Tune up your finances
The good news: Thanks to modern medicine and better diets, people are living longer. On the flip side, health can decline for many years before one’s demise.
That means adult children often find themselves thrust in a caregiver role for a disabled or chronically ill parent while juggling the demands of a career and their own families.
At some point during 2007, an estimated 52 million adults provided in-home care for an aging parent at an average out-of-pocket cost of $5,531, according to a study by the AARP Public Policy Institute.
Your loved one likely means the world to you. But there may come a time when you’ll have to find an alternative care strategy for your elder parent. It’s a process that many find tough to navigate.
“Not knowing where to turn … is the primary cause of stress in the lives of children,” says Suzanne Hall, vice president of The Financial Consulate, based in the Baltimore area.
Some elder parents only require someone to pop in on them a few times a week to help them run errands while others require around-the-clock supervision.
In between are numerous elder care options that vary in price and level of care. Choosing one requires thoughtful consideration of your parent’s financial and medical situation.
- Discussing options
- Daily money manager
- Geriatric care manager
- Part-time caretaker
- Home health aide
- Adult day care
- Personal care homes
- Assisted-living facility
- Skilled nursing facility
What you should do first
The best time to discuss care options with your parents is long before care is needed — prior to the development of cognitive or physical disabilities.
That’s also the time to make sure that your parents have their financial affairs in order, including wills, trusts, powers of attorney and health care proxies. These are all components of an estate plan.
“The best time to do these is when you don’t need them,” says Stephen J. Silverberg, a certified elder law attorney who practices in East Meadow, N.Y. “You don’t want to rush around when a tragedy occurs or someone gets sick and you have to first get a document signed in order to treat them.”
At the very least, Silverberg suggests having some form of durable health care proxy in place. This document designates who has the authority to make medical decisions if your parent is incapacitated.
Setting up powers of attorney will enable someone to pay bills and take care of your parent’s financial affairs if necessary.
If you decide to enlist the help of financial managers or caregivers, make sure they are licensed and trained to work in their particular fields, and don’t skimp on background checks. Trust your instincts and make sure that you and your parent are comfortable with the services received from an elder care provider.
Daily money manager
Hiring a money manager to help your parent pay bills and understand financial statements may make sense if you don’t have the time to do it yourself.
A money manager can be a friend, relative, volunteer or a financial professional. They can be an authorized user of a credit card or bank account, or they may be someone who simply receives copies of bills and statements to ensure your parent is paying on time.
On the upside, there’s less chance that your parent’s credit will be ruined if bills are paid on time, but don’t expect much else if your money manager doesn’t have formal financial training.
A professional money manager, on the other hand, may be able to negotiate with creditors and organize tax records and other paperwork on your parent’s behalf, in addition to managing daily finances. The costs can be low if a relative or a friend helps out, but assistance from a professional ranges from $35 to $100 per hour, depending on geographic area, according to the American Association of Daily Money Managers. Low-income seniors may qualify for free or low-cost service through local charities or the AARP.
Tune up your finances
Geriatric care manager
Geriatric care managers, or GCMs, usually provide a full range of services, such as finding suitable living arrangements, counseling and financial services. GCMs may also conduct background checks on prospective caregivers, check licensing of facilities and pay personal visits to clients to discuss caregiver issues or options.
They typically come from a variety of fields and backgrounds. They’re a good one-stop shopping option for clients who want comprehensive elder care management services.
GCMs, however, can be costly, and Medicare and Medicaid generally do not pay for their services. But some long-term care insurance policies may cover geriatric management fees, which can range from $50 to $200 per hour depending on where you live and the services provided.
GCMs may also charge a fee for an initial visit, during which they can make an in-depth assessment of your parent’s care needs. Get all GCM fees in writing in advance so you understand how billing is calculated.
If your parent is relatively independent and doesn’t need special medical care, perhaps an informal caretaker can help out. It could be a friend, member of your house of worship or a college student.
These individuals can take your parent grocery shopping or on other errands, or simply offer companionship for an hour or two at your parent’s home.
Some caregivers may choose to volunteer their time and not charge anything. But if they do, you can generally negotiate an hourly rate without entering into a special contract.
This solution is typically best for independent parents who do not require medical or other special care. You need to handle screening and beware of scammers. That goes for anyone you hire. Also, part-time caretakers usually do not have any specialized training should a medical emergency pop up.
Home health aide
When your parent is disabled but requires more personal care than family or friends can provide, a home health aide, or HHA, may be the way to go.
They typically provide routine housekeeping and personal care services such as cooking and bathing. They can accompany clients on doctor visits and errands, and in some cases, provide basic psychological support.
Home health aide schedules can be flexible, based on your parent’s needs, and they’re often available nights and weekends.
They typically receive general training on how to handle emergencies and how to cook for clients on special diets.
Many are professionally certified and affordable. The average home health aide rate in 2008 ranged from $12 per hour in Louisiana to $37 in Mississippi, according to Prudential Insurance. A survey from MetLife put the national average at $20 per hour last year.
The downside is many health aides do not have advanced emergency medical skills, and training requirements vary by state.
Look for HHAs who are certified by the National Association for Home Care and Hospice. They are required to complete a 75-hour course, demonstrate 17 skills for competency and pass a written exam.
Adult day care
An adult day care facility is an option for a physically or mentally disabled parent.
These facilities offer structured programs that may include arts and crafts, entertainment, mental stimulation games and mild exercise.
Meals and snacks are provided and they are usually staffed by a medical professional such as a registered nurse. They are a solution for parents who are somewhat mobile, not too cognitively challenged and sociable.
But they should not be confused with a senior center.
“A senior center is for people of sound mind who are physically well. They just like to mingle with people in their age group,” says Hall, who is a director of a long-term care planning program for seniors at the Financial Consulate.
“An adult day care center is specifically for someone who is physically or mentally handicapped.”
Costs range from $25 to $70 or more per day. It all depends on where you live and the services provided. The national average was $59 in 2008, according to a 2008 survey by Genworth Financial.
Medicare generally does not cover adult day care costs, but Medicaid may pay for it in certain states if the participant qualifies.
Tune up your finances
Personal care homes
Sometimes called board and care homes, personal care homes are appropriate for residents who can live in small, supervised environments. They are a less expensive alternative to other living arrangements for seniors. Many personal care homes welcome clients with dementia.
Look for homes that are specially constructed to be wheelchair-friendly. Handrails should be evident in the shower areas, which should be clean.
On the upside, long-term care insurance or Medicaid may pay the monthly fees, which can range from $1,500 to $3,000 per month, depending on the location and the level of services required. Medical services are usually not provided.
These facilities allow residents as much independence in their daily activities as they can handle. They are an alternative for residents who can no longer manage on their own, but don’t require constant medical care.
Your parent can opt for space as small as a studio or as large as a fully equipped one-bedroom apartment.
The facilities provide a wide range of social and housekeeping services and can house as many as 300 residents, but the more common size is between 25 and 120 residents.
On the upside, assisted-living facilities offer a variety of services, but the price is steep. The national average in 2008 was $3,008 per month, according to a survey by Genworth Financial.
That’s over $36,000 annually. In high-priced markets like New York, that price can skyrocket to more than $75,000 annually, according to Silverberg.
Medicare will not pay for general assisted-living fees, so your only options are long-term care insurance, private funds or Medicaid if your parent qualifies.
Nursing home/skilled nursing facility
A nursing home or skilled nursing facility typically provides 24-hour medical care for people who can no longer care for themselves due to physical, mental or emotional conditions.
Licensed health care providers are on premises 24 hours a day. Therapy and personal care services are also available.
On the upside, if your parent has some type of dementia such as Alzheimer’s or is physically incapacitated, you can rest easy knowing that they won’t wander off or skip meals.
On the downside, nursing homes are pricey, averaging $76,460 per year, according to a 2008 survey by Genworth Financial.
Contrary to what most people believe, it’s tough to negotiate fees at nursing homes. And if you don’t have insurance there’s not much you can do.
“You can look to the Veteran Administration if the parent was in the military, but that has its limitations,” says Drew Tignanelli, CPA, CFP and president of The Financial Consulate.
“Family members are always an option (to pay for care), but they’re not usually a good option,” he says. “There’s not a lot you can do if you don’t have the money and can’t afford it. You’re going to have to struggle through it.”
Private insurance coverage varies. Medicare will pay for skilled nursing home care for a limited time following a qualified hospitalization.
Medicare pays 100 percent of facility fees for the first 20 days. From day 21 to day 100, your parent is responsible for a daily co-insurance amount which is adjusted annually. For 2009, the coinsurance is $133.50 per day.
After the 100th day, you’ll need to dip into savings or tap into a long-term insurance policy, if your parent has one. Medicaid may pay for skilled nursing services for low-income patients with very few assets.