"We are assuming that our parents have put things in place for their future.
Don't make the wrong assumption."
One of the major Caregiver responsibilities will be managing their loved one's finances. This job has many layers: from funding the care, being granted access, managing and controlling expenses. This responsibility even goes as far as having a direct impact on the Caregiver's own financial stability.
Other areas of concern under this topic include: protecting your loved one from identity theft, exploring possible options to help fund their care, and understanding the importance of making practical decisions. This topic also touches on some legal issues as well which is why we encourage working with an Estate Planning attorney.
Therefore having a plan - an Estate Plan, is not only important to the aging individual - it is important for the current and future Caregiver.
But what if there is no formal Estate Plan?
Over half of female Caregivers agree with the following statements according to Julie Hyman Anchor; Yahoo Money :
"I'm afraid that caregiving expenses will keep me from ever retiring (83%)"
For the Caregiver, you may not know what plans your loved one may have in place for their Long Term Care until you get there. Everyone knows about planning for their retirement but it's not the same thing as planning for "Elderhood." Retirement is what helps to fund Elderhood.
One of the most stressful responsibilities as the Caregiver or Care Manager, will be managing those retirement funds your loved one worked for all their life. Remember, they made sacrifices in order to have this money available to them for their Golden Years. Therefore, you have an obligation of asking yourself before spending their life's savings- "am I making the best and most practical use of this money by doing this (home remodeling, renovation, major purchase."
At first, spending someone else's money sounds like it will be easy to do - "they have the money, I'll just do it or buy it." However, making financial decisions for someone who has entrusted us with their life savings is even more stressful than making decisions for our money.
As the Caregiver, you will find success in this role by becoming empowered with available options and solutions, for example - before spending $25K for a shower renovation knowing that there may be a more practical solution out there! Having information readily available is key to making important decisions. In addition, you must learn how to move past any of your own emotional residue - "They've always been cheap. They have the money, I'll just do it or buy it".
What shocks new Caregiver's is the amount of your out of pocket expenses. Yes, your out of pocket expense! It is going to happen so it will be important to have a plan on how to handle them.
Document your expenses if you are going to pay for care expenses from your own pocket. There is a right way to go about this and a wrong way.
The right way is having an attorney create an agreement which allows you to document your expenses and then become reimbursed from your loved ones's estate when they pass away. When the decision has already been made that you will be your loved ones Caregiver, discuss your concerns with your loved one and as a family.
The wrong way? It is not a going to be a good plan to take matters into your own hands with your loved one by maneuvering their assets on the down-low in order to cover your out of pocket expenses. Doing it this way may back fire later when your loved one tries to apply for Medicare/Medicaid Benefits.
The number one concern Caregivers have; especially NEW Caregivers is making the right decisions on behalf of the person they are caring for. As a Caregiver there is the obligation to spend it responsibly. So how do you go about doing this when this may be all new to you?
By having a little more knowledge and a better understanding about solutions and options that are out there, it will empower you to make those difficult decisions with more confidence.
There are two main questions that Caregivers will need answers for:
How does my loved one pay for their care?
Where do I find the money to pay for the stuff they need?
Working with financial planner and/or estate planner is always the best answer. They will help uncover and provide information about the many ways available to cover the costs of Care; ie. Long Term Care Insurance Policies, investments, trusts and any future or current benefits to which they may be entitled. Take advantage of their FREE Consultations and Workshops whenever possible.
Professionals will be able to help with the "big picture", however, there are other solutions available, such as the ones listed here that may be worth exploring.
Make practical decisions - Sometimes rushing the decision making process yields poor investments. Don't be hasty- be practical. Is a home renovation truly the best way of spending their money?
Today, there are so many solutions geared towards Aging In Place; such as a Portable Shower Bay Unit. My sister and I thought spending $25K to remodel her home with a first floor shower was the best decision when Dad could no longer go upstairs to shower. Luckily we found this solution just in time! The Shower Bay Unit was $3500 and it turned out to be a great temporary solution since Dad passed away unexpectedly nine months after we bought it.
Make practical use use of their money to create a safe, livable environment for them using products specifically designed for today's Aging In Place. For more solutions like this visit our Marketplace.
Reverse Mortgages - A reverse mortgage may be a good funding option; especially if your loved one has made it clear that they want to remain in their home. Use that loan wisely to create a safe living environment for them by using products for today's Aging In Place available on our Marketplace. .
Long-Term Care Insurance - Long Term Care Insurance helps pay for the costs related to care. Most commonly, it helps to pay for Home Care Services.
When your loved one has this policy in place, it is important to familiarize yourself with it. Every policy is different. Not every Home Care Agency may be willing to work with Long Term Care Insurance; however, you may be able to submit any out of pocket expense for reimbursement from the insurance company.
Point being, it is important as a Caregiver to know when there is a LTC Insurance policy in place, where to find a copy of it and most importantly understand how to engage with it.
Transportation Discounts for Seniors - For example, in Pennsylvania, Seniors may ride public transportation for FREE. Annually Septa offers senior passes. Your State Representative will have information about this. In Central Bucks County of Pennsylvania, the town of Doylestown offers FREE bus transportation in and around a 20 miles radius taking riders to various places such shopping centers and the Doylestown Hospital Health Pavilion.
Area on Aging - this organization is extremely helpful. Your loved one may qualify for financial benefits to receive discounted rates on: Daily Home Meal delivery, door-to-door transportation services, care aides and other support services. To Learn More Check out ElderCare Locator.
Low interest loans - Making purchases on a fixed income is hard, however, the purchase may be necessary. Some purchases may provide for an opportunity for a low interest loan. Qualification requirements may apply on these types of loans.
Becoming better educated about Medicare/Medicaid Benefits- For example, before purchasing any big ticket items, such as: a stair climber, wheel chairs, power chairs, bedding - check with Medicare/Medicaid to see if that it would be a covered benefit. Visit Benefits.gov - the official benefits website with information on 1,000+ assistant programs. NCSL offers prescription drug help for seniors. Benefits CheckUp can help you find out if your loved one is eligible for extra help to pay for Medicare prescription drug costs.
By becoming better educated, you will be more informed about seeking out these entitlement which renew annually or periodically - wheelchairs, stair climbers, power chair purchases renew every five years. Therefore, when your loved one is being discharged from Rehab, it makes more sense to pay out of pocket for a cane and then use any available benefits to cover those big ticket items; such as: beds, stair climbers etc.
Work with your loved ones discharge team and/or their primary health care provider about acquiring these items through entitlements before self-funding a purchase.
There is nothing better than good advice. This article offers some helpful basic information on streamlining one's finances -called How to Death Clean Your Finances. These are recommendations for your loved one to consider as part of their planning process. For the Caregiver, use this as a catalyst to help get the planning process going.
These action items may be talking points to help break the ice with that difficult conversation with them. "Dad, I read this great article. How about we look at streamlining some of your finances?"
Consolidate financial accounts - Fewer accounts are easier to monitor for suspicious transactions and overlapping investments, plus you may save money on account fees.
Automate payments - Memory lapses can lead to missed payments, late fees and credit score damage. Set up regular recurring payments in your bank’s bill payment system or charged to a credit card. Set up overdraft protection to cover any overdraft transactions.
Prune credit cards - Certified financial planner Carolyn McClanahan in Jacksonville, Florida, recommends her older clients keep just two credit cards: one for everyday purchases and another for automatic bill payments. There are some negatives to closing accounts and impacts to credit scores. If there are no needs for any loans in the future, you may want to close them gradually over several months or even years to minimize the credit score impact.
Set up a watchdog - Identify whom you want making decisions for you if you’re incapacitated. Use a legal professional to create durable powers of attorney. Also create “in case of emergency” files that your trusted person or heirs will need. These might include:
Your will or living trust
Medical directives, powers of attorney, living wills
Birth, death and marriage certificates
Social Security Cards
Car Titles, property deeds and other ownership documents
A list of your financial accounts
Contact information for your attorney, tax pro, financial adviser and insurance agent
Photocopies of passports, driver’s licenses and credit cards
Storing information - A safe deposit box are an option but may be troublesome if your trusted person needs access outside bank hours. Another option is a fireproof safe or at minimum a locked file cabinet in your home. Scanning paperwork and keeping an encrypted copy in the cloud could help you or someone else recreate your financial life if the originals are lost or destroyed.
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