While only about a third of aging parents believe they may need long term care, the fact is that about two-thirds of them actually will need it. In many cases, financially successful children have to step in to pay for their parent’s care.
There is obviously a very large gap between what aging parents believe, and the hard reality of long-term care. This “in denial gap” will cause enormous problems for families who do not face the issues early on.
What about Medicaid?Medicaid is touted in many seminar advertisements as the answer. These seminars promise to help you become “Medicaid Eligible”. In response, we are planning our own seminars titled “The Seven Reasons You Don’t Want to be Medicaid Eligible”. Just one of those reasons, other than Medicaid being a welfare program, is that many of the best nursing homes do not accept Medicaid.We put it this way to our clients: “You have saved all your life for a comfortable retirement. Do you really want to spend your last three years (that’s the average nursing home stay) in a shared room getting the poorest available care?”
What are the costs? The average we see is approaching $5,000 per month for a private room in the better facilities. This cost is going up dramatically. It also does not factor in that the cost to care for someone as they get older can go up dramatically. No one’s health at the end of life improves. It declines and the cost of care of necessity gets more expensive the longer the person needs care.
What are the alternatives? For many people we see, there are few alternatives other than stepping up to the plate and helping Mom and Dad in the last years of their lives. The typical scenario we see is this: Mom and/or Dad are spending down their own savings while a son or daughter has signed the nursing home contract as “the responsible party.” At some point Mom and Dad run out of money and the children become legally liable for the nursing home costs. At this point they either pay or start looking for a facility that accepts Medicaid. That is getting harder and harder to do. Also, it can a bit of a shock having to move from a nice facility to one that may not be so nice.
There are better alternatives if they are faced before long-term care is an immediate need. One is long-term care insurance. This has to be arranged while the parents are in relatively good health. Once a person gets close to needing long-term care, the odds are they will no longer be able to pass the physical examinations necessary to qualify. Another possibility are the new annuities and life policies that provide long-term care riders. In the case of annuities especially, there are usually no requirements for a physical exam to qualify. We can arrange long-term care insurance and we can suggest the alternatives that may work in your situation.
So, what do we do? Number one is that you have a conversation with your parents while they are in relatively good health. It might be very wise to get long-term care insurance –even if you have to pay the premiums. It is pretty much a certainty that if you are relatively well-off financially while your parents are not, you will be expected to pay the costs of long-term care.
Longevity is great, until it lasts past good health. Working now with your parents to help them stretch their assets by conservative investing and spending will benefit the whole family in the long run. People are living longer and those in the 85 and over age group are the fastest growing segment of our population.