I'm Penelope and I am happy to welcome you to Wealthy Choices - the place that links your money, your values and your goals.
Today's question is: What do you do when Mom needs long-term care or a nursing home?
That was a question that confronted my family. And what did we do? We were three college-educated adults who loved our wonderful mother, so we did what so many adult children do, we denied the evidence.
We claimed it was just her being distracted when she was talking to us. She was busy cooking and talking to us that's why she asked the same question more than once. The fact that the refrigerator had some spoiled food was that she... that she what? She was a fabulous cook. She would have thrown it out. But we did not want to admit that the reason she didn't, was that she was losing her mind. Losing it to what the doctors called senile dementia.
In time that exquisite smile that warmed our daily lives, that was the light of the day, was gone. She did not know who we were. We mourned our loss even as we sat and fed her. She could not manage the activities of daily life- keeping control of her bladder, transferring herself from her bed to a chair, getting to the toilet, bathing herself, dressing herself so that the clothes went on the right way, remembering how to feed herself.
This reality from the woman who had been the President of national charity organizations, gave dinner parties for 50 and knew hundreds of people and their family lineages. Oh yes, and we three kids did not know what to do.
Well, after my brother and sister each tried to keep her under their care at their homes, and realized that is was impossible, we found a very caring and good nursing home where Mom could get the expert care she needed.
All the money from the sale of the house was spent down until Medicaid took over the bills.
Could there have been another outcome? Not for us. But how about for your family?
Who in your family might need care in the next 10 to twenty years? The statistics are that 40% of those age 65 and older will need the care of a nursing home. Are you ready to be the caregiver or pay for care in a facility?
Can you care for mom or dad in your home? Is there the space? Do you have the time? Do you have the emotional relationship to make it work?
It might be that you are bound more by duty than affection. It may be the others in the family have voted you "official care taker" even though you did not sign up for the job. So you resent their pushing the job on you and their not doing anything. The emotions of fear, guilt, resentment, grief, confusion, panic can all take their turns in dealing with this long-term care dilemma.
Yes, most of us would prefer to stay in our own homes, or be cared for by someone in our own homes, but if there is no family, or mom or dad's condition requires professional care, what do you do?
Does the government pay for long term care? Not much of it. Medicare only pays if you're hospitalized for at least three days and then need a nursing home. Then Medicare would pay for 20 days after that you and Medicare share the cost. The national average cost of a private room in a nursing home is about $70,912 a year according to the Genworth Financial 2006 Cost of Care Survey. That would be like paying $195 a day for a hotel room when you go on vacation. How much did you pay for a hotel room?
Medicare pays about 12%, but the general public- you and me- we pay about 38%. Most of that is pay as you go and with about 7% coming from long-term care insurance.
Medicaid as in the example of my mother does pay for nursing home care when you have spent down all your assets. Medicare covers about 51% of nursing home costs and that covers about 67% of the residents.
As a society I believe we will get clever about making alternatives to nursing homes and finding ways to keep individuals in their homes or in the community, but that is not yet the reality. We also know that unless we pay caregivers better and cultivate a career path for them, we will not have sufficient trained caregivers for nursing homes or home care. Caregivers are very important. They are very rare-- few have the skill and compassion necessary to care for those with Alzheimer's and strokes.
So if you and I are responsible for paying for care, where will the "extra" $70,912 a year come from? Do you have a large enough portfolio of assets to pay for care and still have enough money for retirement, or college or whatever else you wanted?
If all the assets of the person who needs care would be spent down in a year, then that is the person who Medicaid will help. If mom or dad owns a home, at death, Medicaid will reclaim the money it spent by taking its share from the sale of the house. Yes, there are exceptions. Medicaid is a state and federal program, but what we are talking about are the broad outlines of long-term care.
So what are you facing: 1. emotions that are complex and perhaps contradictory.
2. rescheduling your life so you can be the caregiver
3. coordinating care with social services and social networks of friends and family
4. funding care in whatever setting is needed. Where will the money come from? Will it impoverish your mom or dad or you?
New strategies:
For some people, who have sufficient assets and want to preserve them, long-term care insurance can help. For a family who does not want to have a battle over which sibling should take Mom in, or pay for care, they might all chip in to pay for a policy. In addition there is a new generation of life insurance products with long term care riders that work well for people who can use life insurance and who say, "What if I never need long term care?" This combination product can handle estate settlement issues as well as providing for beneficiaries.
There will no doubt be more strategies as more people face these difficult issues. In the meantime, a careful look at the financial picture of your parents, and of the adult children in your family could create alternatives and options that are better for each of you. The key is to act now.
Keep the best options on your side by being courageous about something so many people won't face. Have your family be proud of their courage and thoughtful expression of love. That is a worthy legacy.
In the meantime -stay well, and party with great enthusiasm. Life is a joy.
For more information, go to www.wealthychoices.com/long-term-care
If you want to discuss long term care with me, just email me at Penelope@wealthychoices.com or call me at 1800 631 1970.
Until next time, consider the idea that your daily choices with money lead you to or away from wealth.
I'm financial planner, Penelope S. Tzougros, PhD, ChFC, CLU. 95 Sawyer Road, suite 500, Waltham, MA 02153
Securities offered through LPL Financial. Member NASD/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult me or your financial advisor prior to investing.