Whenever I discuss elder care I can count on being asked one question…

“What if I run out of money?”

Long-term elder care solutions come in many different varieties. Some people simply need to relocate to a more social and supportive environment whereas others need physical hands-on care. Your health is what likely determines the answer to your question in the event you run out of money.

What type of care do you need?

Supportive care is primarily, if not exclusively, private pay. This includes home health, independent, assisted, and memory care communities. That’s right, even memory care, which surprises most people. Services cease when you can’t pay the bill. Don’t expect health insurance to pick up the tab or low-income benefits to fully cover the cost. 

When more advanced care is needed, moving to a long-term skilled care community may be necessary. They are better equipped to provide various therapies, rehab, and treatments requiring the help of a registered nurse or doctor. For example, Massachusetts does not allow traditional retirement communities to inject residents. Therefore, a diabetic that can no longer administer their own injections may want to consider transitioning to a skilled care facility if they can’t afford hiring a private duty nurse to visit. Also, retirement communities generally expect that residents are independently mobile or capable of using a walker or wheelchair. Therefore, once a resident needs significant help with transferring a skilled care community may be a better fit.

If your health and assets run ashore at the same time, it’s then possible to apply for Medicaid* and have long-term care services covered within a skilled care facility. While the state will garnish your income, this is an amazing benefit since skilled care typically costs $12,000 – $14,000/month if you’re not Medicaid eligible. Therefore, the biggest concern to address is if assets run dry before you need skilled care.

*Please note that I’m saying MEDICAID not MEDICARE. MEDICAID means that you’ve spent down to $2,000 in assets if you’re a single person and have applied for MassHealth.  Please check with your state for guidelines if not in MA

How does POWWOW address the “what if I run out of money” question?
  1. I run a financial plan that gradually layers in advancing care needs over a period of time. The timeline is usually between 5-15 years but entirely depends on the situation.
  2. This projection helps us determine if and when assets may run dry.
    • For the lucky ones, it’s a relief to see that their assets extend past the expected longevity despite escalating care costs. In this event, we may run additional scenarios to explore asset protection trusts, gifting strategies, and upgraded room styles or communities.
    • For those who run short, the plan helps pinpoint when the shortfall may occur so we can proactively create a plan B.
  3. If a shortfall is identified while the client is still expected to be relatively healthy, there are a few courses of action:
    • Identify the reasons the plan falls short and make adjustments to see the expected impact of change.
    • Re-focus on different care options and communities than what was initially considered. 
    • If the senior is a veteran, determine the timeline for when benefits could be received to supplement the cost of care.
    • Ask whether the facility offers any corporate guarantee. The offer is likely associated with an extensive financial and health review upon entering.
    • Find out if the facility offers a community/state benefit, such as PACE. You want to thoroughly understand the expected room availability, health, and financial requirements to qualify.
  4. If the shortfall is identified while the client is expected to be in their final stages of life:
    • Proactively choose a skilled care facility that accepts Medicaid and get a pulse on their typical waitlist. Remember, not all skilled care facilities accept Medicaid, and the ones that do may have limited beds allocated toward this benefit.
    • Potentially there is a local hospice house or the senior’s family would be able to open their home if hospice could provide and administer care.

About the Author

Quentara Costa helps the sandwich generation prioritize kids, self, and aging parents. For years Quentara was the primary caregiver for her father who was diagnosed with Alzheimers at the age of 70. Since his passing she’s become a mother of two sweet girls. Professionally she received a master’s degree in Personal Financial Planning from Bentley University and has held the CFP® designation since 2010. Community involvement includes hosting the Merrimack Valley Senior and Caregiver Group and volunteering for Budget Buddies.

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