© Copyright 2011 by Robert Moskowitz
Mom and Dad are in their late seventies, and my brothers are starting to be concerned about the cost of a nursing home. So far, they’re able to live safely and happily in their own apartment. But from watching our parents’ friends we know that illness or accidents can change the situation for the worse.
What portion of long‑term care will Medicare and medical insurance cover? Are there ways to save on long‑term care costs? What can we do to prevent this possibility from draining our parents’ and our own resources?
Signed, Nervous About Nursing Homes
You’re right. The steady drain of long‑term care is a potent threat to your parent’s financial well‑being. According to one recent survey, the median cost of a single bedroom in an assisted living facility is not more than $3,200 per month. And it’s increasing fast.
At present, neither Medicare nor standard medical insurance covers the cost of long‑term care, except for the first one hundred days after discharge from a hospital. Thus, too long a confinement can easily drain your parents’ assets to the minimum required for Medicaid eligibility (about $60,000). Also, Medicaid usually requires long‑term care to be given in a nursing home or other “skilled nursing facility,” which can force your aging parents to give up their home even when they’d prefer to live there.
Several “medigap” policies now include long‑term care coverage. If you can afford one, it can cover most of the costs of long term care.
Before your parents purchase LTC coverage, make sure they know what diagnoses and “pre‑existing conditions” it does (and does not) cover, and whether it covers care in their own home. The premium may be higher than you expect, but solid LTC coverage can be an important source of financial peace of mind.
My in‑laws have asked my wife and me to help them handle some of their financial matters. They have various stocks, bonds, and other assets, and are in fairly good health. But now that they are in their eighties, they want someone reliable to back‑stop them in case of sudden illness or accident. I’m not sure how to get started. What should be my first step?
Signed, Central States Controller
We’d think it’s wonderful that your wife’s parents feel comfortable enough to ask for your help in these matters. You’re shouldering a very important responsibility, but one that needn’t take very much time or effort.
Start by compiling a list of all your in‑laws’ assets, including: bank accounts, CDs, and the contents of any safe deposit boxes; account numbers and detailed holdings of all stocks, bonds, and mutual funds; descriptions of all personal property and real estate or burial plots; policy numbers, cash values (if any), premium due dates, and specific coverages and exclusions of all life and health insurance. Get the details of all their financial liabilities, too, such as credit cards, home mortgages, car loans, and other indebtedness.
You’ll also want to obtain legal authority to manage these assets and liabilities. Have your in‑laws execute “durable power of attorney” forms in your favor (obtain them from a lawyer or use standard ones available for your state in most good stationery stores or on the Internet).
Once you’ve done this, meet their other advisors, if any, and begin consulting with your in‑laws as they examine their financial choices and make decisions for the present and the future. Most important: get comfortable with the idea of back-stopping their own choices and actions, not taking over as if they were children.
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To help your aging parents maintain their quality of life, think in terms of flowing water, which over time can create beautiful formations out of the toughest rocks.
© Copyright 2011 by Robert Moskowitz
Robert Moskowitz is the author of “Parenting Your Aging Parents, How To Protect Their Quality of Life — And Yours!” This 300 page hardcover book has been widely acclaimed as the classic work in the field since 1991. It is available at bookstores, or directly from Key Publications. The Web site is: “http://www.KeyPubs.com/pyapbook.html“. The cost is $21.95 plus $6.95 shipping and handling. If you wish, you can ask Robert Moskowitz your own question for this column by emailing him at: KeyPubs@KeyPubs.com.