Caregiver Financial Planning

Discussions with aging parents about financial matters or health-care options can be awkward, especially since older people are used to giving advice—not taking it. But putting off decisions until there is a crisis can result in hurried and unnecessarily expensive solutions.

Do you know if your parents have enough income to make ends meet, and the capability to handle day-to-day finances? What kind of retirement savings do they have? Who would foot the bill if one or both needed full-time medical care?

The more you know about your parents’ retirement and health-care plans and insurance coverage, the better prepared you will be to help them.

Questions for parents
Include your siblings and their spouses in any discussion with parents so that it becomes a family initiative, suggests Carrie Schwab-Pomerantz, a San Francisco-based author active in the education of female investors. If brothers and sisters prefer not to get involved, keep them informed to avoid future family fights, while respecting your parents’ privacy.

Some key questions: In the event of serious illness, are your parents properly insured? Do they have a will or trust? Who’s their attorney? Do they have enough money set aside to be financially comfortable the rest of their lives? If your parents are not retired, ask how they envision their lives in retirement.

In the past, when Mom and Dad got too old to live alone, they went to a nursing home. Today, there are alternatives, depending on the type of care needed and their ability to pay for it.

Cost for care
The average cost of a private room in a skilled-care facility is $192 a day, according to a nationwide MetLife Inc. survey. This type of nursing home offers 24-hour service in a hospital-like setting.

Assisted-living facilities offer meals, help with bathing and dressing, and limited nursing services. The cost, on average, is about $80 a day in Kentucky.

Continuing-care retirement communities have a campus-like environment, where residents begin in an apartment and then move to an assisted-living unit or skilled-care facility if their needs change. Costs average up to $100,000 to enter, with a monthly fee of $1,000 or so.

Many people want to remain in their own homes as long as possible, but if they are housebound they may not be able to take care of physical or medical needs. Therefore, many communities have begun daytime programs that offer a supportive environment with limited supervision. Some even include to-and-from transportation, at a total cost of $50 or so a day.

Financing options
Once you’ve sifted through the options, how do you pay?

“People are under the impression that Medicare is going to pay for nursing-home care,” says Larry Minnix, president of the American Association of Homes and Services for the Aging, which represents nonprofit, long-term care facilities. In fact, the federal government picks up the tab for only short visits linked primarily to rehabilitation from hospital stays. Medicaid pays for health-care services for the very poor.

If you can afford to cover at least two years for both parents, you should be adequately prepared. But if there is a family history of illness that might require a nursing home, long-term care insurance is probably a good investment, says Charles Mondin, director of United Seniors Health Council.

Long-term care insurance can run from $1,000 to $5,000 or more a year, depending on the age of the purchaser. So it’s important to consider this option as early as possible or before you need it, such as in your 50s or 60s.

KEYWORD EXCLUSIVE: RESOURCES FOR CAREGIVERS

For a list of documents you will need to help plan your parents’ financial future and other resources available click here.