You can “bulletproof” your long term care for your spouse or parent. Take these 7 Steps and you will have the best plan possible.
This is probably pretty obvious to you but you really want to know what is the condition, what kind of progression and complications we can expect, what sort of adaptations will we make to the home. For example if we have a person who has mobility impairments then clearly we need to make access adjustments. We may have to redo the entire bathroom. If we’re dealing with cognitive impairments then we really want to make the home safe because we sure don’t want them going out the door at 2am in the middle of January.
The health of the “well spouse” is an important part of the picture. If the well spouse has a heart condition and the impaired person is otherwise well but for the cognitive impairment, it is important to consider the likelihood that the “well spouse” may die first.
If you have a second marriage blended family situation you want to nail down what assets/finances are available for the long term care spouse. Once you have that in hand you are ready to do an assets/finances review.
Financial Resources
Your goal is to determine the total amount of money you can spend on long term care. You must consider how much will be available for the “well” spouse and how much, if any, is earmarked for inheritance.
Note also that you may not have to pay tax on gains or withdrawals from IRA/401k accounts because of payments for care of a chronically ill individual. Your medical expense deduction may equal the tax due. That could mean you get your money from your IRA/401K tax free. See your accountant on that one.
The second big issue in the financial resources column is the home. Is the home available for long-term care expenses, perhaps by reverse mortgage? Does your plan contemplate a move to an alternate care facility and sale of the house? I’ve seen that many times the house can no longer be maintained.
For example, let’s say the husband has dementia. The wife is his caregiver but she can’t take care of all the property. That includes the roof, gutters, leaves, snow, grass cutting and you name it. Life would be better if they move to a senior apartments. She will not feel so isolated since she can socialize with the ladies and safely participate in activities. He will be in a safe environment. The home would be sold and they could afford for the monthly rent. In such a case the value of the home is huge part of their long term care plan.
Human Resources
The second part of your resources are your human resources and here we’re talking about putting your team together. There will be a primary caregiver. If you have husband and wife, then the “well” spouse most often will be the one. But if your situation is of a surviving spouse, then it’s whatever child of that parent will be stepping up to be the main caregiver. Who do you have to be alternates and successors? There must secondary and successor cargivers. You also must have somebody who can handle the financial matters. If you don’t have much in the way of human resources you will need to use your financial resources for commercial solutions.
There is the tendency to choose one person as the all around support. This is short-sighted. Long-term caregiving is very demanding on the caregiver. We’ve had many cases where the health of the caregiver fails before the impaired person is ready to leave the home. Even short term emergencies must be contemplated. For example what if the caregiver spouse is in the hospital. Who is the alternate caregiver? You want to identify your whole team so things will go as smooth as possible and in case of emergency you will have all hands on deck.
It is best to have everybody at the table to discuss the human resource issues and your over-all plan including your goals and values. An additional benefit is that you will you have a lot less conflict and strife later on. This is especially true if you’re dealing with a blended family.
Medicare: Get a copy of the current “Medicare and You” booklet from Medicare.gov. It will completely explain Medicare benefits. You will want to know what in-home benefits might be available. You will also need to learn how to “shop” for Medicare benefits, such as Medicare Advantage plans and Medicare D, prescription plans. A patient’s needs change and the amount of copays, deductibles, and cost of prescriptions can make it best to consider a new plan each year.
Medicaid: You want to learn about the Medicaid benefit. You may know it will pay for almost any nursing home. But, learn what will it provide for in-home long-term care. Various states have different Medicaid Home and Community Based plans of care. You will want to learn its eligibility requirements. If you are a low income / low asset person then Medicaid is going to be very high on your list. If you’re a person with abundant savings then Medicaid might be very low on your list. Finally Medicaid is the program with a 5 year look-back. That means the agency has the right to demand disclosure of financial transactions within the 5 years before application and has the right to question and disagree with actions you took.
VA veterans benefits: These are extremely important. The VA Health System is available to any veteran and the benefits under that plan can completely supplant other programs because of the hospital, prescription and in-home benefits.
If either spouse is a wartime veteran, then you want to investigate Special Improved Pension with Aid and Attendance. It can provide thousands of dollars a year in cash benefits tax free. There are net worth limitations to eligibility and the program has a 3 year look-back. It is best to NOT contact the VA about eligibility since that contact can establish a claim and if your net worth is too high, you may be out of luck till you spend a lot more money. Best advice is to consult with a VA specialist attorney or Vet organization such as VFW, American Legion, Vietnam Veterans of America etc. about your eligibility. In many cases a VA specialist attorney can help you attain eligibility quickly.
Many local governments have assistance resources such as transportation, chore service and meals on wheels. These can really help round out your long-term care plan,
Rather than repeat the subject I’d like to refer you to our material in the Seven Mistakes. We covered caregiving problems in more depth there. Here is a quick summary:
1. Caregiving is a 24 hour a day job, 7 days a week, that continues for years without break. This takes a demanding toll on the physical and mental health of the caregiver. It is not unusual that the health failure is so serious the impaired person can no longer stay in the home.
2. The caregiving stress often spills over into the whole family causing serious disagreements and many times court battles between family members.
3. While almost all child caregivers want to help a parent out of love, the toll it takes, brings compensation into the picture. Why should a daughter who gave years of her life, while the other siblings had a normal happy life, receive nothing in reward? It is not unusual for impaired parents to want to remake their will to reward the caregiver. The other children are often opposed.
4. Given these considerations you need to consider caregiver compensation up front. Will a caregiver child be paid? She may need it if she has to quit her job. Note, that this pay is taxable as income and it makes her an employee. If the parent moves into the caregiver child’s home, should rent be paid? How may s/he pay a fair share because the parent “does not want to be a burden?” Note that rent received is taxable income but expense deductions are allowed. See your accountant. Finally, if a child is not paid in taxable income, what about a non-taxable inheritance?
5. Non-family caregiver compensation can become a serious legal problem if that person is not treated as an employee. The employer – the parent – must withhold payroll taxes, unemployment and workers compensation insurance. Failure to do so can result in the parent paying taxes, penalties, interest and any medical bills of the caregiver who is injured on the job.
6. We did not cover the issue of the second/third marriage – blended family. If both spouses are alive the family caregiver is often a child of the impaired spouse. There is the tendency in these situations to end the marriage by removing the impaired spouse to the child caregivers home. Confront the issue at the outset: will each family respect the marriage?
We mentioned the concept of caregiver compensation. Evaluating alternative options thus has two benefits: one, it is a measure of value of a family caregiver; two, there are times when the family caregiver plan falls apart due to caregiver health issues and nobody else is available.
Broadly speaking there are three types of alternate care residential options: senior apartments with additional services; assisted living apartments; and, nursing homes.
Note that this section is written as though you were making placement. Whether you are or not, we believe this is the best way to evaluate the care options and the value of family caregivers.
Senior Apartments with Additional Services
These are often billed as “independent living” but in general a good part of the population is not independent. Still the title reflects that the apartments provide common services such as meals and utilities. The additional services provide individualized personal service for items such as medication management and bathing. These apartments are most often unlicensed and generally unregulated.
Assisted Living Apartments
These facilities are supposed to provide complete care for residents. Note that they rarely serve persons with extensive mobility impairments. This is reflected when they advertise “memory care” or dementia care. In our experience these apartments can offer a safe environment for a family member who has a cognitive impairment. Dealing with personal problems is a question for the particular facility. There are dementia stages where a person exhibits disagreeable behavior that is sometimes aggressive. If your family member has such issues you need to discuss that with the facility.
In our experience almost all assisted living facilities are unlicensed and unregulated. There is a small percentage of licensed ones that are often run by faith based organizations.
Contract Review of Senior Apartments and Assisted Living Is Critical
If the apartments you are considering are unlicensed you must fully understand the contract. A review by an elder law attorney would be a good idea, especially since we recommend you do so when making your long term care plan.
There are three critical or “dangerous” items we want to raise. The first is family liability for bills. Many contracts provide that any person who signs the rental contract, including the senior’s representative, is personally liable for charges. In this regard the best advice is only the senior should sign.
The second is to know the termination provisions. For example do you have to give 30 days notice to terminate? Are you locked into a lease until the rent the room to someone else? Can you terminate if you reported problems that they never fixed? Can they terminate without notice? If either you or they terminate, what are the provisions for return of your deposit? For example what if a resident verbally or physically attacks your parent, and they do nothing about the problem? And on the other hand, what if your parent is accused of aggressive behavior to another resident? While it is good to discuss these items with the Representative while you are considering the apartment, know that the contract is the final word.
The third item to know is that most contracts force you to give up your right to go to court if something bad happens to your family member. They require you go to arbitration instead. That is a subject bigger than this article and recommend you do further investigation if you are presented with a contract with a Mandatory, Pre-Dispute Arbitration “Agreement.” Needless to say it would be a good idea to have a lawyer review the contract.
Nursing Homes
Nursing homes are licensed, regulated medical facilities. “Residents” have guaranteed legal rights, that are not often fully realized. If you believe a resident is receiving poor care, you should strongly advocate for their right to good care and know that each state has a Long Term Care Ombudsman to help enforce quality care.
Medicare rates the quality of nursing homes from one to five stars. While some homes have “gamed” the star system, as a general rule the higher the star rating the better the care. You can learn of the quality of care for each nursing home by a Google etc. search for “Medicare.gov nursing home compare.” As of this writing it is found at:
https://www.medicare.gov/care-compare/?providerType=NursingHome&redirect=true
Nursing home contracts are regulated, but we have found that some try to skirt the law and shift responsibility onto the resident or family. If you have an issue with the contract items, contact and elder law attorney and the Long Term Care Ombudsman.
Medicaid does pay for the nursing home care.
You have totaled the financial resources and determined how much you can afford to pay for long-term care. You have determined how much will be available for the healthy spouse and how much if any will be marked for inheritance.
You have reviewed your human resources, considered potential conflicts, and put your team together so that you will be ready for whatever life throws at you.
You have determined what government benefits are available and what will it take to qualify for the benefits.
Now put your plan together, in writing is best, and make sure everybody agrees with your understanding. You are ready for the final step.
Accountant: Review with your accountant the tax issues related to the deductibility of long term care expenses. You may get money out of an IRA/401k essentially tax free because of medical expenses for a “chronically ill individual.” Your accountant can help you with the tax, reporting and insurance requirements involved in having “domestic employees,” who are your paid caregivers. These employees may be family or non-family.
Geriatric Nurse or Social Worker: These professionals can help you with potential family conflicts or the instance where there are no reliable children who could help out. They can be a great benefit to you if you need to evaluate and choose an alternate care facility.
Elder Law Attorney: Consult with an elder law attorney who will review your plan and see if he or she sees any problems. You’ll need to update your legal documents to effect your care plan.
You may need legal contract of hire if you pay your caregiver employees for services rendered otherwise if you apply for Medicaid the agency may regard the payments as giving assets away during the 5 year look-back to qualify for Medicaid earlier..
Other legal documents are essential for your plan to work. The well spouse will want to make provisions in a will and trust for the incapacitated spouse should the well spouse die first. A surviving spouse who is an impaired person will want to a will or trust for her/his wishes to be followed.
Your team will need authority to act through powers of attorney. This is especially true for the medical or health care power of attorney. One thing we found out is that medical care healthcare is less and less doctor and patient and more patient in the insurance system and the big huge hospital system. To deal with those your team needs full health care power of attorney and advanced directives / living will. For all other issues, including contracts, your team needs complete durable powers of attorney. You need all of those to be ready for whatever happens.
Conclusion
Those are the seven steps and if you really well perform all seven steps I think you’ll find you’ll put together a plan that is the best possible way you can deal with whatever life should throw at you you’ll be ready to deal with it and now in closing I will say that we virtually flew over this subject matter almost like an airplane at 10 000 feet and I think you could see after you reflect on it that you we could spend a whole weekend symposium and you would still have unanswered questions.
Good luck. Wishing you all the best.
Jim