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Just Wait Until Your Father Comes Home!

Financial Planning

April, 2001

Just Wait Until Your Father Comes Home!

Time to take a pop quiz. If you can define the following terms without looking them up, then you can go to the next article: DME, Nebulizer, PEG tube, Cannula.

Got no clue? What about "concentrator?" What's that you say; no earthly idea? If you think a Kangaroo Pump is a cute Australian animal working out at the YMCA, then this article is for you. That's because all of the preceding terms are words or acronyms you may hear sometime in the future if you have aging parents.

At the risk of being accused of generalization, we think it's safe to say chances are you will, at some point in your life, be required to make major life and medical decisions for one or both of your parents. At the very least, it is possible you will be carrying out orders once left to nurses and nurses' aids.

The reason? America is aging and the cost of caring for the aging is skyrocketing. Anyone who has been to the doctor recently knows how healthcare costs are, but what about long-term care for the elderly?

The average cost of nursing home care can range anywhere from $2,000 to $4,000 per month, depending on the quality of the nursing home and the services provided. Of course, skilled nursing care and facilities in high cost areas can add to the cost. Even lower cost assisted living units and retirement centers can cost a great deal and we won't even discuss the cost of a hospital stay.

As a result, doctors, hospitals and patients themselves are doing just about everything they can to stay home and out of the hospital or nursing facilities. Even more important than the cost, senior citizens have found they are generally happier and more comfortable in the home where they raised their children, or at least living with their families.

Some of this is nothing new. What is new, however, is how long our parents may need a higher level of care from us than what we are used to providing.

Statistically speaking, if you were born in 1900, you should be dead now. The average life expectancy for all United States citizens born in that year was 49.24 years. Ninety years later, the average life expectancy of newborns was 75.37 years. If you want to take out the effects of those killed in World Wars I & II, even looking at persons born in 1930 had an average life expectancy of 59.3 years. We are all living longer.

If you were born in 1900 to 1930, this is just another affirmation that you truly are an above average individual.

Our society has also changed. The nuclear family is not as important (we think) these days and families are scattered throughout the country. Rather than living close to their hometown, many people now have gotten jobs in cities far from where they grew up and thus live and raise their families far from what used to be home. Such dispersion makes it hard to help an aging parent without placing a significantly larger burden on one child than another. Coupled with the increase in two-earner families, there are just fewer families with the capability to provide full-time care for an aging parent, yet skyrocketing costs will make it more difficult to provide care outside of the home.

That leaves all of us, from senior citizens to the newborn baby a choice: hide our heads and hope we never have to deal with this or get ready. But, how do we prepare ourselves?

First, we have to recognize the costs and take stock of where we are. Certainly, the best place to start is by looking at our own resources. This includes the resources we have in our own immediate families as well as discussing the resources available to our parents.

We assume you will have no problem discussing the finances in your immediate family, but talking with Mom and Dad may be a tougher challenge. Nonetheless, for their sake and yours, you must have the discussion.

One of the things to take a sober look at the health status of your parents and, yes, the likelihood of them needing extended care in the future. How did your grandparents fare late in life? Did they live a long time, or die early? Did they contract illnesses that were long and protracted?

What are your parents' attitudes toward aging and how are they likely to react if they become dependent on you? Where will they be happiest? Some people prefer to move into retirement centers where they can move from a low level of care to a high level of care as their lives change. Some people do not. Some people can afford it, some people cannot.

The list of considerations is endless, but we will leave you with one extremely important thought in this area: the surviving parent.

Assume your mom and dad have a relatively nice lifestyle, but not extravagant. Then, Dad has a stroke and Mom cant take care of him at home. The best place for him is Careforme Nursing Home, Inc. It's a great place and Mom checks him in. His room and board is $4,000 a month. Being the practical woman Mom is, she doesn't worry because she can't see Dad living over a year.

Fortunately, or unfortunately for some purposes, Dad lives three years. Between the nursing home bills of almost $50,000 a year and medical bills, Mom eventually spends almost $300,000 to care for Dad in those years. That was most of their savings, except the house and Social Security.

It doesn't take long in the above scenario to see that some planning is necessary just to protect the surviving spouse. Why should your mom or dad work their entire lives for medical bills to make their retirement years extremely difficult?

Your next step is to take action. First, consider the need for long-term-care insurance and Medicare supplement insurance, including prescription drug coverage. Depending on your parents' age and condition, these can be extremely cost effective (when you consider the alternatives). Some professional associations even offer long-term care insurance specifically designed to help you help your parents. A good source of information on long-term care policies is MetLife's Life Advice Library.

If you think you don't need long-term care insurance because you or your siblings will always take care of Mom or Dad, think again. Caring for a sick person is extremely demanding, regardless of their age. Add to that, the fact that Mom and Dad have probably been independent for a while and reversing the role may create resentment on everyone's part. Add to the mix the uncertainty of you surviving your parents and you can see where you and your parents may wish to have options available.

Suppose your options are gone and your parent has to move in with you. What do you do then? How can you afford to take care of them?

First, explore the benefits available under any and all insurance coverage. Remember that DME thing we mentioned earlier? DME stands for Durable Medical Equipment and most insurance doesn't like to pay for it, and usually pays only to a very limited degree. However, this can be a significant cost in taking care of a homebound person. Sometimes, not always, you can argue with an insurance company and point out it is less costly to provide equipment to keep Mom at home rather than putting her in the hospital. The same goes for many of the expenses you may incur to take care of Mom or Dad at home.

You local agency dedicated to helping the aging may be able to help, either through information or direct aid. Sometimes, to keep people out of the hospital, hospitals will provide some initial level of support. Why? Many times hospitals find they can't bill for extended stays and receive payment from Medicare. Accordingly, they try to reduce their costs by reducing patients' stays.

Finally, the Internet has numerous places that can help you find financial resources, information or, perhaps most important, emotional support. One site that appears to have numerous links is is Silverwoodsisters.com.

Aging is one condition that happens to us all. As we grow older, so do our parents and, at some point, we are likely to be called on to act as their caretakers. This will always be emotionally difficult, but it needn't be a financial disaster.

With a little planning, you can minimize losses to your parents, your family and yourself. Give us a call and let's discuss your family's situation with a smile now, rather than a frown later.

Have a great April!!!!!

These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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