5 Tips for Caring for Aging Parents

Aging is a daily fact of life, but it also comes with its own set of challenges. "As the Baby Boomer generation ages, 10,000 people turn 65 daily...there are [now] more than 50 million seniors" in the United States, according to CareGiverHomes. Even more startling is that "this trend is expected to continue until 2029." A significant side effect is the large swaths of younger generations that will be caring for aging parents once they are no longer capable of doing so themselves. Unfortunately, caring for aging parents can be an emotional and financial strain on the entire family. Careful planning and many conversations will likely be needed in advance to prepare for this event. This a daunting task for many families and they're often not sure of where to turn so here are our five tips for caring for aging parents.

1. Get familiar with long-term care service options and costs. 

There is a wide array of long-term options to choose from in caring for aging parents depending on specific needs, but costs can vary dramatically. Many families will initially try to manage this burden alone (and for free) to keep costs down. According to a 2015 survey conducted by the National Alliance for Caregiving and AARP, "more than 8 out of 10 caregivers (82%) provide unpaid care for one other adult." But, this does not always suffice. At some point, outside services may be necessary, so it is crucial to understand what those options are and how much they cost. These include:

• Home care aides: At-home care providers that don't require highly specialized training. They'll change bandages, check vitals, and administer medications. Costs can range from as low as $9 per hour to as high as $30 per hour.
• Visiting nurses: Registered Nurses that can visit the home to provide care services only a licensed nurse can provide. Costs are much higher and can range from $25 to over $60 per hour.
• Respite care providers: In-home aides that can handle household tasks such as cleaning, cooking, grocery shopping, etc. Costs are typically close to the minimum wage associated with the geographic area.
• Assisted living facilities: Living communities that provide housekeeping, nursing care, and meals as needed. Costs can range from $1,000 to $5,000 per month.
• Nursing homes: For those who can no longer take care of themselves and need daily nursing care. Most nursing homes have nursing aides and skilled nurses on hand 24 hours per day. The national average for a nursing home is more than $8,000 per month. 
• Continuing care retirement communities: A combination of independent living assisted living, and a nursing home. Seniors can live in these communities in a single-family home or apartment as long as they want or can while still having access to the care they need. According to AARP, the average upfront fees can range from $100,000 to $1 million in addition to ongoing monthly fees ranging from $3,000 to $5,000. 
• Hospice nursing homes: Nursing home facilities explicitly designed for terminally ill patients. The focus is typically on keeping patients comfortable and pain-free as they near the end of their life. Costs can vary dramatically but are often upwards of $600 per day.
• Residential care homes: Specialized, community living homes that provide lodging, meals, and assistance with daily living activities. Costs can range between $2200 and $3400 per month depending on the location.

2. Discuss long-term care coverage options well in advance.

Let's face it: long-term care is expensive, so it's important to discuss coverage options as early as possible. There are four primary ways to pay for long-term care: 

1. Government programs (Medicare/Medicaid explained below) that provide limited benefits and may or may not be accessible.
2. Traditional long-term care insurance policies.
3. Hybrid insurance options that combine long-term care with a life insurance component
4. Self-funding from personal savings.

As a family caring for aging parents, the choice to make is: Pay for long-term care services from savings? Or, make the upfront investment and purchase a long-term care insurance policy?

The concern with self-funding long-term care is that it exposes assets to unnecessary risk, and there may never be enough to cover the entire cost of care. While with an insurance policy, however, assets receive protection and funds are secured, but it could be a sizeable investment upfront with no future guarantee of need or use. 

As a family planning on caring for aging parents, it's essential to weigh the extent of current and projected resources against the anticipated needs. Even if self-funding is possible, it's still vital to have a plan to ensure the funding of all needs. The specifics of the plan should address (at a minimum) the following:

• Research on the desired geographical region and types of facilities needed.
• Joint bank accounts and powers of attorney (discussed below).
• A living will and advanced directives.
• Existing funds and funding gaps.

If a long-term care policy makes sense, it's essential to shop options thoroughly. Premium costs can vary dramatically between carriers depending on requested coverage amounts, the premium term, and any riders added. In general, the best time to purchase a long-term care policy is around 50 years of age since age and health will affect cost.

3. Know the difference between Medicare and Medicaid and what each will cover.

Many people confuse Medicare and Medicaid for the same thing, but they are not. Medicare is part of the social security program that any individual may receive upon age 65 if they qualify for Social Security benefits. Medicaid, on the other hand, is a public assistance program designed for individuals with limited income and assets. 

As far as long-term care coverage is concerned, Medicare will not pay for most long-term care services or personal care. The only long-term care coverage Medicare provides is to help pay for a short stay in a skilled nursing facility assuming the following conditions exist:

• The covered individual has had a hospital admission with an inpatient stay of at least three days.
• The covered individual is admitted to a Medicare-certified facility within 30 days of the inpatient hospital stay.
• Skilled nursing care is needed.

After that, Medicare will only cover a portion of the costs for up to 100 days as follows:

• 100% for the first 20 days.
• 100% for days 21 to 100 after the daily copayment of $164.50.
• 0% after day 100.

Medicaid, on the other hand, will cover all long-term care services in nursing homes and at-home care, but only after the total depletion of assets. As a result, Medicaid is more of a last-resort option built exclusively for those who don't have the resources to cover long-term care services but desperately need them. Hence, this stresses the importance of having a plan in place ahead of time if caring for aging parents. Doing so will ensure a long-term care event does not lead to undue financial strain or ruin for the family.

4. Discuss joint bank accounts and Power of Attorney options.

When caring for aging parents with long-term care needs, at some point, they will likely need help paying bills for personal, medical, and household expenses. They may also need legal and financial decisions made on their behalf. To most easily facilitate this, joint bank accounts and a Power of Attorney will be required. 

A Power of Attorney is a legal document between two parties: 1) the "Principal" (the grantor), and 2) the "Agent" (the grantee). The agreement provides the Agent with legal authority to make either medical decisions, financial decisions, or both on behalf of the Principal. The Principal still retains the legal power to make their own decisions, but the Agent may step in when the Principal is unable to act. Powers of Attorney may also be rendered "durable" to remain in effect even if the Principal is incapacitated and unable to make decisions for themselves. 

For a family caring for aging parents, it's important to discuss how they want all of this to look. Undoubtedly, joint bank accounts and Powers of Attorney should be only for family members sure to be good stewards of that money and capable of operating solely within their legal parameters and the best interest of the parent(s). 

5. Meet with a financial planner. 

Our last tip for caring for aging parents is to meet with a financial planner. A good financial planner is easily the most potent weapon in a family with aging parents' arsenal. They will be able to spot current and potential weaknesses, provide clarity around the entire financial picture, and formulate recommendations and solutions that fill the gaps. Long-term care discussions are particularly hard for most families, so it also helps to have an objective third-party that possesses the skills and knowledge to assist.

If caring for aging parents is a concern for you, schedule a time to chat with us today to see how we can help. 

Forefront Wealth Partners is an independent financial advisory firm that provides creative problem solving to our clients. In a world where change is accelerating and the future uncertain, we provide simplicity and confidence concerning financial, tax, and legal strategies. Our process involves a deep relationship, focusing on meaningful outcomes and dynamic planning.

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