Medicaid Planning
What Can I Do About Long Term Care?
Long term care is very expensive. Few people are prepared for the cost when they determine they need care.
Long term care is very expensive. Few people are prepared for the cost when they determine they need care. Fortunately, there are ways to deal with the bills even if you do not have much money.
Medicaid requires beneficiaries to spend all savings and other assets down to impoverishment before they will pay for care. This includes a requirement that any life insurance with a value over $1,500 be cashed in—some people have life insurance so that there is money to pay for their funeral. If someone needs Medicaid to pay for their care, this insurance will need to be cashed in, leaving no money for final expenses as planned. Medicaid does, however, let you set aside up to $15,000 to pay for final funeral expenses if this is done in an irrevocable burial trust. I set these up for people at no cost.
Medicaid also allows you to set these irrevocable trusts up for the final funeral expenses for each of your children and their spouses in addition to the one set up for you. This allows you to leave funds to family instead of spending it all on the costs of long-term care.
Few people know of these Medicaid rules and then leave nothing but the funeral bill for their children.
You have some savings in the bank, earning very little interest. The irrevocable trusts also earn interest, cost nothing to open, and protect money from the Medicaid “spend down”. No need to spend money to open these, other than the amount you want to place in the trust.
At TheLongTermCareGuy.com, we help people deal with the costs of long-term care. We also offer alternatives to help those planning ahead to pay for long term so they don’t have to spend their assets down to impoverishment. There is no charge to meet and explore options. Call us at (920) 884-3030 to schedule a free consultation.
What’s it Really Like Paying for Long-Term Care
Annual cost range is $18,720 for adult day-care services to $100,375 for a private room in a nursing home!
As written by Michelle Singletary and published in the Washington Post on November 26, 2018
One of my favorite Spock quotes from the Star Trek television series is, “Live long and prosper.” Who doesn’t want a long life, right?
But what if the longevity means spending down your money for long-term care? And that’s if you’ve been prosperous and have the funds to pay a facility or home health aide to care for you.
Genworth Financial recently released its 2018 Annual Cost of Care survey and found that the annual median cost of care now ranges from $18,720 for adult day-care services to $100,375 for a private room in a nursing home.
I asked readers to share their long-term care experiences, and here’s what they had to say:
“My mother had Alzheimer’s and was in a memory unit for two years,” wrote Chris Gonzales from California. “My dad has been in assisted living for two and half years and for the last two years has needed round-the-clock care. The cost, when my mother was alive, totaled $230,000 a year. The cost to care for dad is now $170,000 a year. This is in Fort Smith, Ark. My brother and I are very lucky that our parents lived below their means, saved, and did extremely well investing their money in the market, so money has not been an issue. We are also grateful for the ladies that watch over our father and consider ourselves extremely lucky to have people we can depend on as we both live out of state.”
“I managed the care of my mother (who had Alzheimer’s disease) from 1998 through 2006,” wrote Debbie Trice of Sarasota, Fla. “Even that long ago, the cost of her care approached $100,000 annually once she had to move from an assisted-living facility to a skilled nursing facility. The actual cost of long-term care goes way beyond the monthly or daily facility charges. Personal expenses (e.g., adult diapers, toiletries, laundry, haircuts) can be significant. I saved some money by purchasing diapers from a wholesaler and toiletries from a discount store and doing mother’s laundry myself. Medications cost more for residents in long-term care, too. Some states require that all medication, including over-the-counter items like aspirin and vitamins, be specially packaged by a pharmacist in blister packs — at extra cost, of course. Staffing is a critical issue. To keep their rates competitive, many facilities limit their staffing levels to the minimum required by law. But then some patients’ needs can’t be adequately addressed. I found it necessary to hire private duty aides to supplement facility staff for a few hours each day.”
Lane Beckham of New Jersey wrote, “Four years ago my wife (then 71) suffered a fall which led to numerous complications over the next year. She has since been bedridden going from a home hospital bed to a wheelchair. She can feed herself, converse, watch television and read catalogues, but that’s about it. We’ve had a 24/7 home health care aide since April 2015 at a current cost of $215 a day or $78,475 a year. A long-term care policy kicks in $100 a day but only for 5 years of benefit days.”
“My mother died two years ago and for the last two years of her life, she had progressively worsening dementia,”
One reader wrote. “We (mainly my sister) arranged for her to be cared for at her home. The cost was running at about $85,000 a year and that was two years ago! Why? At times, she was simply too much for one person to handle, so we often needed two people to stay with her. And while we went with the better-rated agencies, we still had problems with sitters stealing, using drugs, having friends over and even taking my mother out when they needed to run errands. What a nightmare.”
David Treece, an investment adviser and financial planner based in Miami Shores, Fla., has a client with Alzheimer’s who has a Genworth long-term care insurance policy, which so far has paid out about $323,000.
“I have learned nothing will ruin a retirement plan faster than long-term care expenses,” Treece wrote. “Try having to come up with nearly a third of a million dollars like my client if you don’t have coverage. It’s just unimaginable for most people. My biggest concerns for my clients are a group I call ‘the alones.’ These are people who have no spouse, no children, no close siblings and really nobody else. They can’t even name a beneficiary let alone someone to serve as a power of attorney or health-care surrogate. This group seems to be increasing as so many people never had children, are divorced or never married, or are estranged from family. Who is even going to help them? Our society isn’t really set up for this, and I don’t see any easy solutions.”
*****
How comfortable do you feel paying for care out of pocket when your health changes?
- Have you thought that Long-Term Care insurance would not be needed?
- Do you plan on spending down to Medicaid, a welfare program and then search for a place that will accept it – and you?
If you are concerned, contact www.TheLongTermCareGuy.com at (920) 884-3030 and schedule a time to investigate with someone who understands and can help you find a way to handle this!
Who is Going to Pay for Your Funeral?
Who is Going to Pay for Your Funeral?
Asking who is going to pay for your funeral might seem like a silly question–you probably have money in savings, a vehicle, a house, even life insurance. There should be plenty of money to pay this bill, right?
The problem is, you are gone, so now who has access to your assets?
Your Power of Attorney ends at the moment of your death. How your assets will be distributed and who has authority will all be determined in the probate process in the next few months. So, who will come up with the funds now to pay for the funeral? Even life insurance does not pay out for some time once claim forms are submitted.
Just recently, I received a call from a La Crosse funeral home who wanted to know how to get in touch with the Wisconsin Funeral Trust. This is the organization that funeral directors set up to hold prepayments for funerals. The association chose to invest the funds very aggressively and now only has money to pay out 65% of what people deposited. The funeral home that called me was caring for two individuals who had passed, and the home was trying to determine how much money the trust actually has for them. They called me is because they found me in an internet search. (If you Google “funeral trust Wisconsin”, my website comes up.) They hoped I could either help them or direct them to the correct place.
This shortcoming of the state funeral trust is important to those planning ahead for their end-of-life needs. I am a long-term care planner and, as such, include protecting funds set aside for funerals as part of my work. I help people set aside funds for their funeral using a licensed trust company who specializes in just this. The company that I use for this purpose is a licensed and bonded insurance company, required by law to retain adequate funds to cover claims. There is no cost to set up such a trust and the funds deposited earn interest. These funds are available immediately at death, even before a death certificate has been produced, to pay all the bills in full.
There is another important reason to fund a funeral trust –many people need long term care in the years leading up to their death. This can cost as much as $50,000 to $90,000 per year or more. If they did not plan in advance and purchase long-term care insurance to cover these bills, they may have to apply for a welfare program called Medicaid to pay for their care. Medicaid is a payer of last resort and will only cover long-term care expenses once you have spent down everything you own (house, car, checking, savings) to under $2000. You must also cash in life insurance before Medicaid pays for long-term care. This balance is not enough to pay for a funeral.
Medicaid does allow you to set aside money for funeral expenses, but only in an irrevocable burial trust account. Setting these up for people who did not plan for long-term care expenses has become a large part of my work.
Death happens to everyone. Don’t leave the bills for this to your children. Make sure the money is there AND accessible to them when it is needed.
Long-term care happens to 70% of adults who make it to age 65. What is your plan to pay for this care when your health changes?
For answers to either of these predicaments, reach out to Romeo Raabe at www.TheLongTermCareGuy.com or call (920) 884-3030 to schedule a time to investigate solutions. There is never a cost to investigate.
Do You Have A Gap In Your Plan?
Hopefully you have planned and saved to have an income you can live on in retirement. You planned to use Medicare and either a traditional supplement or a Medicare replacement plan (advantage) to cover health care costs. Hopefully your other available income can be used for basic living expenses, travel, and some fun.
Would an unexpected bill that comes each month in the amount of $2000 to $8000 a month be a problem for your plan? For many people, it would. While only 70% of us will need Long-Term Care in our homes or a facility (HHS), less than 15% have sufficiently planned for this.
Does that mean all is lost when care is needed? Not necessarily. There are strategies that can help most anyone deal with the costs of Long-Term Care (LTC).
The least expensive way to deal with this is to purchase LTC insurance while you are still healthy, but this topic is addressing gaps, so let’s assume you did not do that. The government has two programs which can help, Medicare and Medicaid.
We all get Medicare at age 65, whether we retired early or are holding off until later. Medicare is health insurance which, while it does not pay for LTC, will pay for a short recovery stay in a nursing home. Medicare has learned that is it less expensive to have you recover from surgery in a nursing home bed than a hospital bed.
Assuming you are in the hospital as an inpatient for 3 days (two midnights), transfer to a skilled nursing home for recovery purposes, and do some type of recovery care rehab 5 days per week, Medicare can pay for that care for up to 100 days AS LONG AS YOU MAKE PROGRESS EVERY DAY. This typically does not go past 10-12 days.
Thus Medicare is not a useful payer of LTC services, but Medicaid is. Medicaid will pay for LTC once you can prove that you are completely impoverished (broke). Getting to broke is not pleasant. A single person spends down all assets to $2000 and cashes in life insurance, a married, at-home spouse can keep a house, car and some money which Medicaid will take back after death. Thus Medicaid will pay for care but you will have nothing left to pass on.
Medicaid also pays providers much less than you or I would pay by writing checks for our care, thus getting in to where you want care can be difficult.
Now, some solutions: There are ways to make your just a part of your money last as long as you do. A part of your net worth can be converted into life income – taking into account your [much] shorter than average life expectancy when you require care. If you can leave 2/3 of your estate intact to pass on, it’s generally a good thing.
You can also leave money for family through Medicaid allowed gifting. Irrevocable burial or burial spaces trusts can be funded for children and their spouses, moving a good chunk of assets to family and will not be counted as a divestment. Medicaid rules allow this in 49 states.
The important thing to remember is that there are solutions for most any situation that can at least help. If you would like to learn what you can do to protect some money for spouse or family, contact www.TheLongTermCareGuy.com to learn your options.
“Mind Your Own Business”
“Mind your own business”. How often we have said that to our children or other heirs. That statement does not help those trying to help you when you can no longer handle your affairs on your own.
It is very important that you make the caregivers, or power of attorney aware of what resources you might have.
Case in point: Friends recently lost their elderly mother. She went from sassy, sharp and capable to nursing home and finally to hospice in under 2 months. In this time the eldest son was caring for her and handling her finances, only to find out that mom had a Certificate of Deposit and a small annuity that she had not mentioned. This is now creating problems as he waits for access to these funds to pay the funeral home and other bills related to her care.
If mom had been forthcoming, the son could have been named as a Transfer on Death on the Certificate of Deposit, bypassing probate and making those funds immediately available upon presenting a death certificate. Or mom could have established a Revocable Trust naming the sons as beneficiaries of the estate, thus bypassing the problems and the wait for funds they are facing now.
The annuity has been annuitized, so mom has been getting payments, with a remainder to heirs after her death. It is very possible that mom could have accessed the funds from the annuity in a different manner, and not annuitized it. This may have made it easier for the son to have access to it to now. As it stands, the family will have to wait about a year, receiving small payments, instead of receiving the remainder in a lump sum.
Nobody could have predicted how this would turn out, who needs access to funds, and how. However, by letting the people who will have to take over know where the money is, and how it can be accessed can make things much easier for them. When the probate court does not allow immediate access to funds, family will have to dig into their own pockets, hoping to be reimbursed later.
One more piece that was missing in this non-existent long term care planning: Mom did not put aside any money for a Funeral Trust. This is important as her funeral could have been paid for and the sons would not be in the position of having to jump through hoops and coming up with funds out of their pockets. An irrevocable burial trust pays about the same interest as a CD at your bank, but is immediately accessible to pay the funeral bill completely – even before the death certificate has been produced.
How Your Home Can Help You Pay For Long-Term Care
Yes, it is possible for your home to help pay for your Long-Term Care (LTC) and possibly help keep you in your home longer. For many seniors, the home equity is their largest asset. Using that asset to help keep you at home versus in a LTC facility can make sense. There are a number of strategies on how this might happen.
First, let’s review the Medicaid rules for paying for LTC. Medicaid is the fall back option for people who cannot pay for LTC themselves. If you are single, you must spend down EVERYTHING you have to $2000, including the sale of the home, auto, IRA’s, cash in life insurance over $1500, pretty much devastating your finances. If married, the spouse at home can retain use of (Medicaid will recover later, so children may not inherit) the house, one vehicle, some savings and income.
Since the house will be subject to estate recovery, where Medicaid takes it after last death preventing your children from inheriting it, why not use it to pay for your care – at home or in a facility. A reverse mortgage can facilitate removing the equity in the house and converting it into a check you can cash. You can then spend the money until it is gone, OR…..
There is a way to convert the cash you removed from the house into an income for life. Typically, this is called a life income annuity, but there is a twist for LTC. When LTC is needed, it is probably true that your life expectancy is less than others of your chronological age. Most annuity companies only take into account your age and gender. There is one that has a different twist that makes it much more beneficial when LTC is needed.
This one takes your [poor] heath and thus shorter than average life expectancy into account. By doing so, it may be possible to get a much larger check each month for life. Since your life expectancy is less than average, you can receive a significantly larger check each month, and use that to either pay for home care and stay in your house, or pay for an assisted living or other LTC facility that might not have been affordable to you otherwise.
This lets you use the home equity, which would otherwise be reclaimed by Medicaid after last death, to pay for the LTC you need, and giving you choices of how and where that care is delivered. Its your home, its your equity, why not use it for your care as you wish?
If you are healthy, planning for LTC needs, and do not have the cash flow to pay the premium for LTC insurance, why not use that home equity to purchase the LTC insurance you do not think you can afford. Once you have the coverage, you can use it to pay for care at home, or in a facility, your choice. Since the alternative is to spend the home equity until you are on Medicaid, and remaining equity going to the state after death, versus your children, it makes sense.
Lastly, if the home is going to go anyway, we here at TheLongTermCareGuy.com have ways to save some of that home equity to pass on to your children (and their spouses) that Medicaid allows. Typically, any gifts given in the past 5 years will disqualify you from receiving Medicaid, but there is a provision that will allow you to protect some for family. We can help you accomplish this.
So, when LTC becomes necessary, and you might think all is lost, there may still be options to be able to pay for care and receive that care where and how you want. It is even possible to protect some assets to pass on the family. Simply call TheLongTermCareGuy.com for help at (920) 884-3030 and schedule a time to learn your options.
Discrimination
Yes, it is legal, despite what an article in the USA Today newspaper stated last week. Long-Term Care (LTC) facilities can and do discriminate on whom they allow in.
The problem is that many people do not plan for LTC costs. The insurance that pays for LTC is not cheap, but is actually quite reasonable compared to what it will pay out for your care when needed. The problem is that many people will put more time and effort into finding a way to get onto Medicaid (welfare) than in finding out how they might be able to pay for their care and have choices.
Medicaid is a fall back for people who run out of money paying for their LTC. Unfortunately, it pays less for your care than a person would pay out of pocket, or with insurance. The facilities can actually lose money on this low reimbursement.
Is it possible to lose money on every customer, and make it up on volume?
Of course not! Nobody, including the government will force facilities to accept a loss on every customer and go out of business. Thus the facilities need to keep a mix of those paying for their care to offset the loss on the Medicaid recipients.
A good friend is currently trying to get her mother into a facility in the Midwest. Most of them are asking about her mother’s finances. If she has enough to pay for a number of years, they will accept her. If soon to be on Medicaid, they will not. Others will accept her only if she signs that when she runs out of money and turns to Medicaid, she must leave. How difficult will it be for her to find a facility to accept her then, when they will be losing money on her from day one? It’s good to be charitable, but if you cannot keep your doors open, you will help nobody.
Bear in mind that with the baby boomers turning 65 at a rate of 10,000 a day, the government does not have the funds to handle all the Medicaid LTC either. Medicaid LTC is passing both Social Security AND Medicare as a government expense that is unaffordable.
So, what is the solution to this problem? Have you even investigated LTC insurance for yourself? Why not? Are you hoping that if you don’t talk about it, then perhaps you will never need care? Really? That superstitious?
Most people are surprised to learn that they need less of the insurance than they initially thought. They do not take into account that when one of a couple needs care, there may be no more cruises, trips to Branson, Washington DC, the Florida Keys, etc. No need for 2 (or 3) vehicles if only one can drive, same for the boat, camper, motorcycle. Thus a good portion of spendable income can be redirected towards the cost of care when care is needed.
If you do not want to decimate your life’s savings, you can still use the interest they generate for care, without touching the principal. Then, only the remainder needs to come from LTC insurance.
Many people do not purchase enough insurance to cover a nursing home, since only about 20% of care is done there. If you can afford to cover home care and the wonderful assisted living facilities with a small policy, you have a very good chance of never seeing the inside of a nursing home. Like your homeowners insurance, some of you do not have flood coverage, thinking the risk is too small to insure.
Lastly, the longer you wait to investigate this, the more it will cost. Not just because you get older, but because this insurance has built in inflation to keep up with increasing care costs. Waiting is like saving up to pay cash for your first house. Get it now and inflation will be working for you, causing your policy to automatically get larger every year.
So, wait no more. Give us a call at (920) 884-3030 and schedule a time to do some investigation. You might be pleasantly surprised. The longer you wait, the more likely something will happen, and then you cannot buy it ever again.
Hiring Help For Mom
Reprinted from the Washington Post Carolyn Hax column
On Abruptly Facing An Elderly Relative’s Need For Care
I sometimes supplement my income by senior-sitting those in need of temporary help. Recently, a family offered me a position to live 24/7 in their mother’s home as her aide, caregiver, housekeeper, cook, laundress, hairdresser, chauffeur, med-tech, and personal care provider. The “terms” (their word) were: free room and board, two full weekends off each month, most holidays off and a “stipend” (their word) of $100 a week.
Essentially, they want the Care Fairy to come see to their mother and the house, and will give the Care Fairy a weekly allowance for the privilege. This family is desperate, of course. They have slipped right on over into the fantasy world between Denial and Magical Thinking, unable to grasp the situation upon them. So, I did not overreact when I said no thank you. I was polite, but they were stupefied that I was not interested.
Adults in the sandwich generation: This is your future. The time to talk about it is now, not the day after “something happens”. You might not have a legal right to see your parent’s financials, but you have the moral right to ask to be part of their advance planning and directives. Do it before feelings are hurt and tempers flare, and before you later offend or insult every friend, neighbor, acquaintance, or extended-family member in your search for help.
TheLongTermCareGuy input:
Long-Term Care is a lot of work. It is expensive to hire it done, but many adult children cannot afford to leave their work and families to provide for loved ones. LTC insurance is the least expensive and best way to address this problem, if you look into obtaining it while healthy and preferably below age 55. You pay dollars and get thousands of dollars later when care is needed. For those who do not plan in advance, there are still ways to help – even if already spending down to Medicaid. You can try to figure this all out yourself, or come see an expert who can help. Your choice.
For more information contact www.TheLongTermCareGuy.com
LTC Planning, No Matter The Situation
If Long Term Care (LTC) is needed, but not planned for, there are a number of options to make the money last longer or protect some of it. The best and least expensive way to handle this would have been to purchase LTC insurance while still healthy, preferably in your 40’s or 50’s. By the time we’ve hit 60, a fourth of us can no longer qualify to buy this insurance.
I’ll use a recent example where I was called in to a financial planner’s office as his client’s wife was about to exhaust her short duration LTC insurance policy. The client owns a cottage in addition to a house, $200,000 of IRA money in addition to $180,000 of non IRA investments. He owns a life insurance policy with minimal cash value and his wife has one where the cash value is only slightly less than it’s death benefit.
One of the children would like the cottage and may be able to purchase it. Medicaid does not allow two homes, only one, and it must be sold for fair market value so as not to be a gift and disqualify her from receiving Medicaid.
His life insurance policy with a very small cash value but a significantly higher death benefit would be a shame to lose per Medicaid’s requirements. One of their children could purchase it for fair market value (the cash value) and pay premiums to keep it in force until his death. Hers has cash value nearly the same as the death benefit so it could be surrendered and after paying any income taxes on the gain, the remainder could be used to purchase allowed items like plot, marker, vault, casket, etc. This would be in addition to the irrevocable burial trusts they already purchased.
In Wisconsin, the at-home spouse’s IRA accounts are not a countable asset (currently), so we can ignore those for now. This leaves him with some at risk assets, primarily money. If he were to fund irrevocable burial trusts for his children and their spouses now, he would only be allowed to keep half of remaining assets when Medicaid takes their “snapshot” of assets. If he waits until wife is on Medicaid, and the spend down amount is identified, then he can fund those irrevocable trusts for children and spouses of, while keeping his entire half for himself.
A house presents a timing issue as well. If the at home spouse decides to sell the house while spending down to Medicaid (prior to being on Medicaid), the sale price becomes an at risk asset that must be spent down. If the at home spouse waits until the institutionalized spouse is ON Medicaid, and then sells the house, those funds can be retained by the at home spouse.
As you can see, there are things that can be done to protect assets when someone needs LTC. Every situation is different. Knowing what can be done and when to do it can be very helpful. We often have family meetings to simply explain the Medicaid rules. While we can establish the irrevocable burial trusts for you, your children and their spouses, there are no fees for doing so at The Long Term Care Guy.
For more information, visit www.TheLongTermCareGuy.com or give us a call at (920) 884-3030.
How To Care For Two Parents at Once Without Going Broke
“The biggest challenge of all is holding onto your patience.”
Reprinted from Money Magazine
For years, Madeleine Smithberg has been at the forefront of American comedy as co-creator of “The Daily Show” and a talent coordinator for “Late Show with David Letterman.”
That sense of humor was especially handy during the last few years. That is because Smithberg had to cope with not one, but two elderly parents in rapid decline.
“It’s heartbreaking,” says Smithberg, 56, who heads a production company in Los Angeles. “And yet it’s invisible, because nobody talks about it.”
“It’s like having toddlers,” says Smithberg, whose father passed away in 2014 after she moved her parents to Los Angeles. “They’re hot, they’re cold, they’re hungry, they ask repetitive questions, and their needs become the most important thing in the world at that second… The biggest challenge of all is holding onto your patience.”
According to a new study by Northwestern Mutual, the childrearing comparison is apt: 59% of Americans feel that taking care of two parents between ages 85 and 90 would be even harder than handling two kids between ages 3 and 5.
Caregivers may also have kids of their own. In that case, it’s not just the “Sandwich Generation” – it’s a Triple-Decker.
The Northwestern Mutual report found that 38% of those surveyed have not planned at all for handling the financial burdens of caring for elderly parents.
The costs can be gigantic: National median costs for an assisted-living facility are now $43,200 annually, according to insurer Genworth Financial in its annual Cost of Care study. A private room in a nursing home? $91,250.
That is more than enough to blow up any financial plan. The following is advice on how to care for your parents without going bankrupt yourself.
Long-Term Care
“Long-term care, long-term care, long-term care.” That’s the simple advice from Smithberg. Her father had taken out coverage for himself and his wife, which she calls “the best thing he ever did.”
Long-term care insurance covers expenses for nursing home or home care if you become incapacitated – most of which is not covered by Medicare. The coverage, like the care, can be extremely expensive, and to be sure, it did not cover all of Smithberg’s parents’ assisted-living costs. But, combined with their own life savings, the policy has meant that she has not yet had to dip into her own savings to pay for their care.
Have the Talk
With the holidays right around the corner, it is one of the few times of year when far-flung families tend to gather in one place. Don’t let the opportunity slip by to discuss your parents’ expectations, should illness arrive. Find out if they have advance directives – documents that spell out what treatment they would and would not want during a life-threatening health crisis. Make sure you establish who has power of attorney, should they need someone to make important decisions.
“It’s the perfect time to have this kind of conversation,” says Kamilah Williams-Kemp, Northwestern Mutual’s vice president of long-term care. Her spouse’s grandmother lived to 102, and her mother-in-law has been diagnosed with Parkinson’s.
Consider a Reverse Mortgage
Reverse mortgages allow homeowners aged 62 and above to borrow against their home equity and to receive either a lump sum, a series of monthly checks or a line of credit that can be tapped as needed. The upside of a reverse mortgage? With the bank paying you every month, instead of the other way around, that check can help cover costs for in-home caregivers.
Tom Davison, a financial planner in Columbus, Ohio, is working with a 90-year-old woman whose daughter moved in with her as a caregiver. “A reverse mortgage could help (the daughter) pay her the wages she has given up,” Davison said.
Be sure to have proper documentation that the child is actually employed by the parent. If not, and later Medicaid is needed, Medicaid will count each payment to the child for care as a gift, disqualifying the parent from Medicaid. rraabe
The downside, of course: The family home will eventually become property of the bank.
The proceeds from the reverse mortgage can also be converted to an income for life – but NOT like an ordinary annuity which uses your average life expectancy. When health is not good and life expectancy is less than “average” then a company that takes that poor health, and “shorter than average” life expectancy into account gives a much larger monthly payment. rraabe
Get Help
Your first instinct as a child may be to drop everything and handle all your parents’ needs yourself. But if it comes at the cost of your own career, think about the ripple effects – on your retirement savings, on the needs of your own kids, even on your own sanity.
With Americans extending their lifespan – 76.4 years for men, 81.2 years for women, according to the National Center for Health Statistics – this is a family challenge that won’t be going away anytime soon.
Denver financial planner Kristi Sullivan recommends hiring a case manager to do the heavy lifting.
“For an hourly fee, these people can handle tasks quickly that it might take you hours to do – scheduling doctor’s appointments, handling medical payments and dealing with insurance, helping find a good nursing home or in-home care,” Sullivan says. “Spending this money may seem expensive, but it’s less than putting someone’s career on hold to become a full-time caregiver.”
For more strategies, financing options, or ways to deal with the costs of Long Term Care even if not planned for in advance, contact www.TheLongTermCareGuy.com