We’d like to think that our parents are invincible. After all, they are part of a generation that continues to push longevity expectations higher. More likely to see their 80th birthday than their parents, they approach turning 65 as just another milestone (65 is the new 50, right?).
Despite the trend toward longevity, you and your siblings should talk with your parents about their financial future, even if they are only in their sixties. These discussions should cover, at minimum, long-range housing options, long-term care insurance, and wills and living wills. “Frequently, the first conversation happens when there’s a crisis,” says Elinor Ginzler, author of Caring for Your Parents: The Complete Family Guide. “By then, people are tired, physically and emotionally—and possibly financially,” she emphasizes.
Talking to mom and dad now allows them to be in control. It also gives the whole family time to research options and costs under calm circumstances. For example, when it comes to determining whether or not to go ahead with life-support, knowing their preferences—and having them in writing—will diminish some of the stress and conflicts about key decisions.
Here are some things to consider with
Types of Living Situations
Also known as active adult communities, these are often amenity-rich residential developments for independent people with common interests. Avid golfers, for instance, get to enjoy life within walking distance of a course and in the company of equally passionate neighbors. Planned communities may impose age and visitor restrictions, for example, limiting a guest under 18 to a one-week stay, so be sure to ask about the regulations. Because Medicare considers planned communities a residential choice and not a medical necessity, it will not cover the cost.
Continuing Care Retirement Facilities
These facilities offer a continuum of care: generally independent living, assisted living, and nursing home care, often on one campus. Their size can range widely, from those that house several residents to those that care for hundreds. Before choosing a facility for a loved one, make sure to arrange tours of several different
facilities, as they can vary widely in quality, cost, and services offered.
Generally, continuing care facilities offer the following:
Independent living is for those who are able to live on their own but do not want to maintain a home, condo, or apartment. These facilities often offer a range of activities and trips, and sometimes group meals.
An assisted living facility is for people who need help with activities of daily living, such as cooking, bathing, and dressing themselves. Although services include skilled nurses and sometimes hospice care, Medicare won’t foot the bill, which averages nearly $36,000 a year ($51,000 if the patient has Alzheimer’s or dementia). However, some states might cover the fees through Medicaid if income guidelines are met.
Of all the options you’ll come across in your search, nursing homes are the most widespread. State funds usually pay for a portion of the $69,000 annual cost of housing a patient in a semiprivate room. These are places where physically impaired or mentally disabled adults get medical attention and comprehensive services. One thing to keep in mind is that Medicare covers only short-term stays (say, several weeks to heal from a fractured hip), but Medicaid pays for extended nursing home care in some states if your parent is eligible.
Long-term Care Insurance
Getting long-term care insurance for a person already in his or her 70s or 80s can be difficult. Today, the average
premium for adults over 65 is an astronomical $2,862 a month. On the other hand, the premium for someone under 65 is about $1,337 a month (depending on your age, now might be a good time to get a policy for yourself). Regardless of who the plan covers, ask for inflation protection, which is a built-in safeguard for the rise in care costs. Most important, be sure you are clear on what is and what is not covered—and whether certain conditions need to be met. For instance, some policies cover planned communities and assisted living facilities, not just nursing homes. Some policies can be used only if a doctor hired by the insurance company determines that you actually need the service. Experts recommend asking a lawyer to review the policy.
Wills and Living Wills
Your parents will need a will or a trust so that their assets are distributed according to their wishes, not the state’s. Although you can help them compose a will or trust, you should hire a lawyer to make sure the will adheres to the laws of your parents’ state of residence. Make sure you know where the will or trust is kept and that it is updated as necessary to accommodate changes in assets or family members and to remove deceased relatives.
A living will is a document that tells doctors how to proceed if a patient falls into a vegetative or terminally ill state. These are tough issues to think about—and even more difficult to go through—but knowing whether your parents want surgery or blood transfusions or to be fed intravenously or to use a ventilator or heart-lung machine eliminates some of the conflict when making these heart-wrenching decisions.
As difficult as these matters are, if you deal with them now, when your parents are healthy, it is much easier than having to play catch-up after one falls ill. Putting a plan in place will not only ensure that your parents’ needs are provided for, it will also provide peace of mind. DW
Jennifer Alaya is a freelance business and finance writer based in New York.