This is the first in a series of posts that will focus on how to help your parents manage their finances late in life as they age or face illnesses that can linger for years. This post covers how to get started. Check back for future posts with ideas resources to help you plan.
Though no one likes to think about it, as they age, your parents may suffer from health problems. While this is likely to be a difficult emotional time for all involved, it can also pose some serious financial challenges. Alzheimer’s disease and memory loss — from which 5 million suffer1— are a couple of the most obvious reasons your parents may need help with money management.
But other illnesses, or simply age-related cognitive decline, can also make it difficult for elderly people to handle their own finances. With the over-85 population growing faster than any other age group, it’s an issue more and more families are likely to face.
Do you have a plan for how you’ll help your parents with their health care and finances? Here are some tips that should set you down the path toward making a difficult time just a little easier.
Start the conversation
Instead of waiting for a crisis or dire diagnosis, start talking with your parents about elder care when they are in good health and their cognitive abilities are intact. Taking this task on in the midst of a health crisis could lead to less-than-optimal decisions, and it may not give you time to consider all your options. Waiting too long also may not allow your parents to be an active part of the decision-making process.
Ideally, your parents should be the ones start the conversation. It is, after all, their health and their finances that are at issue. But not all parents are ready to talk about – or even think about – the possibility of a physical and cognitive decline.
If you’re the first to broach the topic, keep the conversation focused on your parents’ well-being and your desire to be of help. At the very least, ask them to compile a list of all their assets and liabilities, and make sure you have a genuine understanding of what type of care they want if they are someday no longer able to care for themselves.
Make it legal
Privacy laws prevent doctors and financial institutions from discussing the details of your parents’ situation unless your parents grant permission. Make sure you are able to carry out their wishes by having these documents in place:
- Durable power of attorney: This gives you the authority to act on your parents’ behalf at banks and brokerage firms.
- Health care proxy: Also known as a medical power of attorney, this lets you make medical decisions for your parents when they are no longer able.
- Advanced health care directive: With this document, your parents can decide the type of treatment they want — or do not want — at the end of life, when they may no longer be able to express their wishes.
Without these documents, you might have to petition the court to become your parents’ guardian or their estate’s conservator, and this can be an expensive and lengthy process.
Plan for care
Even with serious diagnoses, your parents may live for many years. The life expectancy of someone with Alzheimer’s, for example, is eight to 10 years following diagnosis2.
Early on in an illness, your parents may not need much care, perhaps having someone come a few hours a week to help with cleaning, cooking and bathing. Later, they may need costly, continuous care. Where will this care take place, who will provide it and how will you pay for it?
Medicare, the health insurance program for those 65 and older, currently only covers skilled nursing care. But your parents may not need this type of care. Instead, they may need help with feeding, dressing, bathing and supervision to prevent them from harming themselves — what’s known as custodial care, which Medicare does not pay for today. If your parents’ assets are few, they can spend them down and qualify for Medicaid, a federal and state program that does cover this type of long-term care.3
Parents who have long-term care insurance can get their care paid for, either in a nursing home or at home. The policies typically cover a certain dollar amount per day. Find out the requirements to getting coverage started; most policies have a waiting period before benefits begin.
As the ranks of the elderly grow, many will need help managing their health care and finances. Take steps now to prepare for this possibility in your own family by talking to your parents about their finances and then formulating a plan for when you might need to take a more active role. Careful preparation can ensure that your parents get the care and support they need and deserve.
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