There’s a lot to celebrate when mom or dad reaches a milestone like 80, but even if they’ve reached such a ripe age in perfect health, that doesn’t mean there isn’t cause for caution. The latest statistics show that nearly half of all octogenarians in the United States will develop some form of dementia in their lifetime. And Alzheimer's and similar illnesses present major financial challenges for caregivers. Those afflicted with dementia reach a point when they cannot live independently and, eventually, they will require around-the-clock assistance. For caregivers with children at home or full time jobs, the ability to care for mom personally may be impossible. And the costs of professional memory care are expensive for most families. It is not unusual for mom and dad's nest egg to be completely exhausted in just a few short years. So what can one do if the costs of caring for mom are not in the budget?
Explore Alternate Sources of Funding
Mom may have an alternate source of funding that you may not have considered. Here are six options that you may want to explore further.
1. Life Insurance or Other Insurance Policies
Many financially savvy seniors have purchased and paid into long-term care insurance (LTC) policies in the event that a situation like this should arise. Before you start dipping into your parent’s retirement fund—or your own—make sure that mom or dad doesn’t have an LTC policy squirreled away.
Alternatively, even seniors who haven’t purchased a long-term care policy do have life insurance, and you may be able to use the money invested in it to pay for current expenses. Check with the company that issued the policy to learn about your options.
2. Medicaid
If mom has very few resources, she may qualify for Medicaid, the government's safety net health care plan for older, low-income adults. However, do not try to work the system by transferring mom's assets to make it appear that she is indigent when she does have some assets. Requirements are very stringent for Medicaid, and can vary by state. Any assets transferred in the past several years can be counted as resources and cause an elder to not qualify for Medicaid. Contact an elder care attorney to understand the financial issues that you may be facing when you help mom apply for Medicaid.
3. Rent out the Family Home
If both you and your parents own a home, you may want to consolidate households. Once mom and dad move in with you—or you move back to the family home—the other house can be used as rental property. The revenue will help you defray the cost of memory care. Alternatively, the proceeds from the sale of your parents home can be used for their care expenses. A word of caution like the Medicaid issue noted above is an important point. The proceeds from a home sale or other assets must be used for the elder’s care, not grandchildren’s college or other expenses. It is wise to seek the advise of an attorney specializing in elder care and keeping good records of receipts.
4. Reverse Mortgages
While reverse mortgages aren’t the best solution, such an arrangement can provide the cash your parents need if mom and dad own their home and one parent needs care. In most cases, one spouse must live in the home, but as long as your parent is able to live at home, the mortgage company will continue to send them a monthly check. When mom or dad move out or pass away, the mortgage must be paid for by whomever inherits the home. In many cases, the home will simply be sold to repay the note.
5. Check out the Local Senior Center
Your local senior center may be a good resource in helping you find a solution to your caregiving conundrum. Staff in senior centers may know of openings in group homes that may be less expensive than traditional nursing homes. They may also be able to point you toward charitable groups or reputable sitters who may be able to help you look after mom or dad for an affordable price.
6. Pool Resources
If none of the above financial solutions apply to your family, you may need to call a family meeting to figure out the best way of providing care for your parent with dementia. Each member of the family may need to pitch in to provide care. Emphasize that everyone is busy, but if three or four family members volunteer to stay with a loved one a couple of afternoons a week, a large burden will be lifted from the primary caregiver. If some family members live far away, ask if they will be willing to help pay for a caregiver or companion or even just help cover the cost of regular housecleaning, meals, or lawn maintenance for those providing hands-on care for mom.
Memory care is expensive, and thinking outside of the box may be the key to providing for mom and dad as they age. Be proactive in developing a financial plan, but be flexible as mom or dad's needs change. Finally, consult an experienced elder care attorney to explore all of your options to care for your aging parent.
