About 16% of Americans 15 and over provided unpaid care to someone 65 or older in 2016, according to the Bureau of La- bor Statistics. Caregivers may even be forced to leave their own jobs to provide assistance full time, which could jeopardize their own retirements, says Sean Scaturro, advice director for the Life and Health Division of USAA, based in San Antonio. “This trickle-down effect of being an unpaid caregiver actually is going to be seen in the next generation and potentially the generation after that.”
A financial adviser can help you rearrange your budget to deal with the new reality as well as help you identify resources that can help, says Delynn Dolan Alexander, a wealth management adviser for Northwestern Mutual in Durham, N.C.
“Having a good financial plan will give you the confidence to be able to care for your parents and know that you’re going to be OK,” she says.
In 2017, the national median cost of a semiprivate room in a nursing home was $7,148 a month.