Money Cents Newsletter - February 9, 2010

In the coming months, preparation has begun for a presentation to my NAPFA colleagues at our May national convention in Chicago. It is an indeed an honor to be asked. My topic is “Real Life Experiences with Long Term Care and Medicaid". Both clients and colleagues have witnessed the past eight years as Deb and I continue to be caregivers for our collective parents. As the outline for the continuing education course is in preparation stage, we both feel sharing critical beginning steps is very important. Sooner than we ever expect or plan for, we are placed in the caregiver role.

Think about it, you have nine-months to prepare for a new child to be born. With elder care, you may get nine minutes. Our life was forever changed during one phone call when “Granny” broke her hip. She was the primary caregiver to her husband, thus, we were thrust into a dual caregiver role immediately after the nine minute call. How can you be prepared for those nine minutes?

In the best of all situations, helping an older relative or a parent plan for long-term care and various other end-of-life issues happens when they’re healthy and various options can be considered with adequate time to do so. Unfortunately, events can sometimes intervene and make an elder’s need for assistance an emergency.

This is why it’s so important for adult children and younger relatives to gather the courage and preparation to begin a series of important conversations when elders are healthy. Once stricken, older relatives may be unable to understand questions or express their wishes in proper detail. If there is no plan, family members grasp at responsibilities – or shirk them – perhaps without a clear understanding of the older relative would actually want. 

These talks need to go far beyond money. There should be discussions about independence and basic preferences for the way individuals want to live and die. Demographers believe with the rising number of single Americans – those divorced or never married – these conversations will become increasingly complicated as they fall to nieces and nephews, younger friends or designated representatives.

How to avoid a worst-case scenario? Start the conversation NOW, Don’t postpone. Here are some ideas:

Start with the most important priorities:  Maybe the first conversation isn’t about where to find the will or health care power of attorney, though you’ll eventually have to get to that. Maybe this conversation is about you noticing a parent or loved one is moving slower, is more forgetful, is clearly looking like their health has taken a turn for the worse – and maybe that’s why you want to know where the will is. Even so, jumping into money issues first is usually a mistake. Deal with immediate health and lifestyle issues first.

Prepare your questions in advance: When a parent or relative is unconscious or unresponsive, the designated relative is immediately thrust to the drivers’ seat. That’s why it’s critical to make a list of questions for the elderly relative to answer in detail while they have the capacity to address them. The basics: Where important papers are, how household expenses are paid, who doctors and specialists are, what medicines are being taken and whether there’s a will, an advanced directive and a funeral plan (and money or insurance proceeds to pay for it). There may be dozens more questions beyond these based on your family’s personal circumstances. But in creating this list, which can be very revealing, ask yourself: “What do I need to know if my family member suddenly becomes sick or dies?”

Get proper documents executed. During your search, if the proper documents are not found, make an appointment today! Have an elder care attorney prepare: Will, Directive to Physicians, Durable Power of Attorney for Health Care, and a General Durable Power of Attorney documents. You will need all of these the minute you get the nine-minute call.

Turn the conversation to affording long-term care: One of the greatest continuing fallacies about long-term care is that Medicare pays for it – it pays for a significant amount of medical care associated with it, but not for the actual cost of home-based or skilled nursing home-based care. In 2009, private room nursing home care averaged more than $70,000 a year. Long-term care insurance is something that should be purchased in one’s 50s for the best chance of affordability, but the conversation needs to be a mixture of preferences and finances. If an elder cannot afford top-quality care, families need to plan alternatives, especially if it means pitching in.

Be patient:  In some families, having a successful financial discussion means several attempts and expect frustration. Don’t become angry if this happens. Just keep starting the conversation until it begins to take shape and moves forward. It might make sense to say something like, “You’ve always been so independent, Mom. I just want you to give us the right instructions so we do exactly what you want.”

Offer to get some qualified advice: If you don’t fully understand your relative’s financial affairs, it might make sense for you both to talk to an elder care attorney, their CPA, or fee-only fiduciary CFP®. A qualified advisor can help you straighten out whatever confusion exists and can help you put specific legal documents in place and establish ways to pay medical and household bills if they’re unable to do so. If you can, involve your elder in this conversation – an impartial and trusted third party can sometimes move things along. Above all, an elder should have a current will and health power of attorney documents in place – either making or reviewing those documents can be a good starting point for making sure other necessary plans are in place.

Plan a caregiving strategy together: You should discuss the relative’s preferences and trigger points for various stages of health care. An individual always wants to stay in his or her home, but you should have an honest discussion about how much you can do at home as a caregiver and whether various services (home health aide, geriatric care manager, assisted living) should be introduced at various stages. Talking through what a parent will be able to live with at various health stages, and putting that information in writing, will save plenty of doubt and bitterness later. Learn more by reviewing these websites: www.caregiver.org or the www.thefamilycaregiver.org. A geriatric care manager can help you determine what is best for your family; visit www.caremanager.org to find one in your area. To locate specific services in your community, including free or low-cost assistance, contact your local Area Agency on Aging (www.n4a.org).

Discuss what should happen with the home: If an elderly relative becomes sick and irreversibly incapacitated, the equity in his or her home may come under consideration as a resource to pay uncovered medical or household maintenance. Since the home is both a major asset and an emotional focal point, it’s best to get good advice and spell out specifically what the elderly relative wants done with his property and under what conditions.

Make sure everyone knows the plan: Once you settle on a strategy, make sure all family and friends understand the plan and their assignments, based on the individual strengths and comfort level.

Ask for Help. One of the biggest mistakes you can make is trying to go it alone. Many caregivers take on more than they can handle. The stress can put your own health at risk. Reach out to family and friends, senior centers and local services that offer help.

These articles on Interactive Capital Management’s website offer additional knowledge of this critical issue:

“A Primer on Medicare and Medigap Coverage” Money Cents Newsletter 10-19-2009

“Are Your Prepared to Pay for Long Term Care” Money Cents Blog Post 11-13-2009

“Social Security: Late Retirement Boosts Benefits” Money Cents Newsletter 06-2009

“Retiring Early? Don’t Forget About Health Insurance” Money Cents Newsletter 07-2009