As the baby boomer generation ages, it’s becoming more usual for children to be tasked with finding methods to assist in the care of their elderly parents. Uninsured health care expenditures will be one of the most significant issues that boomers and seniors will confront as they age. That’s accurate, neither Medicare nor any other commercial health insurance plan covers long-term care.
So, if you have parents or grandparents who are 70 or 80 years old, you should start thinking about how you’ll care for them now. Here are the main alternatives you’ll have to choose from.
Options to Care for Elderly Parents
Of course I realize each situation is different but what I really want to focus on here is what options you have available when you’re parents are unable to care for themselves.
1. Provide the assistance yourself
Statistics plainly indicate that the number of households with two, and maybe three generations living under one roof has risen dramatically! This isn’t because family members don’t have enough money to live on their own; rather, older parents are more likely to have to move in to be cared for by their offspring.
So, one of the options that you can consider is either (1) living close to your parents so you can reach them at a moment’s notice, (2) move in with your parents, or (3) have your parents move in with you.
As an advisor I’ve seen all three of these situations take place. I recently met with a lady that was retired and she spends every day with her parents caring for them. While they don’t live together, her sole responsibility is to be there when her parents need her.
Along the same lines, I met with a man in his forties about 6 months ago and he bought an RV and moved into his parents back yard. He was working part-time but he had succumbed to the reality that caring for his elderly parents was going to be his new, full-time responsibility.
If you unwillingly or are unable to care for your parents, the government will supply them with nursing home care.
The only caveat is that your parents must be bankrupt. While I’m no expert on the subject, I do know enough to be dangerous: if your elderly parent is unmarried, they can’t have any assets in their name in order for Medicaid to fund their expenses of a nursing home.
However, if your parents are still together then the government requires that they spend down ALL of their assets (they will allow you to keep ONE car, a few dollars in savings, and even a modest valued home) before Medicaid will cover the costs for their long-term care needs.
The problem with this option is that many of the government provided facilities are not the greatest places in the world. I mean…come on…think about some of the other things run by the government.
Another big hurdle to get approved for Medicaid is making sure you’re not committing fraud. Many parents and families try to move assets out of their parents name (transferring the house or IRAs to their children) to make it appear that they are broke and therefore eligible for Medicaid; the problem with this is that the government now has a 5-year look back period, and if anything seems suspicious to them then your parents might not be approved.
If you won’t be caring for your parents, and if they’re too “wealthy” (i.e. have anything to their name at all) to qualify for Medicaid, then paying for care out-of-pocket is an option.
In the Mid-West, a long-term care facility runs on average around $4,500 each month. I personally know of a few higher-end places that even run $6,000-$8,000! So, when considering this option it’s imperative that you know the full costs going in and figure out a plan on how you, your parents, or your whole family is going to cover the expenses.
In this option, it is possible for your parents to enter a long-term care facility, pay for the expenses by themselves, then, once all of their assets are depleted they may finally be eligible for Medicaid.
4. Buy Long-Term Care Insurance
As discussed in this article, preparing for a future that includes aging parents can be extremely difficult. The three options I’ve laid out above might not resonate with you and may sound a little overwhelming.
Understanding that long-term care needs aren’t covered by traditional health insurance, there is a product specifically designed to help families cover the needs of their elderly parents: Long-Term Care Insurance. In order to qualify for a Long-Term Care facility, your parents must be unable to perform 2 or 3 of the activities of daily living:
- Toileting (getting on and off the toilet and performing other hygiene functions)
- Transferring (unable to get out of bed or a chair)
- Maintaining continence (controlling bladder and bowel movements)
Long Term Care Insurance is an option, and often a great one, for many people. The statistics suggest that as of right now 50% of people will need some sort of long-term care in their life. On top of that, the average stay in a long-term care facility is somewhere around 3 years!
In the above-mentioned option #3, can you grasp how much that would cost if you were to pay out-of-pocket for the full length of a long-term care stay? At a $4,500/month average and a 3-year stay, that brings us to a total of $162,000! Ouch…talk about putting a dent in your nest egg. And that doesn’t even factor in inflation!
While long-term care insurance is extremely difficult to get, it’s a viable option that you should consider. From what I’ve seen through quoting the product, I suggest looking to get long-term care insurance sometime between 50 and 65 years old. As with all insurance, the unhealthier you are and the older you are, the more you’re going to pay.
There isn’t a “right” or “wrong” solution when figuring out how you’re going to care for your elderly parents. The important part is that you start planning for it well ahead of time and make it clear within the family how it will all take place. If you’re interested in learning more about long-term care, I suggest that you check out Genworth site for some great information.
Are you currently caring for an elderly parent and how has your experience been? If not, what are you doing to help you or your parents provide for this inevitable stage of their life?