Financing eldercare

Looking for those golden years to be truly golden? WAG’s new eldercare columnist — Abbe Udochi, CEO and care manager of Concierge Healthcare Consulting in New Rochelle – says you need a plan and then some.

My grandmother told me that she wanted her death to be easy on her family. “No muss, fuss or chaos,” she said. She wrote and updated her will, named a health-care proxy, assigned power of attorney, added my mother — her only child — to her bank and other accounts and made her end-of-life wishes known. 

She died peacefully in her home at age 84. She had a plan and it worked for her. 

I think of this as my grandmother’s legacy as I serve clients as CEO and care manager at Concierge Healthcare Consulting LLC in New Rochelle. I know the consequences of not having a plan. 

In one case, a couple with advancing dementia were incapable of managing their care. Documents made years ago — trusts, powers of attorney (POA), wills, living wills — were outdated or incomplete. Financial and insurance documents were in disarray. There was no long-term care insurance (LTCI). Their attempts at asset protection remained unfinished. Resources were squandered because they were ill-equipped to make important decisions.  

Can we escape these weighty steps and take it day-by-day with eldercare? While we all would like to drink from the fountain of youth, statistically the font will eventually run dry. According to the Lewin Group, 48% of Americans 65 and older have a chronic condition or functional limitation. The U.S. Department of Health and Human Services reports that nearly 70% of retirees will need long-term care. 

When health needs arise, having an adaptable care plan and a strategy to finance it for yourself or your loved ones can take much of the stress out of a needed transition. Whether you’re managing multiple health conditions in your 50s and 60s or healthy and active in your 80s and 90s, everyone needs a plan.  

Financing home care 

J Heinlein, president and owner of Synergy Home Care of Westchester, says that home care has financial advantages.

“Private pay home care allows the family the greatest degree of flexibility on days and hours of care, the caregiver, location and specific tasks/activities,” he says.

To calculate costs, research the charge for a private individual versus an agency hire, include the level of care, multiply by number of hours. Remember that It’s not unusual for a few hours of companion care to expand to 24/7 skilled nursing care.  

“Always have a fallback plan in place,” says Heinlein who also suggests identifying all potential caregivers within the family’s network who could fill in during a crisis. 

When care costs escalate

There may come a time when what’s required exceeds care that can be set up in the home in a cost-effective way. Aging in Place, as my grandmother did, isn’t always feasible. Move in with “the kids”? Sandwich Generation members in their 40s and 50s may be balancing the needs of growing teens and senior parents. 

Explore the costs of independent living, assisted living, memory care or a nursing home before a move is imminent. 

Paul Doyle, president of Oasis Senior Advisors, says, “Decisions are emotional, financial and clinical. Once you’re looking into care this is Retirement 2.0.” 

Before any move is made, he advises all to ask, ‘Why am I (or my parent) moving?’ 

Is it because home maintenance and household chores — mowing the lawn, shopping for food — have become too difficult? Is help needed with personal hygiene, mobility, medication management or meal preparation?  The latter will entail increasing care, which could become cumbersome and costly if you stay at home.

Long-term care insurance (LTCI), purchased preferably in your 40s, 50s or even early 60s, can help defray costs, but be prepared to keep up with the premiums. Lapse and you’ll lose the benefits. And don’t naysay LTCI because it didn’t work for Aunt Mia six years ago. “The new products are totally different. Some even have a death benefit,” says Doyle. 

Once the policy is activated, you’ll stop paying premiums, so don’t delay usage if care is needed. 

Veterans’ aid can be a funding source. 

“The VA’s Aid & Attendance benefit can be valuable to anyone who served in the military and their surviving spouse with modest eligibility rules,” says Doyle. 

Legal aspects of financing eldercare  

Ariel Rosenzveig, an eldercare and trusts and estates attorney, notes that a will is never enough. Not only do you also need advance directives — a  POA, health-care proxy and a living will — but these need to reflect your current financial circumstances. While a standard statutory POA will take care of day-to-day expenses, a more expansive document enables planning that goes beyond paying bills.

Proper planning considers future eldercare needs and, in many cases, includes asset protection.  Since care can cost as much as $15,000 to $18,000 a month and the average person will need at least two and a half years of care, assets can be eviscerated. While the very wealthy can self-insure, most cannot.  Various mechanisms help shield assets so that a person can ultimately qualify for Medicaid to cover long-term care.

“The earlier planning is done, the more opportunity there is to protect a greater amount of assets, Rosenzveig says. “With New York’s look-back period for nursing home care and soon-to-be home care (15 months of records as of Jan. 1), it is best that planning be done in advance. That said, even when the need is imminent, you need a plan.” 

Most nursing homes in the metro area accept Medicaid. Community Medicaid includes home care and assisted living. Institutional Medicaid deals specifically with nursing home care. 

So many choices and decisions 

Breathe deeply. Repeat.

It’s easy to feel overwhelmed by the many aspects and potential costs of eldercare. Remember that while the goal is to plan, the best laid plans of …You know the rest. In any health-care situation, the unexpected is expected. Try to craft a proactive plan, but if a crisis hits, create a reactive one — within your budget. Examine the choices and develop a thoughtful strategy rather than act impulsively. Heed those you trust or find new advisers. You don’t have to do this alone. Then breathe deeply. Repeat. 

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How to avoid Medicare’s late enrollment penalties

While unexpected eldercare expenses can create cracks in your nest egg, Medicare coverage is vital to any financial plan. In 2019, it paid almost $800 billion in medical and drug expenses for older Americans, according to the National Health Expenditure Accounts (NHEA).

Yet the lifeline can have a string in the form of late enrollment penalties that don’t expire.  

Ben Abboa-Offei, a Medicare health insurance assistance program counselor, urges, “As soon as you are no longer receiving employer-based health coverage, enroll in Part B. It is one of the prerequisites for Part D.” Part B covers medically necessary and preventive services; Part D, prescription drugs.  

If you work past 65, find out if your employer-based drug coverage is ‘creditable coverage’ —equal to or better than Part D.  If not, you have 63-days to enroll in a drug plan or incur a penalty calculated by multiplying by 1% the months you weren’t covered by a base beneficiary premium, which goes up annually.  In 2022, it is $33.37. 

To protect your wallet from penalties:

Confirm enrollment deadlines and Medicare timeframes.  

Secure a notice of creditable coverage from your employer every year and keep it handy for proof of coverage.  

Start shopping for a Part D plan if your drug plan changes and no longer equals or exceeds Part D.  

Abboa-Offei says, “Medicare is insurance.  They want a pool of people to sign up.  Without a penalty, some will delay enrollment until a health crisis occurs and expensive medications are required… The permanent penalty … encourage(s) timely enrollment.” 

Late enrollment penalties can be disputed under reconsideration within 60 days of notification.  

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