How to be financially prepared when your parent needs long term care
Are you the caregiver of a senior loved one? Have you ever wondered how expensive the cost of long-term senior care is for your elderly loved? Do you have any idea how much the average cost is for a nursing home or an assisted living community or the cost of in-home care services?
What about financially preparing for the care of an elderly loved one. How about documents? Do you even know what documents you will need when the time comes? Do you know what sources of income your elderly loved ones have?
This is part of a continuing series of article and helpful tips and insights into senior care and senior transition services by Nick Santoro and Joe Santoro of Personal Property Managers. Personal Property Managers specializes in senior transition services such as downsizing, content clean out and removal, estate sales, full service real estate and property sale and moving.
We’d like to share with you some recent information conducted by Genworth Financial about the cost of caring for our seniors. We think this will not only be informative but a real eye opener.
This year’s annual cost-of-care survey shows that the national, median annual cost for care in an assisted-living facility is about $42,000.
The average cost of an assisted-living facility nationwide has increased 4.29% annually over the past five years, according to the study.
Nationwide, the cost for a private nursing home room rose about 4.2% annually over the past five years to $87,600.
This is part of an 11 year study surveying about 15,000 providers of long-term care services nationwide.
About 70% of people older than 65 will need some form of long-term care services, but costs for those services have been rising for years. The average length of a long-term care claim is about three years.
The median cost of a private bedroom in an assisted living facility now stands at about $47,880. The cost of a private room in a nursing home has increased 3 percent to $84,315.
Costs for adult day care and home care have grown at slower pace of about 1 percent to 2 percent. The median cost for in-home health aide services now runs about $43,472 a year, while the cost of adult day care services cost about $15,860.
Nationally, the 2014 median hourly cost for the services of a homemaker or in-home health aide hired from a home care agency is $19 and $19.75, respectively.
The real challenge is how to pay for the long term care of our elderly.
Coordinating Alzheimer’s and long terms care for your parents or an elderly loved one is difficult, and the last thing you want is to have to deal with a financial hardship. Elder care is expensive.
Examine their financial situation
Assets and income: As precisely as possible, estimate your parent or parents’ net wealth and income. This means considering the total value of their home, their bank accounts, investment funds or individual investments they own, and income they receive from jobs, annuities, or other sources. It also requires that you calculate the value of their debts and current expenses, and subtract these values from their assets and income, respectively. Not only does this tell you how much you can afford to pay for their care, but it also will let you know whether your parent qualifies for benefit programs, such as Medicaid.
Power of attorney: If they haven’t done so already, your parent must assign power of attorney for finances, or the right to make financial decisions on their behalf. This does not necessarily need to be you, but it should be someone whom they trust, who is familiar with their finances, and who is good at managing multiple assets. You should also have a backup person to exercise power of attorney if their first choice cannot.
A living will: Your parent may want to earmark some of their assets for specific purposes other than elder care. If this is the case, they should do so ahead of time in a living will. Otherwise, you may end up selling such assets and spending the money on their care.
These financial preparations go hand-in-hand with other aspects of elder care planning. You should assign financial power of attorney, for example, at the same time that you assign power of attorney for healthcare. The better you coordinate all these activities, the easier it is to develop a clear, realistic plan for your parent’s care.
Identify sources of income
Once you have a detailed picture of your parent’s finances and desires, the next step is to make up any difference between their money and the likely cost of their care. There are many different income sources available for senior care expenses, including:
• Long-term insurance: If your parent has an insurance policy that specifically provides benefits for long-term care, you may be able to use it to pay for their housing or other elder care costs. Most such policies have strict daily, monthly or lifetime caps on spending, however, so this likely won’t cover your parent’s care by itself.
• Medicaid: Medicaid will cover some of the largest expenses involved in Alzheimer’s care, including custodial care, or care that involves helping your parent bathe, dress, and eat. To qualify, your parent must have less than $2,000 total in assets that can be counted. The only exception is if they receive such care from their spouse in their own home, in which case they can own up to $115,920 along with the home itself, a car, and wealth stored in certain trusts.
• Life insurance withdrawals: If your parent owns a life insurance policy, they can withdraw the base value of premiums they paid without paying taxes on it. You can then spend this on elder care.
• Veteran’s benefits: If your parent served in the military and was discharged honorably, they likely qualify for benefits from the VA. They can use these benefits in any of the 1,300 facilities across the country that the VA recognizes.
• Tax savings: If you take over a significant portion of your parent’s care, you can claim them as a dependent. Depending on your income, this will likely save you thousands of dollars, which you can put toward that care.
Most importantly, don’t wait. Trying to make the best financial decisions when coordinating care is challenging and waiting can be costly to your family.
Personal Property Managers, LLC (www.personalpropertymanagers.com ) can help you in the process of asset liquidation and moving. At Personal Property Managers we specialize in downsizing, content removal and liquidation, Real Estate / property sales and moving. With one call, Personal Property Managers does it all.
For more information on real estate or home downsizing please contact Nick Santoro or Joe Santoro of Personal Property Managers at 215-485-9272 or 908-368-1909. Personal Property Managers specializes in helping home owners transition from their home of many years into a new community. Personal Property Managers services Pennsylvania and New Jersey and offers downsizing services, estate sales services, home staging, discount full service real estate services via its association with EveryHome Realty. Learn more about Personal Property Managers from our recent News Stories.