Long-term Care Planning
The call. It’s inevitable. Some of us have already gotten it. An elderly loved one has fallen, suffered a stroke or a heart attack. For some of us, it’s simply an awareness that our parent’s cognitive abilities have diminished to a point where intervention is required.
That phone call announcing life has changed forever for us, and for our parents, is the dilemma that many of us in the “Sandwich Generation” will face. All of a sudden we are expected to become caregiver and means of support for our elderly loved ones and our children simultaneously. For most of us this will happen while we are still juggling career and personal responsibilities. We find our lives torn apart in an instant.
I’m as guilty as anyone for not tying up all the loose ends that could have made my assumption of the role of caregiver for my parents transition more smoothly. I was their financial advisor for 8 years before my father had a stroke in April 2001. But there was something about the position of being a parent to my parents-that I just couldn’t comfortably adjust to before it was thrust upon me. While I have adjusted to this role, I can speak from experience when I advise you to think now about having a “Plan”.
It was at that point that I had a professional awakening as well-that my skill sets and resources relative to helping my current and future clients (including my parents) with these issues needed to be greatly enhanced. Once we got my dad to a place where his condition was manageable, I enrolled in the long-term care certification program (CLTC) that was developed by Harley Gordon, founding member of the National Academy of Elderlaw Attorneys. I immersed myself in the business of eldercare, knowing that any nugget of information I pick up can only have positive consequences for family, friends and clients.
What’s Your Plan?
The 2005 White House Conference on Aging concluded that state of elder care is at a crisis level in this country. In order to manage it, there must be a commitment from the public and private sectors, as well as individuals to address the multiple concerns of this demographic in society. When it is an option, good planning begins with communication between the recipient and the potential caregiver(s). Proactively coordinating a plan when there is no immediacy for care will enable all involved to identify more options and implement those resources-whether public, private or “family”-more effectively when needed.
Probably the best way to look at this task is to picture the caregiving role as a business. Thus, a “business plan” will not only provide a foundation to work from, but will remove a certain degree of emotion from the process as it evolves. Assuming the role of a caregiver should at least in part, be dealt with from a rational perspective, rather than emotionally. Emotion may cloud judgment; having a written plan may help to strike balance. While circumstances of a care scenario are difficult to predict until the moment occurs, setting a foundation can make adjusting to care giving roles much less painful for the recipient and giver of care.
Procrastination is the biggest obstacle to developing a plan. Seldom does anyone wish to dwell on the inevitabilities of aging. However, discussion is crucial to identifying how all involved in the process want their lives to be if and when a care scenario develops. Communication about the process will maximize trust and privacy at a time when they will be essential to the efficient delivery of services, and subsequent well being of the family. (The most important aspect-money-may be one of the most difficult to deal with for those reasons.) Evaluating resources-legal, personal care relationships, financial, and medical-is where keeping theentire family healthy begins. It will probably be a big job, and can overwhelm those who approach it haphazardly. As they say, one bite at a time is the way to best eat an elephant. Thus, break the tasks down into manageable pieces relative to your capabilities.
While no one area is the best to begin, let’s touch on some user friendly ways to address developing the foundation of your plan to maximize your family’s quality of life. For our purposes, our business plan will be comprised of four components: marketing (distribution of appropriate services to the care recipient), accounting (maximizing potential to access government resources, obtaining the best value in private ones, and allocating private and personal/familial resources in ways that best maintains balance for the caregiver and recipient), legal (Using guidelines of the law to protect and transfer assets), and benefits (evaluating various insurance options to maximize value in services and preserving assets of the care recipient and their family.)
Allocation of Personal Care Resources
In the business plan, this is where the “marketing” of services is established-connecting the consumer with the appropriate resources relative to budget. This is where the care giving process begins. Most children and spouses want to be involved in the care process. However, they soon realize that assuming that role on a 24/7/365 basis is a recipe for disaster. Burnout from the need to balance professional, caregiving and personal family obligations can devastate the most committed caregiver. Thus, identifying resources is a crucial first step in the process; delegating them the next.
Women are more likely to be care providers and coordinators. Thus, they are more subject to all the stress when assuming these roles. (The MetLife Juggling Act Study in 1999 found that “caregiving costs an average individual over $600,000 over a lifetime in lost wages, lost social security and pension contributions. These costs are due to time off from work, having to leave jobs entirely, or lost opportunities for training, promotions and preferred assignments.”) Thus, implications of improper allocations may be costly- regardless of gender status.
Assessing Care Needs
As it becomes evident that a plan of care must be implemented, the needs of the recipient must be evaluated in order to put a plan of care in place. This may be better left to a professional when issues are complex (multiple and or complex medical and physical limitations); however, a plan to address uncomplicated issues may be suitable addressed by the caregiver(s). Some of these issues may include, but are not limited to:
Health: Are there chronic diseases? What are the treatments? Have they been effective? Is there a documented list of providers and medications?
Hygiene: Has their appearance deteriorated over time? Do they need assistance with grooming tasks? Are clothes and living areas maintained in an appropriate manner?
Social/Psychological: Have they been diagnosed with a condition such as dementia, Alzheimer’s, or depression? Do they often appear confused, have memory lapses, or appear chronically depressed? Are they able and willing to communicate with friends and family?
Have they lost interest in activities for which they once had passion? Do they seem to have behaviors that bring them back to a time which defined them in society? (Dwelling on military life, or reverting to job specific behaviors that may now seem less than appropriate are common examples.)
Financial: Are they able to pay bills and shop for themselves? Can they (or someone with a power of attorney) locate important documents?
Safety: Is the living area free of clutter? Are there dangerous carpets and or flooring, or loose rails? Can they navigate through the living area without assistance? Are “special devices” appropriate? (“handicapped grab bars”, easy to read phones, magnifying reading tools, personal emergency “I’ve fallen and can’t get up” devices?)
In my case it was easy. I was closest geographically. I understand insurance and finance better than the average person and I’m divorced with no children. Thus, coordination of resources falls to me. I have taken over supervision of the processing of information for the insurance and retirement issues; bill paying is still a task my mom is capable of, but power of attorney has been assigned to me. 2 of my siblings locally have special needs children. One is in Florida, and the other brother is severely lacking in “conflict management skills”. Thankfully, they pull their weight in areas that would present challenges for me. My sister goes shopping for clothes with my mom. (Just stick red hot slats of bamboo under my nails instead of taking me on that trip to the mall…I’ll have more fun that way.) Both my brothers are skilled mechanics and craftsmen, so home and auto repair decisions fall to them.
“Danger proofing” the house should be addressed to maximize safety for all. The problem of falls among seniors had become prolific to the degree that the senate recently introduced legislation “The Keeping Seniors Safe From Falls Act” (which is providing funding to address the proliferation of falls due to in-home dangers). Removal of dangerous rugs (one of the leading causes of falls) and trash, placement of hand rails and supports, and placing often used instruments and utensils in an easily accessible place facilitates a safer and more pleasant environment, as do periodic checks of heating and cooling systems. My brothers coordinate any complex activity here; leaving some of the less complicated tasks to me.
These are the “Incidental Activities of Daily Living”, or “IADL’s”, that are often the first duties passed off to caregivers. The issue of trust is paramount here-recipients may often avoid a professional provider who may better achieve overall family balance because of a lack of trust. Thus, establishing boundaries and qualifications is an important first step in the process so that all the work isn’t dumped on an adult child caregiver. Details such as bill paying and coordination of medical services may require a more intimate quality in the relationship than yard and house work. Thus, delegating those duties to a professional may establish better balance for all involved if the family infrastructure can’t support them. If the suitable provider to address services is not clear to the caregiver, a professional assessment may be the best way to clarify where “familial” informal resources are, and where the need for professional ones can be best applied. Local senior centers are good resources for identifying agencies and or individuals who can perform and monitor these assessments.
Activities of daily living (ADL’s) are the next level of care services that may need to be addressed. Assistance in transferring (getting in and out of bed, up and down stairs), bathing, toileting, eating, dressing and continence are services that may need to be addressed as capabilities of the care recipient decline. ADL’s also include the supervision of an Alzheimer’s or dementia patient who may potentially be a danger to themselves or to others. These may integrate with skilled care services as medical and physical challenges compound. Visiting nurse and home care services may be logical resources to maintain the care recipient in the home and community. As conditions worsen, adult day care and or assisted living facilities may become viable options for balancing independence and community living. Nursing homes are the last venue for care an individual (and or their assets) decline to a point where community based care is no longer feasible.
In New York State, there are programs that enable seniors to remain in the home and receive services for IADL’S and ADL’s even if they have limited means. The Expanded In Home Services For The Elderly- EISEP, (which is funded by annual grants, and billed on a sliding scale) , and the Lombardi Program (part of New York State Medicaid, which has income and asset limits for participation) offer assistance for seniors who need help-yet are not needy enough for nursing home. Services are locally coordinated for both of these programs. New York State Offices for the Aging are good places to begin inquiries for eligibility.
Medical care-also know as skilled care-can often be effectively delivered in the community. Technology allows for monitoring of multiple functions, to be evaluated outside of formal medical venues. Medicare and Medicare supplements are the backbone of senior medical insurance coverage. There may be coverage through former employers as well. However, Medicare does not cover custodial care-the care that comprises over 90% of “long-term care-that is delivered to seniors today. (It did until 1997. Thus many who had coordinated custodial home care for an aging loved on may erroneously believe that funding from Medicare is still available for home care.) The Social Security website (www.socialsecurity.gov) or the local office are the best starting places for answers to questions about coverage. Local Visiting Nurse Associations (VNA) are also helpful in coordinating and delivering skilled medical care.
Legal Planning
Like it or not, we all have a will. If you haven’t drafted one the process known as probate addresses disposition of one’s estate for those who die intestate (without a will).
At best it can extend transfer of assets by years to those who may need or deserve them. At worst, it can cause needless strife among those who wish to stake a claim to a decedent’s assets. But legal planning goes far beyond a will. Medical and advanced planning directives and living wills address how one wishes to be cared for if they become incapacitated or terminally ill. Executors, guardians and trustees must be established. Certain types of trusts help to facilitate transfer of assets; to children during and or after a second marriage (Qualified Terminable Interest Property Trust –aka QTIP); for special needs children and or siblings (Special Needs Trust-enables them to maintain personal assets in a trust yet still qualify for government assistance); for transfer to non citizen spouses (Qualified Domestic Trust-aka QDOT) and a credit shelter trust; for those who maintain under current tax law more than $3,000,000 in assets per married couple, this combines the $1,500,000 individual to exempt $3,000,000 per couple from estate taxes. Confused? You ought to be. Want to become more confused? Wait and see what shakes out in the estate tax reforms being discussed in the legislature now-and in the future. Tax law has always been a very dynamic arena. Contact an experienced trust and estate attorney to sort through identifying where you are at risk from this perspective and how to best structure documents that will fulfill one’s wishes. Local bar associations and senior centers should be good sources of referrals.
Monitoring them is the other half of the equation. (The $1,500,000/$3,000,000 figures above for instance-is scheduled to change in 2006 to $2,000,000/$4,000,000). Beneficiaries of life insurance and retirement plans are other areas needing review based on life changes.
For all but the simplest of estates, coordinating all legal documents can be an extended process. It took my family over three years to finalize all details due to various conflicts. And a recent life change for a family member now requires some modifications to be made. As frustrating as it can be, it is time well spent to address these issues proactively, rather than after the fact.
Benefits
As awareness develops that a loved one needs care, having the wherewithal to navigate through the morass of insurance programs will be a crucial skill set for whomever assumes that role. I have been in the business since 1989; even with 16 years of experience, this role has been as challenging as any of those I have assumed as a caregiver.
The biggest challenge for me has been addressing administrative “snafus” with my father’s retiree health plan. His former employer changes administrators on an annual basis. The reasoning is beyond me; but having a file with documentation that tracks the progress (or lack of it) is what has helped to streamline the process as best as possible.
Confusion is not limited to corporate administration. An effort to clarify New York State guidelines for Medicaid home care benefits resulted in me speaking to eighteen people-many of whom were deemed to be “experts” by the office administrator-before finding the individual who actually had the knowledge and insight to answer my questions.
Giving you the insight to become a benefits expert would be a challenge best addressed in a class that could literally last weeks. Hopefully this summary will give you a foundation to direct you to the most appropriate place to begin your search to best address accessing maximum benefits for your care recipient.
Medicare
Part A: Covers “reasonable” charges for semi private rooms in accredited hospitals.
Hospital charges-not physicians, surgeons, anesthesiologists are not covered in part A.
2005 Premium: $206/month for those having at least 30-39 quarters of Medicare covered employment; $375/month for those heaving less that amount of employment.
Deductible: First 60 days inpatient hospital costs is a total of $912.00. Days 61-90 the cost is $228.00/day. Days 91-150 the cost is $456.00/day. All costs for the 151st day and beyond are the responsibility of the individual.
Skilled Nursing Facility: First 20 days are covered in full, so long as entry requirements are met. (The beneficiary must have been in a hospital for at least 3 days, and entered the nursing home within 30 days or that stay, and for the same reason or diagnosis.) The coinsurance for days 21-100 is $114.00/day. All costs after the 100th day are assumed by the individual
Home Care: Home care services are covered under Part A, with the following limitations.
- The beneficiary must be homebound.
- The beneficiary must require skilled nursing care on an intermittent basis, or need physical or speech therapy.
- A plan for furnishing the home care services must be established and periodically reviewed by a physician.
- The beneficiary must be under a physicians care while receiving these services.
- Care must commence within 14 days of a hospital stay or nursing home stay of at least three days.
- The “spell of illness” ends sixty days after the post-institutional period begins
- Coverage is limited to 100 visits per spell of illness.
Notice that the definitions of “homebound” and “intermittent care” seem to be inherently conflicting. Most homebound people need care on a permanent basis. However, since most if that care is non skilled care, Medicare does not cover it-they only covered skilled care.
There may be some of you who were involved with a care recipient before 1998. Medicare did cover non skilled care at that point. The changes were implemented in the Balanced Budget Act of 1997, eliminating payments for non skilled care.
Part B: Premium is $78.20/month.
Deductible: the deductible is $110.00 annually. There is a 20% co-pay after the deductible is met. These cover inpatient and outpatient services of physician, homecare services not covered in Part A, supplies, physical and speech therapy, tests and equipment.
Part C: Medicare + Choice
Medicare Part C is a combination of Parts A and B, basically delivered under an “HMO” format. The upside to this is that that costs may be better contained, but like any HMO, services are often area specific, and many providers do not accept it due to low reimbursements.
Medicare Part D:
This is the new prescription benefit; information about it is still being disseminated to the public, and is in the beginning stages of that process. The Medicare website or local office is probably the best source at this time. (My conversation with a Social Security representative in late July was “understanding this is going to be difficult even for those who have a good background in Medicare-which includes me”.) If you can’t get the information you need from Social Security and Medicare-they should be doing community meetings by January,2006. One change is that Medicare will now cover prescription costs previously covered by Medicaid.
Medicare Supplements
Medicare supplements cover the deductibles and co-insurance costs in Medicare contracts. Because underwriting companies are now amending their contracts relative to the changes in Part D, the scope of how the changes will impact coverages offered under supplements will evolve as the Part D program is rolled out.
Stay tuned for more information, or call or email me at the contact information at the end of the article.
Medicaid
In short, Medicaid does pay for a wider scope of services than Medicare, but the eligibility requirements basically mean the beneficiary is impoverished.
Medicaid is the “payor of last resort”; it is available only to people with limited resources. The limits coordinated on a state by state basis, and also have provisions for home and community based services for non-skilled care.
Generally, the limits for eligibility are $80,000-$90,000 per couple in liquid assets, and $2000 per month in income. For single individuals, the limits can range into $10,000 in assets and $500-$700 per month in income for eligibility for home care services (the home is exempt), and as little as $2000 in assets and $50 per month in income for nursing home care. A lien is placed on the house in most cases if it is not required to be sold immediately when nursing home services are required. At this point, the home is still a protected asset when homecare services are covered by Medicaid.
New York State is one of the most liberal in how home care services are delivered via Medicaid for non skilled home care services (see paragraph beginning “In New York State” for more information on the engagement process for pre and post Medicaid eligibility.)
Veteran’s Benefits
Benefits for long-term care related issues are generally reserved for those with “service related disabilities” under the Veteran’s Administration’s guidelines. “Priority Groups” based on service related diagnosis are what determines eligibility. Also, each local VA hospital has the right to set financial eligibility as well. A 1996 General Accounting Office study determined that of 235,000 veterans needing care, less than 34,000 were covered.
TriCare is a program established for retired armed forces personnel. It is available only as a secondary payor to Medicare or private insurance, is primarily for skilled medical services, and has little or anything to do with long-term care services. In short, VA benefits pay little or nothing for long-term care services, especially in a home care setting.
Long-Term Care Insurance
Long-term care insurance was developed to address the costs of non skilled and skilled care “non medical” care. They have evolved to where care for ADL’s and Alzheimers/dementia related care can be covered under most reputable carrier’s policies. Each company and policy version should have the following characteristics:
A “waiting period” or deductible: This is the number of days before services are covered.
This can be from 0 to 365 days.
Daily Benefit: This can be from $50-$500/day
Benefit Trigger: Most policies require that services for “2 of 6 ADL’s” (Activities of Daily Living) be required to “trigger” benefits, or a stand alone provision for assistance relative to an Alzheimer’s or Dementia condition where the individual is a potential danger to themselves or others. Most also state the diagnosis will require services to be needed for alt least 90 days-justifying that it is a true long-term care scenario.
Duration of Benefit: This is usually from 2 years to lifetime.
Inflation component: This can increase benefits at a simple rate of interest, (usually 5%), a compound rate, or leave the original benefit “flat”.
“Partnership policies” are approved by states to give additional asset protection features to the policy holder. New York, Connecticut, Indiana and California are the only states who have bona fide partnerships. Generally, these programs allow for greater levels of asset protection relative to Medicaid “spend down limits. Other states are implementing “quasi” partnership programs due to the successes of these four, but are hampered by the tax code changes from 1993.
There are usually menus of other features that are available in certain policies and or can be added as needed. They are too varied to discuss rationally here (one well established company has 14 different ways to structure its long-term care policies, with nearly unlimited variations based on daily benefit, duration, inflation, etc.) Most current policies cover non skilled services in home and community based settings, including adult day care and assisted living, as well as nursing home care.
Pricing of policies determined by the following: age, marital status (couple/cohabitating partners or often given discounts), policy design (elimination period, daily benefit, duration, inflation component, and optional features) -health status (some carriers will look more favorable on certain conditions than others).
Note that when the ideal company and policy design is chosen, care must be taken to ensure a likelihood of them underwriting it before the application is submitted. If there is a history of chronic or acute illness, checking with the “chosen company” to make certain that they will be able to underwrite the desired policy (and at the desired premium) is critical. A declination from a company may limit choices for alternate companies moving forward.
Long story made short-long-term care insurance is the only consistent payor for non skilled, custodial services, especially in the home. However, because it can be overwhelmingly complex, and costly, consultation with a professional with a focus on long-term care is recommended. Search out one who has a professional designation in the long-term care arena. The CASL (Chartered Advisor in Senior Living), CSA (Certified Senior Advisor) or the CLTC (Certified in Long-Term Care) are all equally respected in the industry. Agents or brokers with such designations are best able to determine the feasibility of such insurance, and to design an appropriate policy structure.
Accounting
Once it is determined that care is needed, an assessment of finances will be essential in determining where services can be accessed, and who will pay for them.
Liquidity will be a primary factor in determining how assets are invested. Attention must be given to preservation of principal, with consideration of growth secondary.
Again money is one of the most difficult things for families to discuss. Getting it out in the open-relative to privacy and discretion issues-will be a crucial step.
One asset class that is often overlooked is the equity one has accumulated in the primary residence. Reverse mortgages are often a way to access funding for care costs. Careful evaluation must be given to the inherent costs of the mortgage, which is essentially a line of credit on the home’s equity. With the recent real estate “boom”, significant equity has been built up on many areas of the country. The National Council on Aging has a link on its website (www.ncoa.org) that helps explore the feasibility of using such a strategy, including some appropriate caveats.
When the financial assessment determines that the recipient is potentially going to use all their assets for care costs in a short duration, crisis planning is available. There are strategies that can preserve some of them and still allow the recipient access to Medicaid without compromising the Medicaid qualification formula. It is a state specific issue, and can better be discussed directly. Contact information is at the end of the article.
In closing, the aging process is one that encompasses the concept of loss as one moves through life. We lose our physical beauty-at least as most of our society defines it. We lose our physical capabilities. We lose what defines ourselves in society-our career-when we retire. Our cognitive capabilities decline. And we begin to lose those who have been part of our lives.
As caregivers, it is not our job to prevent these “losses”, but to manage them in a way that makes the experience life affirming, rather than a debilitating one. That is why having a plan is so important in guiding all involved through this part of life’s journey. It is also why the “unwritten” part of the plan-the commitment to balancing our lives when these challenges arise-is critical to the well being of the entire family.
My journey has been challenging, but equally rewarding. I found that one of the best things about assuming the role of caregiver is it has created a greater awareness of what wonderful parents and people my mother and father were-and still are-to me and my siblings.