Consider $2M: The Cost of Long-Term Care For One Aging Parent

Consider $2M: The Cost of Long-Term Care For One Aging Parent

Oct 20, 2022 | aging, aging in place, cost of aging, cost of long term care, finances for elders, financial advisors

Carolyn L. Rosenblatt, RN, Attorney, AgingParents.com

Every year since 2004, private long term care insurer, Genworth has conducted a national survey to determine the average costs of care at home, and in facilities. The data is broken down by state, with the median price listed. The bottom line: the cost of care is rising significantly in all the four general areas Genworth studied. It is also rising in the areas it did not study. Inflation is affecting how much it costs elders and families to keep them at home or in any living situation.  The Genworth study includes home care, adult day health, assisted living and nursing homes. There is a lot more to consider than what the Genworth study shows. Long-term care is not limited to the things this insurer pays for when you buy a product from them.

The median monthly costs in the U.S. for two of the services studies are outlined in the 2021 report from Genworth:

Homemaker services (help with cooking, cleaning, transportation, shopping, etc.) $4957

Home Health Aide (personal care: eating, bathing, dressing, walking, bathroom, etc.) $5148

In a book we wrote for financial planners, Hidden Truths About Retirement & Long Term Care (AgingInvestor.com, 2017), we detail how about 70% of us are going to need some kind of long term care in our lives. And we discuss how most of us live in The Great American Fantasy that it won’t happen to us, that we will be fine and die quietly in our sleep at age 100 in full control of our faculties. In the book, we urge financial advisors to help clients get out of fantasy and into the reality that dollars need to be set aside to pay for what Medicare does not cover; so called “custodial care” that is not medical in nature. That includes things like home care workers, home modification to accommodate disabilities, assisted living and other things many people eventually need. We discuss the advantages and disadvantages of all the choices.

Here are actual costs we learned about from clients in two real cases.

Four Years of Home Care

One of them, described in our book from 2017, was about a man who lived to be 95 and never wanted to be in a facility. His wife hired caregivers to keep him at home. Long term care insurance defrayed some of the cost but most came out of pocket. The bill for the 24/7 care he received over four years of increasing dependency: $2M. There was nothing unusual about his needs. He just got more frail and had more care issues over time. That’s typical of how some of us are going to age. At the end, he had four caregivers in shifts, a specially fitted van with special wheelchair, a home stair chair, a lift to get him into the bath, numerous other kinds of devices to help and huge increases in the cost of maintaining the home with all the help. That cost would be significantly higher in today’s dollars.

The Outrageous Cost Of A Difficult Elder’s Care

In another, current case we work with at AgingParents.com, there is an elder with unusual needs. The family has a very difficult mother with dementia. She is calm until certain personal care must be given. Her mental state is confusion. She hallucinates and thinks she is being attacked when the family member or paid caregiver attempts to clean or bathe her. She gets very combative, with kicking, biting and punching those next to her. She calms down after the personal care but it takes two people to keep her from hurting anyone. She is astonishingly strong for a woman in her 80s. Her physical assaults happen multiple times a day when she needs cleanup. The family will not put her into a care home. No home would accept her this way. Rather, they would medicate her into a stupor so she would be more manageable. The family won’t have that. Her lighter medication at home allows her to be engaged with those around her in a good way. All except  at those time of the close personal care.

This family is paying $50,000 a month for home care workers from two different agencies to help them. They can’t do it alone. They can’t manage with just one caregiver at a time. It takes two at a time to do the job. The cost is draining their assets and there is no end in sight. As this keeps up, the family will be spending $600,000 in 2022 to care for their mother.

Assuredly, not every elder is as difficult as the combative and confused mother in this case. But some elders do become very hard to care for. If one has strong feelings about not over-medicating a loved one, the choices can get very expensive.

It can take a good strategy to manage the care of an elder at home. It is not as simple as just buying long-term care insurance when the elder still can qualify for it. It may take working with a competent financial planner who understands that the limited things this insurance pays for do not fully protect anyone from out-of-pocket costs.  Many additional things may be needed to maintain an aging loved one at home, where most people want to be. Financial planners tend to promote having income to pay for “the lifestyle to which you are accustomed”. No one is accustomed to a lifestyle of needing 24/7 care at home. However that is a reality anyone needs to discuss with a competent financial advisor, as it can happen to any of us.

Overall, this is a wake-up call for anyone who has not thought through how to pay for long term care. If it is your own aging loved one, you can’t ever be sure that they won’t need assistance from a paid source in the future. If it is yourself, at or near retirement age, be wise about how you look at the need 70% of us may have as we get older. Long-term care can be simple for some. It can be a huge, heavy burden for others. The wise retiree will consider the risks of getting old, living long and the likely need for paid help at some time in their future.

One Thing You Should Never Tell Your Aging Investors

One Thing You Should Never Tell Your Aging Investors

Dec 30, 2020 | aging, aging in place, aging investor, cost of aging, cost of long term care, elder investor, elderly, finances for elders, financial advisors, handling money for seniors, investor, long term care, medicare, retirement planning, senior investor, seniors finances

In retirement planning discussions, we see this statement financial professionals often publish for their clients:

“The average lifetime out of pocket costs for healthcare for a 65 year old couple retiring today is $285,000.”

Why should you never say this? It’s misleading at best and at worst, it’s false. From my own research as to where the number came from, I found it in government sources calculating Medicare deductibles and supplemental insurance payments, and co-pays Medicare does not cover. Generally, the out of pocket calculation refers to non-covered “medical” costs. But when that term gets diluted to mean “healthcare” it is far too broad and it simply ignores the reality that long term care is indeed healthcare. Medicare does not cover that at all, except for limited stays in skilled nursing homes following hospitalizations. It is noteworthy that when the Federal government uses data to calculate what out of pocket medical costs will be, the subject of long term care is entirely omitted.

The “average” lifetime cost of long-term care for two people in this country is far greater than $285,000. According to research by long term care insurance provider, Genworth, seven in ten people will need long term care at some point in their lives.

The comprehensive Genworth cost of care study, done annually, was published for 2020. Consider that at some point, with longevity being as it is, an older person with multiple medical conditions may need 24/7 care. Almost everyone will tell the advisor that he or she wants to stay at home and age in place. What will that cost at home in any of the most expensive states? In California, for example, the median cost of in-home care with a non-licensed caregiver full time, 27/7 is $252,000 per year! This is not medical care, in the sense that no skilled nursing is part of it, no doctor’s prescription is involved, and the agencies that supply unlicensed home care workers can charge whatever the market will bear.

A truthful financial professional will never mislead aging clients, or those planning for retirement by telling them that all they have to worry about for their future out of pocket healthcare costs is $285,000. Prudent financial advisors will themselves look annually at the Genworth study and help clients calculate the costs of long-term care, which every person should know about.

Costs of care, whether at home, in an adult day health center, in assisted living or in a skilled nursing facility vary widely from state to state. Looking at national median costs can be of little benefit to anyone doing retirement planning. Instead, using data from the Genworth study, one can look state by state for the real, most applicable numbers derived from where your client lives or plans to retire.

From my perspective, financial advisors are not educated to fully understand the difference between government provided statistics about out of pocket, non-Medicare covered medical costs and what we mean by long term care. They are quite different terms. It is distressing to me, with substantial experience in nursing, to see the fallacy of statements published by financial professionals about what retirement planning should include. Clients will be shocked to find that their own experience with having to pay for long term care out of pocket is not what their own advisor told them years before.

If you are in the retirement planning business and you want to serve your clients well, bear in mind that the data telling us that seven in ten people will need long term care at some point is likely true. Don’t fool yourself into thinking that retirement planning is just fine if a couple puts away enough to generate $285,000 for out of pocket medical costs. They also need to plan for how to pay for long term care, which they are statistically likely to need. That cost can destroy the most carefully laid plans for retirement income.

As a real-life example, take a client of ours, “George” at AgingParents.com, where we offer advice and guidance to families with aging loved ones. The advice encompasses legal, financial and healthcare issues as well as diminished capacity issues. George is 98 years of age and still sharp, though with some memory loss problems. He was wealthy at one point, after two successful careers. He owns his own home and wants to stay there for the rest of his days. His physical health is fragile and he now needs 24/7 help. He hired a good agency to provide in-home care. He spends in excess of $300,000 a year for caregiving alone, not counting the cost of everything else involved in home ownership, food, recreation, and out of pocket medical costs. Those medical costs involve dental surgery and equipment he needs at home. He has less than $400,000 left in savings. What if he lives another two to four years?

As you can see from this example, George is not a rare case. Many people do live into their 90s and beyond. Many start out with financial security, only to see assets rapidly depleted as the cost of care escalates to heights no one wanted to think about in retirement planning.

The Takeway

If you pride yourself in doing great retirement planning with clients, get real. Sit down with the data and find out what your clients might expect to need if they live long and require help at home or elsewhere. Tell the truth about it. If they need long-term care insurance to feel secure, talk about it. If they have sufficient assets to make it to 100 or so with full time care, they don’t need to get long term care insurance but they will need to have access to sufficient cash to cover the actual, not fantasy, costs. Above all, be clear in your own mind about what “out of pocket medical costs” means as compared with long term care costs. You are the key to these honest calculations. You can be the hero of the retirement planning story when you present an honest picture to every client you have.

By Carolyn L. Rosenblatt, RN, Attorney, AgingInvestor.com

About Carolyn Rosenblatt and Dr. Mikol Davis

Carolyn Rosenblatt and Dr. Mikol Davis are co-authors of The Family Guide to Aging Parents (www.agingparents.com) and Succeed With Senior Clients: A Financial Advisors Guide To Best Practices and Hidden Truths About Retirement and Long Term Care. Rosenblatt, a registered nurse and elder law attorney, has more than 45 years combined experience in her professions. She has been quoted in the New York Times and, Wall Street Journal, Money magazine and many other publications. Davis, a clinical psychologist and gerontologist, has more than 44 years experience as a mental health provider. In addition to serving his patients, Davis creates online courses and products to assist professionals and the public with understanding aging issues. Rosenblatt and Davis have been married for 36 years.

 

Financial Wellness and Physical/Mental Wellness: Are They Related?

Financial Wellness and Physical/Mental Wellness: Are They Related?

Oct 9, 2020 | aging, aging investor, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial judgement, handling money for aging parents, senior investor

Financial professionals often use the term “financial wellness”, referring to a client’s comfort level with their assets in retirement. That sounds good. But is there any connection between finances and wellness of the body and mind in retirement? Perhaps there is a vague belief that if you’re financially secure, all is well. In reality, how much money you have does not automatically make you physically nor mentally well, nor does it protect anyone against the one thing many people fear most: Alzheimer’s disease. Dementias are no respecters of the wealthy. No one is immune to brain disease.

You may hear the well-worn adage, “Without your health, you have nothing”. OK, that’s not completely true either. Even with declining health related to aging, you may still have excellent quality of life. That is a matter of perspective, and a matter of using assets you have to make the most of life, even with disabling conditions. The one factor that makes for a more secure longevity is what you can afford in terms of care, as aging takes its toll on independence.

Research clearly shows that how we live our lives, our healthy habits or lack of them is responsible for about 70% of how we age. Aging is different for each person, with the other 30% of the picture directed by genetics. Suppose you have a client with longevity running in the family. That may affect your client’s life span but it will not guarantee a great “health span”; i.e., how long one is healthy. What we already see with our aging population is an increase in disabling illnesses in seniors coping with diabetes, heart disease, obesity, high blood pressure and yes, Alzheimer’s disease and other dementias. Genetically predisposed to live long? How fun can it be to live to be 100 if you have a combination of these illnesses, cutting off the things that make life worth living for most of us?

It is extremely unlikely that any financial professional is going to convince a client to lose weight, exercise, stop smoking or cut out junk food so they can enjoy retirement more. That’s not your job. Managing assets is your job and the assurance you can provide is that your client, with a strategically managed investment portfolio, will be able to afford high quality care in old age.

What does high quality care mean for one’s retirement years? It means that if enough assets are available, your client will never have to go to a nursing home. It means that they can afford well trained caregivers at home from high quality agencies, licensed, bonded and insured.

Here’s an example from real life with one of our clients at AgingParents.com, the companion site to AgingInvestor.com. Timothy is 97 years old, living in a lovely home he’s been in since 1960. He is widowed. He needs a walker. He doesn’t cook for himself. He’s very alert but with lung disease, he’s frail. He has a high-end agency providing care management as well as caregivers day and night. He has the means and the right to spend his last days in his own home. Even if his health deteriorates further, he can afford a Registered Nurse to oversee his treatment or give additional skilled care to him at home. Licensed home health agencies can give skilled nursing to anyone at home for a price. A concierge physician can also visit him at home and direct the medical treatment for any illness or chronic condition. That is high quality care, and it comes only at a high quality price.

If you are in the business of managing client assets as they age, don’t just talk about how fun retirement will look at age 90 because they have plenty to spend. That may not be true at all if health is an issue. At that age, declining health is usually problematic. Be truthful. Let your clients know about how you are working to protect them in longevity, no matter what health conditions they may face. That protective spirit feels good to people, knowing you’re watching out for them and that you support the notion of staying in one’s home to the end of life. You have foresight they may lack. And you know the dollars they’ll need for what is likely to become necessary with long life.

If you do not know details of just what dollars those are, the nuts and bolts of how much it actually costs to pay for the numerous kinds of care a person may need, you can quickly find out. It’s laid out for you in our book, Hidden Truths About Retirement & Long Term Care, available at AgingInvestor.com and on Amazon. Increase your expertise! Get your copy today by clicking here

By Carolyn Rosenblatt, RN, Attorney, AgingInvestor.com and AgingParents.com

Do Your Older Clients A Favor: Warn Them About This Scam

Do Your Older Clients A Favor: Warn Them About This Scam

Sep 5, 2019 | aging, aging investor, cost of aging, declining health, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, handling money for seniors, investor

Attempts to scam money from seniors never stop. And the thieves keep getting better at thinking up ways to extract information from older folks. Here’s another one—a different phony Medicare trick.

People hear ads on TV about genetic testing and how it can predict disease and protect them. They also hear ads that they’re not getting all the Medicare benefits they deserve. Who doesn’t want to get all the benefits they should get? It’s a perfect moment for scammers.

They may call your retirement-aged client and tell them that new genetic testing is available that Medicare will pay for, worth thousands of dollars. Of course, all your client has to do is to give them their Social Security number and the free testing kit, signup papers, or other inducement will be mailed to them immediately.

Let’s be clear: Medicare does not pay for genetic testing as a “new benefit”. If for any reason such testing were needed, a physician would order it and explain why it was needed. Such testing would not be ordered without any discussion with one’s MD.

Your client should never, ever give out a Social Security number or other personal information such as date of birth or address over the phone. Your client must never accept a genetic testing kit not ordered by one’s own doctor. If it is accepted and the cheek swab, DNA test or anything else is given to the sender, your client may be billed directly, potentially incurring a debt for thousands of dollars. It would be a sad day for your client to mail in a claim for reimbursement to Medicare for a fake benefit and realize that the claim is denied. They’re on the hook for the full price.

These kinds of scams are used to get information to commit identity theft and Medicare fraud. No matter how smart your client is, anyone can be caught off guard and tricked.

What Advisors Can Do

Here are some ways to let your client know you care about their financial safety.

  1. Prepare a friendly form letter to send to all clients over age 65 and inform them about this scam. Warn them not to fall for it.
  2. Keep abreast of all the latest scams in over 30 categories at the Federal Trade Commission, which explains what they are and how they work. Keep clients advised.

If identity theft has happened, direct your client to the Federal Trade Commission website for instruction on what to do.

Carolyn Rosenblatt, RN, Elder law attorney, AgingInvestor.com

About Carolyn Rosenblatt and Dr. Mikol Davis

Carolyn Rosenblatt and Dr. Mikol Davis are co-authors of The Family Guide to Aging Parents (www.agingparents.com) and Succeed With Senior Clients: A Financial Advisors Guide To Best Practices. Rosenblatt, a registered nurse and elder law attorney, has more than 45 years combined experience in her professions. She has been quoted in the New York Times, Wall Street Journal, Money magazine and many other publications. Davis, a clinical psychologist and gerontologist, has more than 44 years experience as a mental health provider. In addition to serving his patients, Davis creates online courses and products to assist professionals and the public with understanding aging issues. Rosenblatt and Davis have been married for 34 years.

 

The Hole in The Senior Safe Act: Why Briefly Holding Transactions Is Not Enough To Stop Abuse

The Hole in The Senior Safe Act: Why Briefly Holding Transactions Is Not Enough To Stop Abuse

May 9, 2019 | aging, aging investor, cost of aging, declining health, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, handling money for aging parents, handling money for seniors, resources for senior, resources for seniors, scammers, senior citizen investor, senior investor, seniors finances

 The Senior Safe Act allows you to hold transactions when you suspect financial abuse of a client. The Act is designed, at least in theory, to allow time for the trusted contacts you have on file to take appropriate action. Many of those victimized by predators or manipulated by unscrupulous family have dementia and have lost their judgment about what makes sense financially. The Act urges you to get trusted contacts and provides that you are not breaking privacy rules to contact them in the reasonable belief that your client is being financially abused. The length of time you can hold a requested transaction can be as long as a month. This is where the Senior Safe Act has missed the mark.

 Let’s look at the reality of impaired elders who are in charge of their wealth on the family trust. The trust is in order, and if the elder recognizes that he or she is experiencing decline in mental ability, that trustee may choose to resign. Simple. But that is not what happens in too many cases. For many persons who have cognitive decline and dementia, the elder does not recognize that he is impaired at all. “I feel fine!” he tells his worried family. When asked to resign as trustee, having total control over (theoretically) millions of dollars in a trust, the elder flatly and stubbornly refuses. Meanwhile, financial abuse by predatory people can continue unabated.

 When an older person experiences cognitive decline, it typically has a very slow onset. Short-term memory loss does not raise enough red flags for those closest to the elder to take any action. “She’s just getting old” they say dismissively. But memory loss is often the first and earliest warning sign of Alzheimer’s disease, the most common form of dementia. The odds of having Alzheimer’s disease by age 85 are at least one in three.  Think about your own older clients. Some live well beyond age 85. The risk of dementia rises with age. Short-term memory loss interfering with daily life is not a normal part of aging.  Financial abuse and cognitive impairment often go together.

 When financial abuse reaches a visible level, the advisor may do what the law allows and call the trusted contact person, usually an adult child.  The advisor hopes that the call will somehow trigger something and the abuse will be stopped. But here is a reality check: The family can’t accomplish anything needed in two weeks or even a month if you hold transactions then. Here is a real case example of just such a situation, showing how long it really did take.

 In our work with a family at AgingParents.com we saw rampant financial abuse of an elder by a family member. The elder had dementia but had not been formally diagnosed by his doctor. Over 70% of his income was going to the predator. He was asked to resign as trustee by his two adult children, who were reasonably worried that he was going to give away all his cash and further encumber his home. The dad, whom we’ll call Gene, had been developing dementia for at least two years. He felt obligated to the predator and was totally powerless in resisting her demands for money. He just kept writing checks, draining his own resources. It was clearly a case of financial manipulation.

 We were involved in working to persuade Gene to allow what his family trust provided: to have his daughter, Jennie, become the successor trustee.  He agreed, then reneged. He accepted the logic and then refused to accept it. The kids had no choice but to use the law to take over control. Their father was too stubborn to resign as trustee when asked, even with the entire family presenting a united front, asking and respectfully begging.

 The trust, like many such documents provided that Gene could be removed as trustee by his appointed successor, his daughter, after two physicians had declared him to be incapacitated for handling his own finances. A court decision was not required. However, getting him to two doctors willing to assess him and put their observations in writing was a challenge that took months to accomplish. The total time spent getting the change of trustees accomplished according to the terms of Gene’s trust was eight months.

 His children were the trusted contacts in the advisor’s file. They knew about the abuse and were in agreement with the advisor that Gene had to stop being the trustee. The adult children had to hire consultants (AgingParents.com), have meetings, hire an attorney, and try various methods to get the job done.  Their time energy and thousands of dollars were expended to prevent an even worse outcome, which was being left to support their aging father if he were to totally deplete his own funds.

The takeaways:

  1. Though well intended, we do not expect that the Senior Safe Act will do much to stop financial abuse because of the short time allowed for a financial professional to hold transactions. In Gene’s case, the predator would have been happy to wait a mere two weeks or a month before resuming the financial manipulation of Gene.
  2. Know that any older impaired client may not understand that he or she is cognitively impaired and will ignore pleas to resign as trustee with total control over any family trust.
  3. If you see that an older client is showing signs of cognitive decline, do not wait until it gets worse. Reach out at the time of your first suspicions of trouble.  The family or other trusted persons may well have a better opportunity to persuade an elder to transfer power over finances to the appointed successor before complete loss of capacity. Expect this to take time.

In the case described above as a result of ongoing financial abuse, nearly all of Gene’s cash was depleted during the eight months of effort on the part of his adult children to have him removed.  The advisor did the right thing but too much of Gene’s cash was depleted in the period when the abuser could keep manipulating him for those months of effort by family to have him removed as trustee.

By Carolyn L. Rosenblatt, RN, Elder law attorney, AgingInvestor.com 

If you are seeing abuse and feel lost about how to stop it, contact us at AgingInvestor.com for a confidential consultation with our nurse-lawyer, geriatric psychologist team so you can do everything possible to protect your vulnerable client.