Helping my Aging Parents Pay for Care

January 9, 2019

Helping my Aging Parents Pay for Care

Your parents may reach a point where they can no longer live on their own. Not only that, but as we age, the costs of living increase as we seek more and more complicated medical care.

These increased costs may require you and your parents to make some hard financial decisions to ensure they receive the best care possible. If you are having difficulty initiating these types of conversations, please see our previous post on “How to have ‘the Talk’ with Your Aging Parents.”

Fortunately, there are financing options to explore. This blog will provide you with some of the numbers associated with each option to assist your loved ones with financing costs. Ultimately the goal is to make the best decision for you and especially for them.

First, before you make any hasty commitments, sit down and map out what your parents’ personal needs are and what kind of care they need to finance for, such as:

Transportation
Meals
Housing
Medical
Personal Care/Visiting

Private Pay

Private Pay is one of the most common forms of payment and is accepted by nearly every senior care service, including nursing and assisted living homes. In some cases in fact, it is the only form of payment accepted. Here is an example of median monthly cost of private pay as of September 2018:

Home healthcare homemaker services: $3,994
Home healthcare home health aid (44 hours/wk): $4,385
Assisted living facility (private in non-nursing home): $3,850
Nursing Home rate (semi private): $8,562
Nursing Home rate (private): $9,125

*Genworth Financial 2018 Cost of Care Survey

Disability and LTC (Long Term Care) Insurance

While both can help protect your assets, they serve different purposes. Disability insurance replaces a portion of income that is lost due to an inability to perform job duties and the qualifying disability can be job or task specific. LTC insurance on the other hand pays for a portion of or all caregiving expenses needed due to physical or mental disability.

For Disability and LTC Insurance:

Average yearly cost, single person, age 55: $2,007
Average yearly cost, couple, age 55: $2,466
Average yearly cost, couple, age 60: $3,381

For a complete list of LTC insurance rates, click here.

Reverse Mortgages

While everyone’s situation is unique, a reverse mortgage is a special type of home loan. A reverse mortgage allows the homeowners (borrowers) to take a portion of the equity in their home and convert it into cash. Certain conditions must be met to obtain a reverse mortgage. The homeowner(s) must:

Be 62 years or older
Have up to 80% percent of equity available to them (generally)

Monthly payments are made to the homeowner however the owner (borrower) must pay closing costs (as much as 5% of home value.) The loan is repaid when:

The borrower is no longer living in the home
The borrower has passed away
Or the borrower didn’t meet terms of loan (payments, taxes, insurance, keep home in good condition, etc.)

For a more in-depth look at reverse mortgages, visit our previous blog post, “Are Reverse Mortgages Wise for Seniors?”

Medicaid

Medicaid is essentially a combined federal and state program that assists with medical costs. In Michigan, Medicaid is administered by the Michigan Department of Health and Human Services (MDHHS). To qualify for Medicaid, certain income and asset limit requirements must be met and these requirements are based on an individual's service needs.

Asset limits are:

$2,000 for Medicaid Patient
Non-Medicaid Spouse: 1/2 of assets of couple (maximum for 2018 of $123,600)

Income Limits:

Medicaid patient has patient pay amount
Non-Medicaid Spouse limited right to spouse’s income

Medicaid pays for all related expenses for care of the Medicaid patient. For an introduction to Medicaid, click here to view a video blog on the basics of Medicaid.

If you have further questions about assisting your aging loved ones with their care finances, contact a Foster Swift elder law attorney.

Categories: Elder Law, Financing, Financing Long-term Care, Medicare/Medicaid