Stop 3: Financial Realities: What Can You Afford

Money is an emotionally loaded subject for most families, and paying for longterm care can stress everyone involved. Seniors may worry that their savings won’t cover their medical and housing needs, while their middle-aged children–the boomers–may be struggling to provide for their own children.

Know that your family’s conversations about how to pay for longterm care can raise difficult decisions you must face together, so try to approach these conversations in a mutually respectful way. Senior housing and care contracts detail all specific rates and services, so everyone will know what the decision entails. Use LivOn’s financial inventory to estimate your monthly price range for housing and care.

1. Liquid assets.

Confirm amounts available in checking, savings, and money market accounts; stock, bond, or mutual funds; and any other cash assets.

Estimated cash: $__________ lump sum

2. Retirement and pension funds.

Confirm what benefits will be paid from a corporate orgovernment retirement plan, such as veteran’s benefits or from union benefits.

Estimated income: $________ monthly or $__________lump sum

3. Social security.

The current average payment for a retired worker is about $7,500 a year ($12,800 for couples with one worker).Everyone can find out how much money they are entitled toby calling the Social Security Hotline at (800) 772-1213 and asking for a Personal Earnings and Benefit Statement.

 Estimated social security benefits: $__________ monthly

4. Antiques and jewelry.

It’s best to let someone offer to sell anything of sentimental value, rather than assume it can be sold. Many older people want to keep a few possessions with them as treasured keepsakes and reminders of special people or times in their lives, no matter where they live. Some facility contracts,though, specify that loss of valuables is the resident’s risk.Nursing facilities, for instance, don’t typically have lockable rooms.

Estimated cash value: $__________ lump sum

5. Real estate.

A family home can provide income in several ways. The simplest is to rent the house for monthly income. You can sell the house and use the lump sum to pay longterm care fees, but whether selling makes sense depends on where you live and the current real estate market. Some states require seniors to sell their homes for cash before they can qualify for Medicaid; other states put a lein on the house and pay for skilled nursing care, then bill the family for that care after the second spouse dies. For seniors moving into a nursing facility,keeping their home for awhile is a psychological benefit that can ease the transition.

Since equity in a family home is the biggest asset for many seniors, another option is home equity conversion, a financial vehicle available in some regions. The most common form is a reverse mortgage, which is a loan against equity in a home, paid out monthly or as a lump sum. Reverse mortages allow seniors to live at home and use the money tied up in their house to pay for longterm home health care and living expenses; the drawback is that seniors may eventually run through their equity loan and have no residual value in the property. Home equity conversion is legally and financially complex, so look into these options carefully with a financial advisor or reputable attorney.

 Estimated rental income: $__________monthly

 Estimated sales value: $__________ lump sum

 Estimated value of reverse mortage: $__________ lump sum

6. Family pledges.

Family members or other relatives may be willing and able to contribute to longterm care. A steady monthly pledge works best for some people’s budgets. Others find a one-time lump-sum gift more reliable and easier to manage.

Estimated family pledges:

$__________ monthly or $__________ lump sum

$__________ monthly or $__________ lump sum

$__________ monthly or $__________ lump sum

7. Medicare.

Part A, hospital insurance.

Everyone over 65 who is eligible to receive social security benefits is automatically eligible for Part A of Medicare (the federal health insurance program).

Medicare rules change every year. It currently covers primarily hospital and skilled nursing care, with limited home health and hospice care. Medicare is not a viable source of funding for most senior housing or care. It doesn’t pay for longterm care in an assisted living facility or for custodial care in a nursing home–the type of care typically needed, for instance, for Alzheimer’s or stroke patients. It does cover hospital care following a stroke, hip replacement, or other acute injury or illness. Medicare also covers skilled nursing care, but only if:

• an MD certifies that a patient needs skilled (not just”custodial”) nursing care,
• the patient is admitted to a skilled nursing facility immediately following a hospitalization of at least 3days, and
• the patient needs skilled nursing care for the same condition that lead to the 3-day hospitalization.

If these criteria are met, Medicare typically pays in full for the skilled nursing facility for Days 1 through 20, and, if other criteria are met, pays a portion of care for Days 21 through 100 (the average patient coverage is 30 days). No benefits area vailable beyond the 100th day of care.

Estimated benefit income: $_____________

Part B, medical insurance.

Most people over 65 also buy Part B of Medicare, which pays a portion of physicians’ services and outpatient care, including outpatient surgery, ambulance services, and a portion of medications and medical supplies. There’s a small annual deductible; then seniors pay 20% while Medicare pays 80% of what the government consider “reasonable” fees. Call your local social security office for the free Medicare Handbook that details coverage.

Some seniors buy MediGap insurance to supplement Medicare coverage, but be aware that MediGap typically pays only apart of your skilled nursing facility care that Medicare doesn’t cover.

8. Medicaid

Medicaid funds are allocated by each state to its low-income residents, and each state has its own policies about what is covered and who is eligible. In California, Medicaid is calledMediCal.

Some Medicaid programs pay only for skilled nursing facilities; others cover home health care, as well; and a few states have begun using Medicaid funds and waivers to help pay for assisted living. For seniors to qualify, some states require them to sign over any income, such as social security checks and retirement benefits, to the facility providing care; other states lets seniors keep some assets. Medicaid rules in some states allow couples to split their assets so that a partner staying at home won’t have to “spend down” and become impoverished for the spouse to qualify for Medicaid; the partner can keep the house and a small income and the other is still eligible for Medicaid.

If your parent is initially admitted as a private-pay resident into a Medicaid-certified nursing home, he or she, currently,can’t be made to move when personal funds run out–the facility is required to take on your parent as a Medicaid resident. In some regions, it may be hard to find a Medicaid bed available, and seniors may need to apply to several facilities or be put on a waiting list before admission.

9. Other government benefits.

Supplemental Security Income (SSI) assists seniors who are legally blind, disabled, or have extremely low financial resources. SSI payments are paid monthly; contact your localSocial Security or Welfare office if you think eligibility is possible. VA benefits and other government plans may include custodial care and skilled nursing benefits.

Estimated benefit income: $______________

10. Private longterm care insurance.

Currently, few people over 65 purchase private longterm care insurance, although it may become a trend. These policies typically cover the standard daily rate for skilled nursing facilities for whatever number of days you’ve purchased. A few plans cover assisted living. Some HMOs now cover nursing home services and are actively providing senior care.

On to stop 4: Find a Facility: Search by Health Status

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